As if we need more evidence

As if we need more evidence

Yesterday we learned that CVS Caremark has made a switch on their preferred formulary list favoring Johnson and Johnson’s (NYSE: JNJ) Invokana over Lilly’s (NYSE: LLY) Jardiance. An interesting move given the data on Invokana which revealed a greater risk of amputations. Express Scripts on the other hand made no major changes on their formulary for diabetes meds. Taken together this basically confirms two things we have been stating consistently.

First diabetes medications have become commodities where price is more important than performance and second this is all about money. CVS’s decision to favor Invokana although Jardiance clearly has the better overall data set is proof of this. It also shows that JNJ was feeling the pain and used the only weapon they had to keep Invokana from losing more share.

Although these formulary changes are common one must wonder how CVS will explain this one to patients and physicians. It’s not like Invokana is a bad drug however why put patients at the additional risk of amputations when there are two credible alternatives. What this says to us is that JNJ paid dearly for this position and Lilly and AstraZeneca (NYSE: AZN) didn’t want to or could not match the package offered by JNJ.

Looking longer term these deals makes us wonder just how receptive the major payers will be to new and innovative therapies. Just by way of example look at the exenatide micro-pump from Intarcia, a drug/device which solves the biggest problem facing patients, therapy compliance/adherence. Will Intarcia be forced to heavily discount the system to gain favorable formulary placement or will payers who constantly complain about the lack of therapy adherence put their money where their mouths are. This decision by CVS with Invokana is a worrisome sign.

The harsh reality is that payers don’t care all that much about which drug is best for the patient. When it comes to patients with diabetes the mantra is clear – manage them as cheaply as possible until the patient either goes to another plan or onto Medicare.

In our humble opinion, most payers are bunch of hypocrites, as they talk long and loud about improving patient outcomes but when the rubber meets the road all they care about is the almighty dollar. How else can Anthem explain their decision to call the 670G from Medtronic (NYSE: MDT) an experimental device. Seriously this is akin to calling a smartphone an experimental device.

Many times, we speak of how the business of diabetes interferes with the treatment of diabetes. How physicians are often handicapped when treating patients because the patient’s insurance does not cover the therapy they need. This forces patients to make very uncomfortable choices, either they pony up more of their hard-earned money for the therapy they need or they pay the mortgage. Yet all we here from payers is that these drugs are too expensive when they are using Mafia like tactics to extort better terms from drug and device companies.

Listen we have no objection to everyone making money but we have a strong objection to out and out hypocrisy. If we are ever to see better overall patient outcomes, something that will not just save lives but also millions of dollars, this hypocrisy must end. This constant finger pointing and blame game does nothing to help patients. As per usual it’s the patients who get screwed.