On Tuesday, Express Scripts released its annual list of formulary exclusions, which included several drugs to treat rare diseases like hemophilia, HIV and hepatitis C. Many of these products, including Gilead’s Atripla for HIV, seemed safely ensconced on Express Scripts’ preferred formulary.

Not anymore, Express Scripts said. And that change of strategy could hit the top lines of not just Gilead but also AbbVie, Sanofi and several smaller players, analysts fear.

Of the 48 drugs that are being kicked off the formulary for 2019, 11 are specialty drugs that have low-cost branded rivals or biosimilar alternatives. They included Atripla, CSL Behring’s Berinert to treat hereditary angioedema, and five factor VIII products to treat hemophilia.

All told, Express Scripts "is excluding products in several categories that were once likely considered untouchable," wrote Credit Suisse analysts in a note to investors.

Among the exclusions is Sanofi’s factor VIII drug Eloctate. That product was at the center of Sanofi’s $11.6 buyout of Bioverativ in January, and U.S. sales account for about 70% of Eloctate’s haul, according to Credit Suisse. "We assume Sanofi [was] unable to give enough price concessions to secure access in a competitive area," the analysts wrote. Now Eloctate and the other factor VIII drugs have been kicked off the preferred formulary and replaced by lower-priced alternatives, including Shire's Adynovate and Advate.

One of the most worrisome changes for Express Scripts’ 2019 formulary, analysts said, is the exclusion of AbbVie’s hepatitis C high-flyer Mavyret. That product’s strong pickup drove AbbVie’s hep C sales up 100% in the second quarter to $973 million. Analysts were expecting Mavryet to soar past $1 billion in sales next year. But now the product could be facing serious competition from Merck’s lower-priced Zepatier, which moved from excluded to preferred status on Express Scripts’ formulary.

Credit Suisse analyst Vamil Divan reported that during a conference call after the new formulary was released, Express Scripts executives commented that Zepatier and Gilead’s Harvoni were given preferred status in hepatitis C because of the companies’ willingness to "keep prices low." They indicated they would be open to discussions with AbbVie about dropping Mavyret’s list price.

At first glance, it would seem that Gilead is coming out a winner from Express Scripts’ Mavryet decision, but the actual outcome could be a bit more nuanced, analysts say. Leerink analyst Geoffrey Porges said in a note to investors that Gilead could grab market share in hepatitis C from the 50% or so of people who would have otherwise been prescribed Mavryet. That could bump up Gilead’s hep C sales by as much as 6% next year, Porges wrote.

"However, it is unlikely that the full positive effect of these gains would be realized since Gilead has likely increased their relative positioning on the Express Scripts formulary through greater discounts and/or rebating which will reduce the profitability of these incremental revenue gains," Porges explained.

And the exclusion of Atripla from Express Scripts’ preferred formula likely won’t help Gilead drive revenue gains, either. Atripla is a combination of three drugs, two of which are available as generics. Express Scripts chose a half-dozen lower priced alternatives for the formulary, including Mylan’s Symfi, which replaces the branded part of Gilead’s three-ingredient pill with a less expensive but similar pill.

So could Express Scripts’ exclusions actually make Mylan a winner in all this? That’s certainly possible, considering Symfi "gained zero traction" after it was launched earlier this year, said Evercore analyst Umer Raffat in a note to investors. The only "rational explanation has been some PBM/rebating game" by rivals, he added. The formulary update "seems to be fixing that finally," and fixing it in favor of Mylan, Raffat predicted.

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