Recently there has been much talk in the news about a seeming new class of drugs known as “biosimilars,” along with their purported ability to drive down the costs of certain specialty pharmacy medications when they are approved. In this way they share some similarities with generic drugs that have contributed so much to helping reduce the cost of certain brand drugs. However, there is much about biosimilars that differs from generic drugs and that is the focus of this piece.
A Biosimilar is a “highly similar” version of a “reference product”
This aspect of biosimilars is best illustrated by an example. Remicade is the brand name of the first version of the biological medication infliximab. It began to be marketed in 1998. As such it is deemed the “reference product” for all biosimilar versions of infliximab that come to market, of which there are now two – Inflectra (approved in 2016) and Renflexis (approved in 2017). In order to win FDA approval, Inflectra and Renflexis had to prove that their purity, molecular structure, and bioactivity were “highly similar” to Remicade’s, the reference product.
A Biosimilar is a “biological product”
When any drug is described as being a “biological product” that always means some very specific things. Three of the most important things that it means are:
- The molecules of a biological product are significantly larger than a traditional drug, such as aspirin. If you’ve ever seen a picture comparing the size of the Earth to the size of the planet Jupiter, that is analogous to the size difference between biological and traditional drugs.
- Biological products are produced from living organisms, traditional drugs are produced by either simple or highly complex chemical reactions. Biological products produced by living organisms may vary slightly depending on many variables, while traditional products produced by chemical reactions are identical.
- Because of the potential variability in biosimilars, they are subjected to an even higher level of analysis and testing than traditional drugs are to ensure consistent quality, as well as “no clinically meaningful differences” from the reference product.
A Biosimilar has “no clinically meaningful differences” from a reference product
This simply means that, owing to the variability introduced by their method of production by living organisms, biosimilars may have absolute differences compared to reference products, but they may have no clinically meaningful differences with regard to safety, purity, or potency when compared to the reference product.
A Biosimilar is approved by the FDA after rigorous evaluation and testing
Prescribers and patients should have no concerns about using biosimilars in place of reference products because biosimilars meet FDA’s detailed standards for approval, they are manufactured in FDA-licensed and monitored facilities, and they are tracked as part of post-marketing monitoring programs to ensure on-going safety.
What does all of this mean to the cost of my benefits programs?
Unlike generic versions of brand drugs, pharmacists cannot automatically substitute biosimilar versions for the reference product. Biosimilar substitution requires doctor approval, so that makes accessing biosimilars somewhat more challenging. In addition, many biosimilars are processed under the medical benefit and not under the pharmacy benefit which creates two additional challenges:
- The handling of biosimilars under the medical benefit may be less transparent than the handling of drugs under the pharmacy benefit, and
- The medical benefit and the pharmacy benefit may have conflicting coverage rules and preferred products if coordination between them isn’t purposefully discussed and negotiated.
A Biosimilar may cost less than a reference product
While biosimilar products often come to market with a lower list price than their respective reference product, their launch often brings about an unexpected result. Reference product manufacturers often lower the list price of the reference product and/or increase rebate amounts in an effort to lower the net cost of the reference product in the face of biosimilar competition.Sometimes those changes result in the reference product having a lower net cost than the biosimilar product, so constant analysis and vigilance is required.
Financial opportunities & actions to take now
- Neupogen (increases white blood cell counts) now has two approved biosimilar competitors, Zarxio and Nivestym, however, Nivestym is not yet being marketed. Zarxio is currently about 17% lower in list price than Neupogen, while pricing for Nivestym has yet to be announced. All three products may be utilized under both the pharmacy and medical benefits. Determine which product has the lowest net cost and, if able, cover it and exclude the other two from your formulary. If you are unable to change your formulary’s composition, ask your PBM about limiting coverage to the lower cost benefit, either pharmacy or medical.
- Neulasta (increases white blood cell counts) now has one biosimilar competitor, Fulphila, that recently launched. Fulphila is about 30% lower in list price. Both products may be utilized under both the pharmacy and medical benefits. Determine which product has the lower net cost and, if able, cover it and exclude the other from your formulary. If you are unable to change your formulary’s composition, ask your PBM about limiting coverage to the lower cost benefit, either pharmacy or medical.
- Epogen and Procrit (increase red blood cell counts) now have one biosimilar competitor, Retacrit. Retacrit is about 57% lower in list price than Procrit and about 33% lower in list price than Epogen. All three products may be utilized under both the pharmacy and medical benefits. Determine which product has the lowest net cost and, if able, cover it and exclude the other two from your formulary. If you are unable to change your formulary’s composition, ask your PBM about limiting coverage to the lower cost benefit, either pharmacy or medical.
- Not all specialty drugs are biologics and thus we have several specialty generics available. Examples of specialty brands with generics available are Copaxone and Gleevec. These drugs can be auto-substituted by the pharmacy. Offering a generic specialty copay differential and mandatory generic plan design will help align your incentives with your members.
- You should ask your medical carrier and PBM what their strategies for promoting biosimilars are, and what they are doing to lower your cost when these products exist. We can help you with those conversations, and we can help to ensure that your pharmacy and medical benefits work together in a coordinated fashion to make the best clinical and economic decisions for both plans.
If you would like to discuss the specific ramifications of certain biosimilar products to your benefit programs, or any other aspects of your Pharmacy Benefit Plan, simply reach out to your Excelsior Solutions account team and we will be happy to quickly set up a call.
Bob has more than 30 years of diverse experience in the pharmacy industry. Over the course of his career, Bob has led clinical and PBM operations teams in successfully managing more than $4 billion in annual drug spend. This was also while limiting per-member-per-year spending growth to levels that have simultaneously drawn industry acclaim and consistently high levels of member and payer satisfaction.