Eli Lilly & Co. is dropping CVS Health Corp’s drug benefit plan for its employees after CVS stopped covering its blockbuster weight-loss drug in favor of a rival medication from Novo Nordisk A/S, according to people familiar with the matter.
Starting on Jan. 1, Lilly employees covered by the company’s medical plan will automatically be enrolled with pharmacy benefit coverage through Rightway, a privately held pharmacy benefit manager, according to a document viewed by Bloomberg.
Lilly, based in Indianapolis, has around 50,000 employees.
A Lilly spokesperson told Bloomberg the company routinely reviews benefit service providers to ensure it’s delivering high-quality, cost-effective coverage.
“Rightway shares our passion for innovation and exceptional care for people while offering competitive fees and services aligned with the best interests of our employees, retirees and their families,” the spokesperson said.
CVS wouldn’t comment on specific client moves, but said its overall retention is in the high 90% range. The pharmacy chain said it offers plans with both Lilly’s Zepbound and Novo’s Wegovy, but that option “is costlier for plan sponsors” than its standard offering which excludes Zepbound.
“Our move earlier this year to negotiate Lilly and Novo against one another drove significant savings for our clients,” spokesman David Whitrap said.
In May CVS’ drug benefits unit, known as Caremark, dropped Zepbound from a list of preferred drugs in favor of Wegovy. Caremark is one of the largest PBMs, guiding which drugs millions of Americans take, and Lilly warned the decision could hurt Zepbound sales.
Novo and Lilly have been locked in a fierce battle to dominate the obesity market, which is expected to reach $100 billion by the end of the decade. CVS Caremark’s decision to prefer Wegovy over Zepbound might give Novo an edge as the companies fight to convince insurance companies to pay for their treatments, which can cost more than $1,000 a month before discounts.
The deal with Novo also allowed CVS to sell Wegovy for $499 to cash-paying customers at its more than 9,000 pharmacies nationwide.
On an episode of the Cheeky Pint podcast that aired Tuesday, Lilly Chief Executive Officer Dave Ricks said: “We actually ourselves just moved our PBM from a traditional one to a sort of new tech, fintech-y PBM.”
A spokesperson for Rightway said: “We’re excited to partner with the Lilly benefits team to enable their innovative and best-in-class benefits for employees, retirees, and families.”
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