ISI Evercore Weighs In on Gilead Sciences (GILD) Preferred Formulary at CVS (CVS)

ISI Evercore analyst Ross Muken weighed in on news CVS announced that it is giving preferred formulary status to Gilead Sciences' (NASDAQ: GILD) Harvoni/Sovaldi. This decision comes two weeks post Express Scripts' decision to make AbbVie's Viekira Pak its exclusive option for patients with genotype 1 hepatitis C.

"We view CVS' announcement re the HCV market (Harvoni / Sovaldi given preferred formulary status) as unsurprising but timely (was unlikely to follow ESRX re ABBV relationship given improved leverage w/ GILD) and evident that sometimes being 2nd has its advantages," Muken said.

He added, "We believe that CVS was likely able to garner an attractive discount for its members for the more advantaged of the two drugs (potentially shorter regimen, more convenient dosing, less drug-to-drug interaction issues). Thus they will be competitive on specialty trend without the appearance of shifting members to a potential less advantaged therapy. This should translate well in the upcoming selling season and will likely be seen as a less bold event than that of ESRX (whom has a history of market moving formulary decisions), potentially appealing to a broader segment of the employer market (similar savings w/o controversy). While not a huge financial lever for either company this should help skew the balance of momentum back in CVS' favor as ESRX's announcement had garnered a significant amount of market attention (recall CVS has won notable share from ESRX over the last few selling seasons and there had been recent market hope of fortunes shifting back in ESRX favor) and allow for another highly active PBM selling season in the Spring."

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