These are early days for biosimilars in the United States. There’s only one biosimilar available on the U.S. market today: Sandoz’ Zarxio (filgrastim-sndz), which was approved by FDA in March, for the same indications as Neupogen (filgrastim). Still, FDA rejected Amgen’s Epogen as a biosimilar; the company plans to resubmit its application to the agency in the first half of 2016.
Read: Will biosimilars change the cancer care landscape?
GinestroDespite that, there’s a lot of optimism surrounding biosimilars, says Mark Ginestro, a principal at KPMG. He says that optimism is largely attributable to the impact biosimilars could have on reducing the cost of pharmaceutical products.
A 2014 RAND study projects
that biosimilar drugs could result in more than $44 billion in savings on biologic drugs between 2014 and 2024 (or about 4% of total biologic spending).
Nadina Rosier, North America health and group benefits practice leader of pharmacy at Towers Watson, says the market is still waiting on final guidance from FDA that addresses outstanding concerns, such as naming conventions, interchangeables, and substitutions. Thus, she says the ability of biosimilars to reduce plan sponsors’ costs for specialty drugs remains unpredictable.
On a practical level, Rosier suspects that pharmacy benefit managers (PBMs) will manage biosimilars initially through formulary placement and utilization programs, such as preferred drug step therapy programs. But it’s not yet written in the cards “that biosimilars will be the PBM’s preferred agent of choice,” she says.
RosierWhat payers are looking for is clarity about how biosimilars are going to be handled in Medicare Part B and Part D, says Ginestro. For example, biosimilars are currently treated as generics in the Part D “donut hole,” which would make a branded product more attractive.
Discounting will be the way for manufacturers to gain market share, says Ginestro, though he doesn’t expect biosimilars to be discounted as heavily in the United States as in Norway, for example, where they are discounted by as much as 70%. “I think what you’re seeing in Norway is you’ve got a government payer who can negotiate and control [price]. We don’t have that in the United States,” he says.
Next: Biosimilars and J-codes
Then there’s the issue of J-codes. The Centers for Medicare and Medicaid Services (CMS) announced in November that the same J-code will be assigned to all biosimilars of the same reference product for billing purposes. Since then, the agency has received feedback from the Biosimilar Forum and physician advocacy groups that support creating a distinct and unique code for billing and reimbursement, says Rosier.
Read: 5 reasons to be concerned over proposed Medicare rule on biosimilar coding
The criticism from these groups is if biosimilars don’t have unique J-codes, there could be confusion among prescribers and patient frustration, plus it would prevent the tracking of biosimilars separately, and that could lead to clinical and safety issues, she says.
As Ginestro sees it, it comes down to whether biosimilars share a J-code with the brand drug or they don’t. “The effect there being if they’re sharing a J-code, the reimbursement for everything in that J-code is at the same price,” he says.
“If somebody launches a [biosimilar] at a discount, they may be able to attain share for a period of time, but over say two quarters, it’s all going to sort of shake out so that even the brand product gets the same reimbursement level as the biosimilar product because they’re sharing a J-code."
The future of biosimilars will depend on how prescribers and physicians feel about the safety of substituting a biosimilar, says Dinkar Saran, a principal with PwC’s health industries advisory services, who agrees that some of the naming conventions make biologics difficult for prescribers to understand.