Are payers optimistic about biosimilars’ savings?

December 7, 2016

As more biosimilars are approved, plans and PBMs will continue to evolve their strategies regarding coverage and formulary management of these new medications.

In 2010, Congress approved the Biologics Price Competition and Innovation Act (BPCIA), creating an abbreviated licensure pathway for biological products that are demonstrated to be “biosimilar” to or “interchangeable” with a previously approved biological product. The new pathway is predicted to be a multi-billion-dollar opportunity to change the biopharma industry and offer promising biologic treatments to more people at lower costs, according to APCO Worldwide.

A biosimilar product is a biological product that is approved based on demonstration that it is highly similar to an FDA-approved biological product, known as a reference product, and has no clinically meaningful differences in terms of safety and effectiveness from the reference product. In order to be deemed an interchangeable biological product, a biosimilar must meet additional standards, and may be substituted for the reference product by a pharmacist without the intervention of the prescribing healthcare provider.

The FDA recently approved Amgen’s Amjevita (adalimumab-atto), a biosimilar to AbbVie’s Humira (adalimumab) for multiple inflammatory diseases, such as rheumatoid arthritis, Crohn’s disease, plaque psoriasis and other conditions.

Amjevita is the fourth drug approved by the FDA’s biosimilar pathway. The first biosimilar drug approved by the FDA in March 2015 was Zarxio (filgrastim-sndz, Sandoz, a Norvartis Company), a biosimilar of Amgen’s Neupogen (filgrastim). This year the FDA has also approved Celltrion’s Inflectra (infliximab-dyyb), a biosimlar version of Janssen Biotech’s Remicade (infliximab) as well as Erelzi (etanercept-szzs, Sandoz), a biosimilar of Amgen’s Enbrel (etanercept).

Biosimilar strategy: Plans, PBMs

With an increased focus on the future of biosimilars, it is important to discuss how insurance plans and pharmacy benefit managers (PBMs) plan to deal with these newly approved drugs.

Ginestro“Pharmacy benefit managers and other payers have been eager to see biosimilars for at least eight years,” says Mark Ginestro, a principal from KPMG Strategy. “Payers and PBMs see this channel as a means to constrain some of that spending growth, especially with medications that have a large number of patients, such as treatments for cancer, rheumatoid arthritis, or multiple sclerosis.”

According to Nadina Rosier, Health and Group Benefits Practice Leader at Willis Towers Watson, plans and PBMs have been developing strategies to manage biosimilars and specialty drugs overall given the relative high cost of these products.

“Biosimilars are not the same as generic specialty drugs, so strategies that ‘auto-substitute’ in similar ways to how generics substitute for traditional drugs are not appropriate,” says Rosier. “Instead, many PBMs have indicated they are considering formulary approaches that are similar to how traditional and specialty drugs are managed today.”

As an example, Rosier explains that placing biosimilars into preferred and non-preferred tiers and exploring exclusion in some cases, has been a popular approach employed by PBMs. This allows employers to manage costs and serves to maximize any pharmaceutical manufacturer rebates that may be available to plan sponsors.

In conjunction with formulary tiering, Rosier explains that utilization management approaches such as prior authorizations and step therapy are also being used to ensure clinically appropriate use of various types of drugs.

“PBMs and payers are optimistic about biosimilars savings; we expect all to create a strategy to encourage biosimilars, with some being more aggressive than others,” says Valerie Reynolds, senior director at ADVI Health. “Strategies will depend on the market served and the savings offered by both reference manufacturers and biosimilar manufacturers.”

Next: How plans and PBMs view biosimilars

 

 

How plans and PBMs view biosimilars

Payers and PBMs are likely to treat biosimilars like brand competitors, rather than generic competitors due to the increased complexity of the molecules, higher cost of production, and lack of interchangeability, according to Reynolds.

Pharmacy benefit plans will try to encourage the approval and use of biosimilars because they will introduce competition to the market. Manufacturers will attempt to show equivalency to the original product to get a stronger position on a pharmacy plan’s formulary, says Ginestro, adding that interchangeable biosimilars could further shake up the industry.

“The fact that if biosimilars are approved as interchangeable, one drug can be substituted for another at the discretion of the pharmacy independent from what is on the prescription, gives a much greater amount of control and leverage to the PBM and pharmacy,” says Ginestro.  “The market access barriers are quite different in this situation in that there isn’t the same need to educate the healthcare community about the new product because it is replaced often without the physician or patient ever knowing.”

At press time, no biosimilars had been deemed interchangeable. Ginestro says it will take time and clinical evidence before they will be. “Even the PBMs which have been among the biggest backers of biosimilars are not seeing interchangeability until 2020; the plans want to drive the move to the lowest cost option and some original product manufacturers may cut prices if the market heads in that direction.” 

If a biosimilar is approved, will plans mandate a switch?

As new biosimilars become available, a key question is whether plans will require patients to use the new product or if patients well-controlled on an originator drug will be “grandfathered” in and allowed to continue previous therapy.  

“The PBM philosophy and approach to grandfathering across various trend management programs varies; some PBMs generally advocate for grandfathering when a patient is currently taking a specific drug and appears clinically stable on the product,” Rosier says. “However, this approach can vary, even within the same PBM by disease condition and therapeutic class."

For example, some PBMs are excluding the originator drug Neupogen, without allowing grandfathering for existing users, and instead preferring the biosimilar, Zarxio. For a different therapeutic class (such as TNF-inhibitors), however, the same PBM might allow grandfathering, says Rosier.

Another question is whether plans will mandate a switch from a different originator to a newly approved and preferred biosimilar.

In this case, Rosier says that it depends on how the biosimilar is approved with regards to its interchangeability status. Additionally, individual state mandates differ and influence whether plans or PBMs can mandate a switch.

Reynolds“We anticipate many anti-TNF inhibitor biosimilar launches over the next several years,” says Reynolds. “Payer decisions regarding coverage and formulary placement will likely depend on cost benefit to contracting with manufacturers compared to the cost of granting exceptions for patients requiring a specific agent.”

According to Ginestro, a payer or plan might struggle to mandate switches for existing patients, as they will likely face pushback from prescribers and patients. For new patients, there is a greater likelihood to mandate a switch, provided the evidence supports equivalent outcomes. 

As more biosimilars continue to be approved, plans and PBMs will continue to evolve their strategies regarding coverage and formulary management of these new medications in the future.

Erin Bastick, PharmD, is a graduate intern at University Hospitals Elyria Medical Center in Elyria, Ohio.