CVS Health is launching a new company that will work directly with drug makers to produce and commercialize “biosimilar” drugs, the less expensive versions of expensive brand prescriptions derived from biotechnology.
The name of the new company, Cordavis, will operate as “a wholly owned subsidiary that will work directly with manufacturers to commercialize and/or co-produce biosimilar products,” CVS said in an announcement Wednesday afternoon.
Biosimilars are versions of biologic medicines approved by the U.S. Food and Drug Adminstration that are “highly similar to” and have “no clinically meaningful differences from” brand biologic medicines already on the market, CVS said.
“The Cordavis products will be FDA approved, high quality, and easy for patients to use and will help ensure consistent long-term supply of affordable biosimilars,” CVS said.
This is important because taxpayers, government health insurers and companies are spending more on pricey specialized prescription drugs. Last year, for example, specialty prescription spending for U.S. employers was 49% of total pharmacy costs, according to the big benefit consultancy Mercer.
As its first product, Cordavis has contracted with the drug maker Sandoz to commercialize and bring to market in the first quarter of 2024 a biosimilar known as Hyrimoz for Humira, an expensive treatment for rheumatoid arthritis, Crohn’s disease and other autoimmune diseases. “The list price of the Cordavis Hyrimoz will be more than 80% lower than the current list price of Humira,” CVS said.
Humira, approved by the U.S. Food and Drug Administration 20 years ago, has for years been one of the nation’s most costly drugs, generating more than $20 billion in sales for its maker, Abbvie, in 2021 alone.
“CVS Health has a history of bringing innovative solutions to the market that lower the cost of drugs and ensure people have access to the medications they need to stay healthy,” CVS Health chief financial officer Shawn Guertin said. “Cordavis is a logical evolution for us and will help ensure sufficient supply of biosimilars in the U.S. and support this market now and in the future, while ultimately improving health outcomes and reducing costs for consumers.”
The announcement comes less than a week after a regional health plan, Blue Shield of California, said it would drop CVS’ Caremark subsidiary as its pharmacy benefit management company. Instead, Blue Shield of California said it would would use Mark Cuban’s Cost Plus Drugs, Amazon Pharmacy and others to manage prescription costs of its health plan members.
Blue Shield of California could end up benefitting from CVS’ decision to launch its own biosimilar drug maker.
CVS will continue to be involved in managing California Blue Shield’s specialized drug costs. Neither Amazon nor Mark Cuban’s Cost Plus Drugs will be involved in the provision of specialty pharmacy services for the nearly 5 million Blue Shield members with complex conditions. Neither Cost Plus nor Amazon own or operate a specialty pharmacy.
Meanwhile, the biosimilars market in the U.S. is projected to grow from less than $10 billion last year to more than $100 billion by 2029, CVS and industry analyst reports show.
“Biosimilars are crucial to creating competition and reducing costs for specialty pharmaceuticals where drug prices are rising the fastest,” said Prem Shah, CVS Health’s chief pharmacy officer and co-president of the Pharmacy and Consumer Wellness segment. “Through our direct involvement, we will expand the supply chain and ensure biosimilar availability in the market. We have assembled a talented team at Cordavis and look forward to the value this business will deliver to patients and payors.”