That’s what we are very focused on doing by creating competitive environment. It is a significant — it could cost U.S. a $1 trillion if every American that is considered obese, and that’s about 70 million Americans, were prescribed these GLP-1s, that would put significant pressure on the U.S. healthcare system. So, it is imperative for us as a PBM to really reduce the overall cost of those drugs, and we’re working very closely with our customers to do that. As you can imagine, our customers’ top priority is really understanding the cost of GLP-1s and David will talk about that. But let me turn it over to Prem to talk about Cordavis.
Prem Shah: Yeah. And just to add to what Karen said, Cordavis is an extremely exciting opportunity for us. And Lisa, you’ve been around the PBM industry for a long time. And if you think about the competition that was created in the early part of the 2010s as it relates to the generic pipeline, we view the balance of our pipeline as the competition for the specialty drugs. And if you think about the amount of pharmacy spend that’s in specialty drugs, it’s greater than 50% at this point. So, it’s really important for us to be able to create that competition in biosimilars. And as I think about what Cordavis is really intended to do, it’s going to work with manufacturers to bring these products into the U.S. pharmaceutical marketplace.
One of the big, big pieces that we need to ensure is, what I’d say, is continuity of supply of these products in the marketplace. And that’s one of the things that Cordavis will work for. So, our first product that we’ll launch, as we mentioned earlier in the year, is going to be a contract with Sandoz to co-manufacture and commercialize Hyrimoz and its biosimilar product called Humira. And we’ll be launching that in the first quarter of 2024. And recall, we mentioned that we are going to launch it at a list price that’s greater than 80% lower than the current list price for Humira. So, again, it creates lower cost for consumers, better access, and affordability across the board. And as we look out into 2024 with Cordavis, we intend to have a full portfolio of products as we see other biosimilar competition coming in the specialty marketplace to facilitate the broader access with these products in the U.S. And I’ll hand it over to Tom to talk about some of the questions on the financials on that.
Tom Cowhey: Yeah. Thanks, Lisa. You asked about kind of the GLP-1 impact. But I think it’s important to just talk about what the enterprise impact is there. And then David can talk some more about some of the specifics on how the PBM helps here and some of the challenges that our self-insured customers are facing. In Pharmacy Services, the GLP-1 is — are a class of drugs that are uniquely suited to the value of the services what a PBM provides. And so, we do have a positive margin contribution from the GLP-1s in that segment. On the Aetna side, it’s really about whether or not we captured utilization in our pricing. But most of that pricing is really capturing indications for diabetes, not for weight loss. For weight loss, that’s really something that our self-insured customers making individual-wise decision on, or it’s a buy-up for our insured book.
And we believe that for 2023, we’ve appropriately priced that and we — we’re taking our latest thinking into our pricing for ’24. On the flip side, branded products pressure margins in the PCW business, so the GLP-1s are generally a headwind to that business. Maybe David, you could provide a little bit more context on kind of the PBM impacts?
David Joyner: Sure. Thanks, Tom. So, as Karen mentioned, the GLP-1s are certainly at the top of every client’s list in terms of areas that they’re concerned about going into ’24 and beyond. Good news is that PBM actually plays a critically important role in managing this category of drugs. So, we really have three different ways in which we’re trying to drive savings for our customers. The first is formulary, so we create competition. And obviously, as new entrants come into the market, it serves as an opportunity for us to continue to reduce the cost for our customers. Secondly, as utilization management, so focusing on the appropriate use of the medications, including off-label utilization. And then lastly, there is a significant investment being made in our advanced care management solutions, which is looking at the holistic view of the conditions in which we’re treating, and it’s essentially complementing the drug therapy and it’s giving us an opportunity to focus on the underlying causes of the conditions.
So, as we look at the results, at least year-to-date, you look at the combination of our formulary management in addition to the utilization management, we’re saving nearly 70% of costs for our commercial clients. So, again, it’s a great proof point that we’ve been able to take cost out of the system as we’re looking obviously at this growing cost of medications. The area that I would say we’re focused on in ’24 is there is still a sizable percentage of our customers that have included obesity or weight loss. And it’s an area that’s probably growing 6x what the non- or the diabetic utilization is. And so, there is a big focus right now on the — both the ROI as well as making sure as new competitors come into the market that we’re using these opportunities to focus on reducing the unit pricing of the product and then more specifically focusing on the overall ROI for the services that it’s delivering.
Brian Kane: So, maybe if I could just pivot one minute on the Cordavis because I just — I knew it was a three-part question, Lisa, and I know we’re trying to answer it in a variety of different ways. But I think the Cordavis is a really important unique opportunity for us in the market. So, as Prem said, Cordavis is brought to market a low list price product as the PBM. We have a formulary that looks at both clinical efficacy as well as driving low net cost for our customers. The good news is, is that we — when we have influence, we actually are moving to a product with the low list price, as Prem mentioned, 80% below the current list price of the brand, Humira. So, it does require a change in the market. So, if you look at our — how we’re looking at the opportunity going into ’24, it’s, can we move enough share in order to create value for our customers.
In our models, we believe we can take 50% of the 2022 cost out for this category by moving aggressively to a low list price product. So, we have to then look at what gives us confidence that we can actually move the share. So, we’ve mentioned, obviously, in previous calls that we’ve had success with moving Lantus to Basaglar. We had 97%-plus conversion for that product back in — many years ago. And if you look at one example, which is a client in Medicaid that has chosen to exclude the coverage of brand as Humira, we’ve been able to move upwards of 90% of the product by — within the last 30 days. So, I think it’s become a proof point that, one, we can actually move to low-cost biosimilars, we can actually reduce the cost of the category for our customers, and ultimately, make sure we’re preserving the experience for our — for the members.
So, I think, again, we’re pretty bullish on our opportunity of changing the marketplace and capitalizing on bringing new innovative therapies to market.
Lisa Gill: Thank you.
Operator: The next question comes from Nathan Rich from Goldman Sachs. Nathan, your line is open. Please, go ahead.
Nathan Rich: Great. Thanks so much for the questions. It sounds like Oak Street is kind of scaling in line to maybe a bit better than your expectations. I guess, could you maybe just update us on how you’re thinking about the incremental platform contribution next year? And what you see as the kind of biggest opportunities for practices in terms of how they need to adapt just given the tougher rate environment that we’re going to be in for Medicare next year? And from a capital deployment standpoint, can you talk about your appetite for additional M&A from a care delivery standpoint? Is that something that you’re looking at currently, or do you need to kind of allow the existing kind of assets to mature more before you’d look to build further?
