Bristol Myers Squibb: New Products Need More Insurance Coverage, Still A Buy

Bristol Myers Squibb (NYSE:BMY), hereafter referred to as BMS, is a large ($161 billion market cap) global biopharmaceutical company. Management was last seen at J.P. Morgan’s 41st Annual Healthcare Conference on January 9. They touted the launch of 9 new products in the U.S., which collectively are “annualizing at over $2 billion.” While the portfolio is showing momentum (Table 1), investors have to recognize that the growth potential is tied to broad insurance coverage of these drugs.

Table 1. Revenues of the New Product Portfolio for the nine months ended September 30

Product		2022			2021			% Change
	Total	U.S.	Non-U.S.	Total	U.S.	Non-U.S.	Total	U.S.	Non-U.S.
Reblozyl	518	434	84	400	355	45	30%	22%	87%
Abecma	263	203	60	95	91	4	177%	123%	*
Zeposia	171	119	52	86	65	21	99%	83%	148%
Breyanzi	127	109	18	47	46	1	170%	137%	*
Inrebic	62	52	10	54	50	4	15%	4%	150%
Onureg	87	68	19	48	47	1	81%	45%	*
Opdualag	148	148	–	–	–	–	–	–	–
Camzyos	8	8	–	–	–	–	–	–	–
Sotyktu	1	1	–	–	–	–	–	–	–
Total	1,385	1,142	243	730	654	76	90%	75%	220%

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* = Change in excess of 1,000%

Coverage was explored at the 15 largest health insurance companies in the U.S. overall. Combined, these payors control 59% market share, with 38 million covered lives as of 2021. The BMS CAR T cell therapies ABECMA and Breyanzi are only available at certified treatment centers and were excluded from the search. The most recent agent approved was Sotyktu on September 9 and more than 3 months have passed since its launch, which was enough time for most payors to discuss its inclusion in their prescription drug lists (PDLs or formularies). The most common plan was examined when possible and are specified in Table 2. If the insurer offered non-Medicare plans in a state Marketplace (Obamacare), the most populous state was chosen (California > Texas > Florida). Humana (HUM) doesn’t even do those, so their Medicaid plan is the only one in the survey.

How to read Table 2:

Tier # Higher Tiers have higher cost share. Drugs in Tier 4 or higher (in 5+-Tier plans) are non-preferred brands and may also include drugs recently approved by the FDA or specialty drugs and may need special handling.

Sp Specialty drugs are used to treat difficult, long-term conditions and may need to get filled through a specialty pharmacy.

PA Prior authorization is the process of obtaining approval of benefits before certain prescriptions may be filled.

NF A non-formulary drug is not included on a plan’s Drug List. An exception process such as PA is available to request coverage for a NF drug.

X Not Covered drugs are specifically excluded from coverage by the terms of the plan. Patients likely won’t get any reimbursement will have to pay out-of-pocket for these drugs.

Table 2. Coverage of BMS New Products at 15 Largest Health Insurance Companies in the U.S.

