It was already a terrible day for Valeant Pharmaceuticals (VRX) when news came that CVS Health (CVS) was dealing the company a new blow: it will restrict the use of Jublia, the drugmaker’s toenail fungus treatment.
Valeant shares, down 10% on Monday after a Wells Fargo research note said its board and management “have made decisions that may have put Valeant at significant business and reputational risk,” took another hit when Bloomberg News reported CVS’s decision.
CVS, which operates pharmacy benefits manager Caremark, the second largest PBM after Express Scripts (ESRX), is launching a new program in April that will among other things limit the use of Jublia, CVS Chief Medical Officer Troyen Brennan told Bloomberg. The news agency reported Jublia goes for $1,000 for an 8-ml bottle. Caremark members will have to try to treat their condition with other, less expensive toenail fungus drugs, according to Bloomberg. The program will be optional for health insurance and employer clients. A CVS spokesman confirmed Brennan’s comments.
Brennan told Bloomberg it was part of CVS’ broader efforts to reduce the use of costly dermatology drugs.
There is no love lost between CVS and Valeant. CVS, which also operates a massive drugstore chain, in December slammed Valeant for striking a drug pricing and distribution deal with arch-rival Walgreens. (WBA) The pact calls for Walgreens, the largest U.S. drugstore chain, to sell Valeant’s signature skin and eye drugs at a 10% discount under a 20-year agreement. Under the deal, Walgreens won’t take ownership of the Valeant drugs but instead hold them on consignment until delivery, a move that could marginalize pharmacy benefits managers such as CVS’ Caremark unit.
Two months ago, CVS Health Larry Merlo said 90% of Valeant’s programs are either excluded from Caremark’s formulary or have non-preferred status. In October, CVS dropped one of Valeant’s former partners from Caremark’s network. CVS said at the time that it was terminating Philidor, a specialty pharmacy facing scrutiny after an internal audit found evidence of “noncompliance with the terms of its provider agreement.”
Valeant was pummeled late last year when questions about its business and accounting practices spooked investors, with the stock ending 2015 down about 70% from a high hit in August.