For years, we have been hearing about the promise of biosimilar drugs to bend the healthcare cost curve in a meaningful way. And though there have been isolated successes since the first US biosimilar approval in 2015, regulatory red tape, legal action, and the onset of the COVID-19 pandemic combined to dam the flow of biosimilar competition into the marketplace.
But with the expected availability in 2023 of more than ten biosimilars for some of the highest-grossing drugs, most notably Humira, the dam is about to burst. Their market entry elicits important questions for plan sponsors: Are your PBM contracts structured to take advantage of opportunities that these new products may present? How will PBMs integrate these products into their formularies? What should your members know about these products and potential changes to their coverage?
To help groups and brokers get ready for the dynamics these products are likely to introduce, Truveris experts offered specific strategies in a recent webinar, “The Rise of Biosimilars: How Payers Should Plan for 2023 and Beyond.” Highlights of the perspectives shared are captured in this article.
Understand the challenges and opportunities presented by biosimilar drugs
The FDA defines a biosimilar as “a biological product that is highly similar to and has no clinically meaningful differences from an existing FDA-approved reference product.” This means that the safety and efficacy of the biosimilar are the same as that of the reference drug.
Biologics and biosimilars are produced from living cells. This method of manufacture distinguishes biosimilars from generic drugs, which are exact chemical copies of a molecule — and it contributes to the relatively high price of biologics. A biosimilar, however, does not go through the same lengthy R&D and FDA-approval processes that a reference biologic does. That creates modest cost-saving opportunities when a biosimilar is launched which allows for the drug to be priced in a more advantageous way to the plan and member.
Additional savings may be realized as more competition on the reference product takes hold, as seen with ASP trends of infliximab and its biosimilars.
Because biosimilars are not bio-same, a prescriber must sign off before most biosimilars can be substituted for a reference product. That’s where interchangeability comes in. This is an FDA designation that allows pharmacists in most states to substitute an interchangeable biosimilar for a reference drug before dispensing it.
As of October 2022, only three biosimilars on the market had interchangeability status. But several of the biosimilars that will reach the market in 2023 are expected to carry this designation.
What’s more, these products will compete not with drugs on the medical benefit — as have nearly all biosimilars to date — but with costly biologics available through the pharmacy benefit.
When you consider the amount of dollars that may be left on the table, it’s critical for plan sponsors to prepare for the arrival of these treatments now.
Take action: 3 biosimilar readiness strategies for plan sponsors
1. Examine your pharmacy benefit contract. “I find that contracts are sometimes overlooked as one of the most impactful drivers of change,” says Adrienne Trudell, PharmD, who as Vice President of Truveris’ Pharmacy Solutions Team, works with brokers and employers to manage their pharmacy strategies and assists with contract negotiation and implementation.
Some of the dynamics around new market entrants may be complex, Trudell points out. For instance, Semglee, a biosimilar insulin with interchangeability status, has a two-tier pricing structure with and without rebates. Does your contract contain financial guarantees that would enable you to benefit from new competitive tactics?
2. Ask your PBM if and how it plans to manage these products. Some PBMs have taken a wait-and-see approach to biosimilars, while others have embraced products that offer a lower net-cost option after formulary- and utilization management strategies (like preferred placement or prior authorization) have been implemented. Joe Thomas, PharmD, MPBA, Clinical Director at Truveris, says the question about a PBM’s approach is especially relevant, given the near-term timeline for biosimilar launches.
“The biosimilar landscape will soon include competitors for some of the most utilized self-injectable medications currently under the pharmacy benefit,” says Thomas, who has 15 years’ experience in pharmacy and clinical advisory roles for several chain pharmacies and PBMs. “The window for a wait-and-see strategy is closing. We are all in search of official PBM guidance for the future.”
3. Understand how decisions will affect the member experience. It will be important for a PBM to manage your beneficiaries’ expectations as new products become available. This is especially true if a formulary strategy winds up being disruptive.
This raises several questions, such as: How will a PBM educate members about their options? If a biosimilar is placed at a formulary advantage over a longstanding reference biologic, how will your plan communicate this to members? Will members with existing scripts for a reference product be grandfathered? For how long? How will the PBM manage substitution at the pharmacy?
Many experts expect 2023 to be a watershed year in the rise of biosimilars. By familiarizing yourself with your contract elements, identifying PBM partners that can help you navigate industry trends, and working with a PBM partner that can craft a biosimilar strategy customized to your needs, you’ll be well prepared for this complex and ever-changing environment.
Truveris is a leading digital health company focused on delivering truth and clarity in pharmacy. Truveris’ proprietary technology, coupled with deep pharmacy expertise, helps to build a more efficient market that maximizes choice, accessibility, and prescription drug affordability. Our solutions provide the insight and knowledge to help people lead healthier and more productive lives.