A Modified View of Price Behavior in the anti-TNF Category

A couple of undercurrents are apparent in the payer market when it comes to biosimilar competition. A project that I worked on recently through the Health Payer Council revealed how the thinking of pharmacy and medical directors has evolved in the last few months.

Web image 2I was reminded that in the early days of anti-TNF drugs, series of price increases were fairly common. And this gets to an important point: the introductions of a new anti-TNF biologic did little, if anything, to blunt the effects of new price increases. Why then should I expect that to be the case with biosimilar introductions?

I wrote in February that pharmaceutical companies often raise their prices when new generic competition is anticipated, in an effort to optimize revenue before the insurers and health plans inevitably switch to generic coverage. And these revenue hikes can be eye opening and frequent. For example, the Elsevier Gold Standard Drug told us that Amgen has been hiking the price of Enbrel impressively over the 18 months: 4 hikes at an average of 8%, for a cumulative price jump of 36.7%. I said at the time that perhaps payers can expect the introductions of the first anti-TNF biosimilars to guard against this sort of price-hiking behavior by the manufacturers of innovators—this would be the quickest way to expand the spread in pricing and persuade managed care organizations to move as quickly as possible to the biosimilars.

My most recent input from payers indicates that they are less concerned about this behavior, because they actually apply only to wholesale acquistion cost or average wholesale prices. In other words, price jumps like these will not affect contracted pricing to much extent, especially in contracts with price guarantees.

Now we are nearing a situation in which biosimilars for Enbrel®, Humira®, and Remicade® may all be on the market before mid-year 2017. Price competition for the anti-TNF inhibitors may well be on the contracted business, and it is distinctly possible that WAC prices may continue to rise. “Once biosimilars are on the market, the fight will be over net price and the ability of biosimilars to shift market share away from brands.  At that point, brands are likely to step up their rebating gains to try and outflank the biosimilars,” said one pharmacy director.

Something else that may affect competition is the question among the anti-TNF brands. Of course, some are infusibles and others are self-injectable, which could discourage switching. More importantly, perhaps, is the payer’s suggestion that if a prescriber’s go-to choice of Humira, for example, doesn’t provide the expected benefit, that physician is more likely to move to a therapy with a different mechanism of action—not another TNF inhibitor.

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