PARIS (Reuters) - U.S. pharmacy benefit manager CVS will drop Sanofi’s main insulin drug Lantus from the list of medicines it reimburses on behalf of health insurers, dealing a blow to the French drugmaker’s key diabetes business.

A person walks by a CVS Pharmacy store in Pasadena, U.S., May 2, 2016. REUTERS/Mario Anzuoni - RTX2CJ84

CVS said it would switch instead to Ely Lilly’s cheaper biosimilar drug Basaglar from 2017.

Biosimilars are cheaper copies of protein-based biotech drugs such as Lantus, which are no longer protected by patents. They cannot be precisely replicated like conventional chemical drugs but have been shown to be equivalent in terms of efficacy and side effects.

U.S. pharmacy benefit managers such as CVS help private-sector medical insurers negotiate better prices from drugmakers and also draw up so-called formularies, which are exclusive lists of drugs they reimburse for the insurers they work for.

CVS, which has nearly 80 million plan members, announced on Tuesday a number of changes to its formulary, saying they would lead to significant savings.

The company also said it would no longer reimburse Toujeo, Sanofi’s next-generation diabetes drug.

Sanofi shares were down 1.4 percent at 1250 GMT.

“Sanofi is disappointed by this decision. Healthcare professionals and patients should have a choice regarding their treatment,” a spokesman for the French group said in an emailed statement.

“We will continue our ongoing discussions with other insurers,” he said, adding CVS’s announcement did not change the group’s forecasts.

The patent on Lantus expired in 2015 in the United States, the world’s largest drugs market, and Sanofi hopes to revive declining diabetes sales with Toujeo, launched in March 2015.

Switzerland’s Novartis and Actelion were also dealt blows by CVS’s new formulary.

In a research note, Citi analysts said CVS’s new formulary marked the “dawn of the biosimilar era”.

Kepler Cheuvreux analyst David Evans said CVS’s decision meant investors should brace for the pessimistic end of Sanofi’s target range to limit the decline in diabetic drug sales to 4-8 percent per year until 2018.

Sanofi published lower second-quarter sales and profit last week, partly hurt by its diabetes division, whose sales were down 3.5 percent at constant exchange rates to 1.6 billion euros ($1.8 billion).

When asked at the time about the threat from biosimilars in the United States, Sanofi’s head of diabetes Peter Guenter told investors that, given the number of Lantus patients, it was hard to imagine hundreds of thousands of patients being switched.

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