Changes Are Afoot in the Biosimilars Sector

In President Donald J. Trump’s blueprint to lower drug prices and cut out-of-pocket costs, American Patients First, one goal is to promote competition and innovation for biologics. The blueprint specifically mentions incentivizing development of additional lower-cost biosimilars.¹ A biosimilar is a biological product that is highly similar to and has no clinically meaningful differences from an existing FDA-approved originator biologic. Although identified as a strategy, the biosimilar program in the United States is still in its infancy compared with Europe, which has approved many more biosimilars and enjoyed success with them. No major efficacy or safety issues have been reported with these agents, and more importantly, none have been withdrawn from the European market.² However, it appears that the United States is on the cusp of seeing significantly more activity related to biosimilars. The items listed below describe some of the changes anticipated for the US biosimilar market, activities that will support growth and adoption of biosimilars and challenges that will need to be addressed.

Rapid growth in the number of biosimilars.

The number of biosimilars approved by the FDA is expected to increase significantly over the next few years. Through April 2019, 19 biosimilars have been approved; Zarxio was the first, in 2015. Since then, there were 3 approved in 2016, 5 in 2017, 7 in 2018, and 3 through April 2019.³ However, these numbers pale by comparison with the 260 biosimilars approved outside the United States and the 188 that are in development.⁴ Approval by the FDA does not always lead to the biosimilar immediately becoming commercially available. Issues related to patent protection of the originator biologic and potential litigation between the originator and biosimilar manufacturers may delay entry onto the market. By 2023, 71 biologics will have lost their patent exclusivity, which should facilitate biosimilars of these products becoming available for patient care.⁵

Biosimilars for treatment.

Many recent biosimilar approvals were for agents to treat a variety of conditions versus being supportive care. Of the 15 biosimilars approved by the FDA since May 2017, 10 were for treatment, with a good number of the total oncology-related. These include biosimilars to Avastin (Mvasi), Enbrel (Eticovo), Herceptin (Ogivri, Herzuma, Ontruzant, Trazimera), Humira (Cyltezo, Hyrimoz), Remicade (Renflexis, Ixifi), and Rituxan (Truxima).³ The number of biosimilars to treat cancer is expected to increase quickly.² It will be interesting to see if physicians and other providers will readily use biosimilars for treatment as they have supportive care.

Biosimilar uptake on hospital formularies.

The percentage of hospitals that evaluate biosimilars for formulary status once they are on the market, as well as those that have biosimilars on their formulary, continues to increase. In a recent survey examining biosimilar addition to hospital formularies, 72% of the respondents indicated that biosimilars were on formulary, which was a 15% increase over 2017. Furthermore, 80% of the hospitals reported they would review biosimilars for formulary addition once available. This was a 35% increase compared with 2017. The factors most important in the formulary decision process were price (87%), evidence-based clinical data (81%), reimbursement (69%), and interchangeability (67%). Reimbursement alone increased by 38% over the past 4 years.⁶ Other factors reported were immunogenicity/safety, manufacturing expertise, and supply chain reliability.

Biosimilar cost and reimbursement.

As a general rule, a hospital’s outpatient setting is considered a profit center, with the inpatient setting a cost center. The goal is to maximize outpatient reimbursement while keeping inpatient expenses low, because of the high percentage of fixed reimbursement seen with hospitalized patients. CMS reimburses biosimilars used in hospital-based outpatient clinics at the average sales price (ASP), plus 6% of the ASP of the innovator product. Hence, there is some incentive to use a biosimilar.

In the inpatient setting, CMS reimburses based on diagnosis-related groups, so for biosimilars, the cost of a product drives drug selection. Some private payers still reimburse based on a discounted charge (eg, 80% of charges), which varies between facilities.