Non-Medicare	Health insurance company / Plan	Reblozyl	Zeposia	Inrebic	Onureg	Opdualag	Camzyos	Sotyktu
1	Kaiser Permanente [CA Marketplace]	x	x	x	x	x	x	x
2	Elevance Health (Anthem) National Drug List 5-Tier	NF PA Sp	NF PA Sp	NF PA Sp	NF PA Sp	NF PA Sp	NF PA Sp	NF PA
3	Health Care Service Corporation
	BCBS Illinois Basic Drug List	x	x	x	x	x	x	x
	BCBS Montana Basic Drug List	x	x	x	x	x	x	x
	BCBS New Mexico Basic Drug List	x	x	x	x	x	x	x
	BCBS Oklahoma Basic Drug List	x	Sp	x	x	x	x	x
	BCBS Texas Basic Drug List	x	x	x	x	x	x	x
4	UnitedHealth Group [TX QHP Standard]	x	NF	x	NF	x	NF	NF
	Advantage 4-Tier Prescription Drug List	x	3 PA Sp	x	x	x	x	x
5	Centene [Essential Rx Drug List]	x	x	4 PA	4 PA	x	x	x
6	CVS Health (Aetna Health Exchange Plan: CA)	x	x	x	x	x	x	x
7	GuideWell (Florida Blue) ValueScriptRx	x	6 PA Sp	5 PA Sp	5 PA Sp	x	6 PA Sp	x
8	Blue Cross Blue Shield of Michigan [BCN HMO]	x	x Sp	6 PA Sp	5 PA Sp	x	5 PA Sp	x
9	Highmark Healthcare Reform Comprehensive 3-Tier Incentive	x	2 PA Sp	3 PA Sp	3 PA Sp	x	3 PA Sp	3 PA Sp
10	Blue Cross of North Carolina Enhanced 4 Tier	x	3 PA Sp	4 PA Sp	4 PA Sp	x	4 PA Sp	x
11	Humana [FL Medicaid Preferred Drug List]	x	x	x	x	x	x	x
12	Blue Cross and Blue Shield of Alabama Blue Saver Bronze	x	5 PA	6 PA	6 PA	x	5 PA	x
13	Blue Cross Blue Shield of Massachusetts	4 PA	5 PA Sp	4 PA Sp	4 Sp	x	4 Sp	x
14	Molina Healthcare [CA Marketplace]	x	x	x	x	x	x	x
15	Independence Health Group [Value formulary 5-tier]	x	5 PA	5 PA	5 PA	x	5 PA	NF
Medicare	Health insurance company / Plan	Reblozyl	Zeposia	Inrebic	Onureg	Opdualag	Camzyos	Sotyktu
1	Kaiser Permanente	x	x	x	x	x	x	x
2	Anthem Medicare Supplement Senior SmartChoice	x	x	x	x	x	x	x
3	HCSC BCBS IL/NM/OK/TX MedicareRx Basic	x	x	5 PA	5 PA	x	x	x
	BCBS Montana Medicare Advantage Classic	x	x	5 PA	5 PA	x	x	x
4	UnitedHealth [AARP MedicareRx Walgreens (PDP)]	5 PA	x	5 PA	5 PA	5 PA	x	x
5	Centene [Wellcare Value Script (PDP)]	x	x	5 PA	5 PA	x	x	x
6	CVS (Aetna) [SilverScript Choice (PDP)]	x	x	5 PA	4 PA	x	x	x
7	GuideWell (Florida BlueMedicare Premier Rx)	x	x	5 PA	5 PA	x	x	x
8	Blue Cross Blue Shield of Michigan	x	x	5 PA	5 PA	x	5 PA	x
9	Highmark Performance Formulary	x	5 PA	5 PA	5 PA	x	5 PA	x
10	Blue Cross of North Carolina Medicare Essential Plus	x	x	5 PA	5 PA	x	x	x
11	Humana Basic Rx Plan PDP	x	x	5 PA	5 PA	x	5 PA	x
12	Blue Cross and Blue Shield of Alabama Blue Rx	x	x	5 PA	5 PA	x	x	x
13	Blue Cross Blue Shield of Massachusetts	x	x	5 PA	5 PA	x	x	x
14	Molina Medicare Choice Care (HMO)	x	x	5 PA	5 PA	x	x	x
15	Independence Keystone 65 Basic Rx HMO	x	5 PA	5 PA	5 PA	x	5 PA	x

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As expected and in line with past surveys, Kaiser Permanente, with its integration of care and focus on cost-effectiveness, doesn’t cover anything but offers the 2^nd most affordable metallic plan in California. Elevance Health (ELV), formerly Anthem, doesn’t include any new BMS product in its PDLs either, but is the only insurer to allow access to all of them after a Prior Authorization process. BMS also mostly strikes out with the Health Care Service Corporation, with only Zeposia on the Oklahoma unit’s list. Only Zeposia, Inrebic and Onureg are on the (slight) majority of PDLs.

Despite approval, being shut out of formularies can pretty much kill a drug launch, as Biogen (BIIB) found out with its controversial Alzheimer’s drug Aduhelm. Formularies typically update on a quarterly basis, but could change more frequently depending on drug adoptions into practice guidelines by medical associations. Camzyos, approved in April, is off to a good start. Reblozyl would probably have a sharper intake and on its way to blockbuster status if it was on more than 2 lists. Sometimes one highly publicized inclusion could start a snowball effect, as rivals wouldn’t want to lose their members who may choose to switch over, so investors should try to stay tuned to such news.

Of all the New Products, it is more imperative for Sotyktu to be on formularies so it can compete with the other oral psoriasis treatment, Otezla, for which Amgen (AMGN) is trying to score favorable label expansions based on recent study results. Aside from being more convenient than infusions, Sotyktu also doesn’t carry the cardiovascular warnings of newer JAK inhibitors. Sotyktu has already beaten Otezla in its pivotal trials, but it can’t be used if not covered, as few patients can afford paying out-of-pocket cost of $6,164 per month, a 40% premium over Otezla. However, given its clinical strengths, coverage will eventually be earned.

To conclude, BMS is already a good buy as a defensive healthcare stock in a bear market. As it stands, the New Product Portfolio make up almost 13% of BMS’ $10.8 billion product sales in 2022. All except Sotyktu are indicated for rare diseases and thus come with high profit margins. Broader coverage will improve this ratio and will bring added value to the already excellent profitability rating according to Seeking Alpha’s Quant system. Furthermore, BMS has consistently beat EPS earnings estimates for 6 straight quarters and pays an attractive dividend yield currently over 3%.