CVS is pushing for the creation of a cheaper version of the complex drug with the new Humira discount

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CVS Health is partnering with drugmaker Sandoz to produce a nearly identical version of its blockbuster arthritis treatment Humira that will be priced 80% below the price of the brand-name drug.

The move is part of a new company venture focused on securing, and in some cases, co-production, biosimilar drugs, the generic equivalents of complex protein or gene-based therapies known as biologics.

“We’ve invested in committing to a certain volume for the US market so we have a long lasting supply of product. We want to make sure that once we bring this product to the US market, we don’t have any supply issues, we have a high quality biosimilar product available, and it will be launched at a much lower price than the existing precursor molecule,” said Prem Shah, CVS Health EVP and head of pharmacy.

CVS has become a leading player in the procurement of generic drugs through Red Oak, a joint venture with Cardinal Health. But they want to strengthen their foothold in the biosimilar market, which is expected to grow to $100 billion in the next six years.

The company said on Wednesday it was launching a new subsidiary called Cordavis, which will specialize in securing the supply of new biosimilar drugs and will partner with Novartis Pharmaceuticals’ generic manufacturing unit, Sandoz.

Sandoz, which is currently part of Novartis, is expected to be spun off into an independent public company later this year.

CVS did not disclose the terms of the agreement for the new biosimilar, trademarked Hyromiz.

The company promised that the selling price for Cordavis Hyromiz would be 80% lower than the current selling price for Humira, which is made by drugmaker Abbvie. It will launch in the first quarter of 2024.

The first FDA-approved biosimilar for Humira, Amgen’s Amjevita, went on sale in January. Eight more biosimilars are expected to become available online in the next year, including Hyromiz.

Amgen executives say demand for the company’s biologic products appears to be increasing, but securing coverage from health insurance companies has posed challenges.

“We’re clearly still in the early stages of the biosimilar market with Amjevita. And we see very clearly what new payer behavior is going to be given the large products that have biosimilar competition,” said Murdo Gordon, Amgen’s EVP of commercial operations, on the company’s second-quarter earnings call. “Clearness about how pharmaceutical benefits work with the use of biosimilars, or the lack thereof, is becoming clear to us and other biosimilar manufacturers and other observers.”

Abbvie reported Humira sales of over $4 billion last quarter, which was slightly better than expected. The companies say they continue to offer health insurance plans that are equivalent to the new biosimilars.

The launch of Cordavis had been long planned, before news broke last week from Blue Shield of California that the company was dropping CVS as pharmaceutical benefits manager and turning to Cost Plus Mark Cuban Drug Company, Amazon Pharmacy, and others in an effort to save on drug costs.

The news sent CVS shares plummeting, but analysts such as Raymond James’ John Ransom said the sell-off was overdone.

At this point, the potential threat from start-ups is not as great as one might fear, especially when it comes to the current biosimilar market for drugs like Humira, Ransom said.

“They get a big discount from Abbvie, or they get a big discount from one of the competing biosimilar manufacturers. And that’s where they benefit,” Ransom said.

Cost Plus Cuban doesn’t have the scale to buy generics or enough storage space from manufacturers, he said.

Correction: CVS Health subsidiary Cordavis will partner with Sandoz on biosimilar drugs. Previous versions mischaracterized the relationship.

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