This also needs to be taken into consideration when performing the biosimilar financial analysis. As with most medications evaluated for formulary status, the cost of the product is not just its acquisition cost. Factors such as rebates and incentives based on volume, the expense in adding the product to the electronic health record (EHR) and modifying order sets appropriately, changing the drug library on the institution’s infusion devices, updating the automated dispensing cabinets, and making sure the product’s bar code scans correctly must be consid- ered. Given the complexity of reimbursement and contracting decisions related to biosimilars, there should be open lines of communication between pharmacy leadership and appropriate individuals in the finance and managed care departments.⁷

Biosimilar price.

As more biosimilars for the originator biologic become available on the market, their prices are expected to decrease. The foundation has already been laid for this to occur. The FDA has approved multiple biosimilars of originator biologics, 2 examples being adalimumab and trastuzumab. As these products enter the market, the competition between them should result in lower prices. However, do not expect to see the above-50% price reduction that occurs when there are generics of small-molecule drugs on the market. Price reductions of 20% to 30% appear to be more realistic. The filgrastim biosimilars are an excellent example. The most recent biosimilar, Nivestym, entered the market with a wholesale acquisition cost 30.3% lower than Neupogen and 20.3% lower than Zarxio. Manufacturers of the originator biologics are being aggressive with contracting, not making it as attractive to change to the biosimilar.^2,7 A Rand Corporation analysis estimates that further biosimilar approvals will reduce direct spending on biologic drugs by $54 billion between 2017 and 2026, with anti—tumor necrosis factor products, monoclonal antibody antineoplastics, and immunostimulants (excluding interferons) accounting for 87% of the savings.⁸

Payer-driven biosimilar use.

A prominent issue is the practice of payers increasingly dictating which biosimilars are administered to outpatients in the clinic and hospital settings, often because of manufacturers’ rebates. This is problematic because multiple payers may identify different biosimilars as their agents of choice, necessitating that each of them be built in the EHR. As a result, the physician will be responsible for choosing the correct biosimilar based on the patient’s insurance when ordering a chemotherapy regimen, adding a step to an already labor-intensive process and increasing the chances for error. Pharmacists may also be expected to verify that the physician has chosen the correct biosimilar based on the payer. Logistical issues must be addressed within the pharmacy to ensure that each payer’s biosimilar is clearly labeled and stored appropriately.

This requirement will increase the workload for physicians and pharmacy staff, the likelihood of medication errors, and the potential for billing errors. There is also potential for patients to experience immune reactions if required to switch to the payer-preferred product. The Institute for Safe Medication Practices recommends that health systems identify biosimilars available for use through their formulary process and that payers provide reimbursement, no matter which product is placed on formulary.⁴

Biosimilar interchangeability guidance.

On May 10, 2019, the FDA published its final guidance on interchangeability of biologic products. The guidance is expected to promote competition in the biologic market and reduce uncertainty among health care providers about the equivalence of interchangeable biosimilars with the originator reference product. The FDA defines interchangeability as “the biological product may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product.” This is similar to what is done with generic versions of small-molecule drugs and their brand name counterparts.

Additional testing (eg, switching study) will be required by the FDA above what a manufacturer must currently perform to get a biosimilar the interchangeable designation. It must be shown that the biosimilar “can be expected to produce the same clinical result as the reference product in any given patient” and that “for a biological product that is administered more than once to an individual, the risk in terms of safety or diminished efficacy of alternating or switching between the use of the biological product and the reference product is not greater than the risk of using the reference product without such alternation or switch.” Although not mandatory, the FDA recommends that manufacturers of biosimilars seek interchangeability for all of an originator reference product’s indications. Just 1 company has applied for an interchangeable biosimilar. It is expected that more will do so.^9,10

Biologic classification for insulin.

Much has been written about the skyrocketing price of insulin and its subsequent impact on patients whose survival depends on it. In March 2020, under the Biologics Price Competition and Innovation Act of 2009, insulin will be classified as a biological product and regulated under the Public Health Service Act. This will allow the FDA to license biosimilar and interchangeable insulin products. The hope is that having interchangeable insulin products that can be substituted by the pharmacist without physician intervention will lead to increased access and reduced drug prices for patients.

Biosimilars action plan.

