Pricing of Biosimilars With Biologics and Other Biosimilars

Perspective on the potential effects of pricing of biosimilars compared with biologics as other biosimilars enter the market.

Transcript

Kyle Skiermont, PharmD: Al, no conversation about biosimilars would be complete, or we probably wouldn’t even be having the conversation, without talking about pricing. And I know for us, as a provider in our health system, 1 of the greatest or most appealing aspects of the biosimilar market, and as it’s developing and as it’s growing, is the potential to try to drive down some of the costs of these very, very expensive and very, very important and successful medications. For us, I think when they were first starting to come out, we thought, “Gosh, if there’s a 15% to 20% price difference, we’ll probably see a lot of uptake in the marketplace.”

Al Heaton, BS, PharmD, RPh: Surprise.

Kyle Skiermont, PharmD: Right. When they first came out, A, we didn’t necessarily see that much of a price difference, but, B, we definitely didn’t see the rapid uptake that we thought. With more and more coming into the market, what are your thoughts on what will be driving and what will happen with the pricing of these products?

Al Heaton, BS, PharmD, RPh: We’re beginning to see that now, where we have a couple of biosimilars to 1 reference product. And now there’s beginning to be competition among the biosimilars. We were hearing the same data, kind of seeing the same story with 15%, 20%. It wouldn’t be like a generic, which might be 80% to 90% off. So we were consistent in our thoughts and kind of comfortable in that.

But now that we have a couple of biosimilars for 1 therapeutic class, we are seeing more significant price reductions from these manufacturers. We are seeing rebates now beginning to rear their heads. They’re beginning to say, “OK, we’re going to drop our purchase price to the physician,” say the buy-and-bill scenario, “But we’re also going to rebate on the back end in the health care plan.” So it’s very much like the old days in how we structure our formularies as well.

We do have a couple of formularies for drugs on the medically administered side. We started that work actually back in 2016 and really haven’t used it. So we’re dusting it off now because now we do have competition. We do have multiple products in a number of therapeutic classes, so it makes sense to say, “Here’s a preference, and here’s a nonpreference product,” and structure different kinds of co-pays, coinsurance. Our employer groups who use high-deductible plans are concerned that a member meets their max out-of-pocket in 1 dose with some of these drugs. And they’re on the hook for all the rest of it. And most of these are chronic therapy. So it is causing us to restructure our whole benefit designs in terms of medically administered drugs.

In our plan, for example, right now any drug, anywhere, however given, goes through pharmacy for prior authorization, or step edits, or other utilization tools. So we’re getting a very quick handle on the utilization of these agents and their subsequent costs.

Kyle Skiermont, PharmD: Well, Al, I want to touch on something you said around the, kind of the cost, and the reference product at times. You know, that was what we were seeing when some of the first products came out. We would start to see discounts on the reference products, that we didn’t see that 20% to 30% of savings, or even a 5% savings, right? We were actually seeing the opposite, where the reference product was lowering its price enough or was giving us some other kind of a discount, where the price was actually lower than what we were seeing with the biosimilars.

So with recent legislation trying to make it harder to do—kind of pay for delay, you know, trying to get these products to the market more quickly—we’re optimistic that, similar to what you discussed, if there are multiple biosimilars in a given category or for a given reference product, it allows more competition just naturally. But also, I think that for all the things you just mentioned, the health plan has, in its arsenal, to try to lower costs for the health plan but also for the patient.

Al Heaton, BS, PharmD, RPh: We had a rheumatologist actually call us and say, “Hey, guys, did you know that the company dropped their price to me? I’ve got a better front-end discount, I have a better class-of-trade discount, I have a volume discount.” Now we saw that in the short term, early on. The danger for the manufacturer, of course, is if that becomes the new average sale price, and suddenly that’s a Medicare scenario.

So we saw that tactic early on. We’ve heard of pay for delay. I cannot pinpoint 1. But again, looking at the initiatives by the federal government and also by the number of states, they’re going to try to combat that. We saw that for years with generic manufacturers in the pay for delay. The stakes are even higher now with biosimilars, just in terms of the pure cost of the drugs.