In July 2018, the FDA developed and published a biosimilars action plan and is in the process of implementing it. The goal of the plan is to encourage innovation and competition among biologics and the development of biosimilars; it consists of 4 key elements:

• Improving the efficiency of the biosimilar and interchangeable product development and approval process
• Maximizing regulatory and scientific clarity for the biosimilar product development community
• Developing communications to improve understanding of biosimilars among clinicians, patients, and payors
• Reducing gaming of FDA requirements or other attempts to unfairly delay competition

One of the elements, communication and education related to biosimilars, directly affects pharmacists and other health care providers. The FDA is committed to ensuring that health care providers are knowledgeable about biosimilar and interchangeable products and how they benefit patients. To this end, the FDA released the Biosimilar Education and Outreach Campaign in 2017. Updates were made to its biosimilars website, videos related to biosimilars/interchangeable products were developed, and a webinar on the regulatory framework for biosimilars was presented—with others being planned. The FDA considers the biosimilars action plan to be a dynamic document, and it plans on routinely adding to and updating it to “encourage innovation and competition among biologics and the development of biosimilars.”^10,11

The next several years will be exciting ones for the US biosimilars market. The high number of originator biologics coming off patent and the recently published interchangeability guidance should increase the number of commercially available biosimilars (ideally, interchangeable biosimilars) and result in more competitive pricing. With insulin being reclassified as a biologic in less than a year, some of the issues related to product availability and cost will hopefully be lessened.

Finally, remember that practices that have the potential to introduce error into the medication-use system, such as payer-driven biosimilar use, need to be examined closely and more suitable alternatives identified when necessary. ®

REFERENCES

• American Patients First. US Department of Health and Human Services website. hhs.gov/sites/default/files/AmericanPatientsFirst.pdf. Published May 2018. Accessed April 26, 2019.
• Furlow B. The state of biosimilars in 2019. Managed Healthcare Executive. February 6, 2019. managedhealthcareexecutive.com/biosimilars/state-biosimilars-2019. Accessed April 10, 2019.
• FDA biosimilar product information. FDA website. www.fda.gov/drugs/bio- similars/biosimilar-product-information. Accessed May 6, 2019.
• Payer-driven biosimilar requirements: New Institute for Safe Medication Practices. ismp.org/acute-care/medication-safety-alert-may-9-2019. Published May 9, 2019. Accessed June 17, 2019.
• Rosenthal M. The year of the biosimilar: new drug approvals 1029: part 1. Pharmacy Practice News. May 21, 2019. pharmacypracticenews.com/Clinical/ Article/05-19/The-Year-of-the-Biosimilar/54794. Accessed June 17, 2019.
• Biosimilars. Pharmacy Purchasing & Products. May 2018. pppmag.com/ article/2233. Accessed June 17, 2019.
• Soefje S. Considerations for adding biosimilars to formulary. Pharmacy Purchasing & Products. April 2019. pppmag.com/article/2368. Accessed June 17, 2019.
• Mulcahy AW, Hlavka JP, Case SR. Biosimilar cost savings in the United States: initial experience and future potential. Rand Health Q. 2018;7(4):3.
• US Department of Health and Human Services; FDA; Center for Drug Evaluation and Research; Center for Biologics Evaluation and Research. Considerations in demonstrating interchangeability with a reference product: guidance for industry. FDA website. www.fda.gov/media/124907/download. Published May 2019. Accessed May 13, 2019.
• FDA. Statement from acting FDA commissioner New Sharpless, MD, on policy advancements to help bring interchangeable biosimilars to market [news release]. Silver Spring, MD: FDA; May 10, 2019. www.fda.gov/news- events/press-announcements/statement-acting-fda-commissioner-ned-sharpless-md-policy-advancements-help-bring-interchangeable. Accessed May 13, 2019.
• FDA. Biosimilars action plan: balancing innovation and competition. FDA website. www.fda.gov/media/114574/download. Published July 2018. Accessed April 29, 2019.