Jonathan Ogurchak, PharmD, CSP: When you talk about the pricing impact when multiple drugs come to the market, this is the concept that everyone has anticipated as it relates to the utilization that’s been seen in the European Union. It’s a basic concept of economics, and we saw this initially with the first biosimilar approval in the United States. As that biosimilar came to market, why would you set your list price lower than you need to when you know the reference product is still making up the majority of the market share? And there’s likely additional competition coming later on. So early biosimilars saw about a 10% cost reduction off the reference’s list price.

Now, as we have multiple biosimilars for the same molecule come into market, we’re seeing a greater cost savings. It’s allowing for competition between both the biosimilar molecules as well as a reduction in the list price for the reference drug just to keep a market share. Now this is a model that has driven the EU market to be far more competitive. It not only demonstrates that we can curb wasteful spending by using the biosimilar drugs, but in a molecule like adalimumab, the European Union anticipates that it’s going to drop annual spending for that molecule alone by about 75%, just through the utilization of the biosimilars. So there’s a high likelihood that we will continue to see this be the trend as more and more of these molecules are approved by the FDA.

Kyle Skiermont, PharmD: Al, how does this affect being a provider. You know, I’m naïve to this. I know you guys operate a little bit differently, but from kind of a rebate perspective, or kind of the net price for the plan, does that have much of an impact when multiple products come to the market?

Al Heaton, BS, PharmD, RPh: It’s having an increasing impact because of our plan designs, where we have so many high-deductible plans, where the member really sees the cost of the drug. And they see it both on the pharmacy side and the medical side, and we have something called combined accumulators. So we transfer files back and forth daily. And they’ll hit their deductible, or they’ll get their max out of pocket. The 1 infusion can hit them right away, or it can leave them struggling. And most patients do not come into the physician’s office and expect to get a $5000 bill, on the average.

And so, the biosimilars will have good potential to decrease their cost. But in all honesty, when you think of these chronic therapies and repetitive dosing, they will go through their max out of pocket, and they will go through their deductible pretty easily. The plan sponsor, their employer, does benefit more because that does shift a little bit in terms of the cost. So they will pay less overall on, say, a yearly basis.

Kyle Skiermont, PharmD: Al, 1 of the things as a pharmacy, which we’re being challenged with, is that we finally now have multiple products coming to the marketplace. As a pharmacy we’re being required to then stock all those products because we may have a patient who needs 1 of the 3 based on formulary design. From a plan perspective, can you talk about how you handle that or how that goes when you’ve maybe got 1 on formulary and another hits the market?

Al Heaton, BS, PharmD, RPh: I think in a very simplistic perspective, we’re going to take this path of what we’ve done with generics as well. We now have a situation in which we have a couple of biosimilars out to a reference product. We will say these things are therapeutically equivalent. There are no outcome differentials. We will look, then, at the pricing on this particular product. We’re very cognizant of the fact that these are physician-purchased products under the buy and bill, so we will work with our physician networks that we have to say, in essence, “Here’s what we think. What do you think? What’s your best deal? Here’s our best deal. Let’s see if we can’t come together on that.”

And in our pricing and reimbursement mechanism, already we have this as priced very similar to the pharmacy benefits. We try to componentize the drug. We will pay them for admin fees, office visits, and what have you. But we’re trying to hold the drug prices steady.

Jonathan Ogurchak, PharmD, CSP: Let’s talk a little bit about this conversation about multiple products and what’s being required to stock on shelves in the pharmacy, and really how to build a pricing-and-reimbursement mechanism surrounding them. You know the pricing impact, when multiple drugs are coming to the market, is really being seen at the formulary level. For instance, in the 2019 formulary guidance from 1 of the nation’s largest PBMs [pharmacy benefit managers], it mentions that there are 11 specialty drugs where there’s either going to be a lower-cost brand or a biosimilar alternative with a lower list price that might be able to impact spend. This is really the first time that PBMs are starting to address that and the potential for cost savings through formulary management.

Another of the largest PBMs also said that there’s a biosimilar product that’s now preferred over the reference, even though there isn’t interchangeability guidance available from the FDA. Now, at the end of the day, the reimbursement component is going to be key to having a patient not only initiate it but also be maintained on therapy. So as the FDA continues to update its guidance, there’s likely going to be another driver related to that payer reimbursement that’s going to help to see a shift in the reimbursement.