In May 2016, I interviewed Steven Avey, Vice President, Specialty Pharmacy, MedImpact, for the Center for Biosimilars. That conversation speculated on the potential for biosimilars, having only recently experienced the launch of the first biosimilar in the United States, filgrastim-sndz. At the Academy of Managed Care Pharmacy’s 2019 annual meeting last week, I sat down with Steve once again to gain his perspectives on changes in the biosimilar environment.
Biosimilars Review & Report: Congratulations on winning the Academy of Managed Care Pharmacy Foundation’s Steven G. Avey Award! This is sort of a double honor, first having the award initially named after you, and then many years later, winning it yourself!
Steve, you’re considered one of the real thought leaders in managed care pharmacy. What do you consider to be the main challenges facing your colleagues today?
Steven Avey, PharmD: Thank you. There are many real challenges today. First of all, we have the potential for drug rebates to go away. It’s clear that something is going to be done (and we don’t know what that is), and it could apply not only to Medicare Part D, but possibly Medicaid and commercial. We will need to wait and see.
Another challenge relates to the Administration’s emphasis on reducing list prices for drugs. This will not only influence the industry, but managed care pharmacy as well.
That challenge is part of the ongoing concern about the cost of specialty medications (and continuing price increases), and the greater call from payers for a better understanding of the value that they’re getting from these medications. Are the people who are taking specialty medications actually getting real benefit?
BR&R: In addition to payers, employer purchasers and others have been requesting a better understanding of the value of specialty medications. This has been sought for 10 years or more. Are we any closer today in getting a grip on this?
Avey: I think we are. Many PBMs are getting more involved in data management regarding these medications. The better we get at analyzing the medical and pharmacy data together, the closer we will get to understanding the value of these specialty medications.
To give you an example, a PBM today is basically reviewed and assessed on what its financial picture looks like—are you able to bend that specialty cost trend? But if you don’t know what these specialty agents are really doing for the patient population, how can you tell if covering them is the right thing to do? In order for us to know that, we have to evaluate the medical and pharmacy data together and focus on the total cost of care of that individual member. Over time, you can say that our costs are either going down or not. Then, we can ask the question, am I using the right agent or should we be using those very expensive drugs for these patients?
Given the lack of the medical and pharmacy data, we just don’t know. That’s one of my greatest frustrations.
BR&R: Let’s switch to biosimilars. Do you believe that if the rebate safe harbor is removed for Medicare, payers will also stop seeking them?
Avey: Yes. It will definitely trickle into the commercial side. I can see a day in the not too distant future where we don’t rely at all on rebates. It will be a new world focused almost solely on list price reductions.
BR&R: Will that give biosimilar manufacturers an edge?
Avey: It will be a boon for biosimilar makers! When the rebate goes away, then all that remains is the list price. That will be a huge advantage for biosimilars.
BR&R: Well, if I’m a reference biologic maker, whose R&D costs were paid off a decade ago and whose profit margin is extremely high, I can still lower my WAC price considerably to compete with the biosimilars, right?
Avey: They can, but they will have to compete with three or even five biosimilars who do not have to spend millions of dollars on advertising or promotions like the innovators do to keep their brand’s exposure and visibility high. The innovator drug maker will do everything possible to avoid losing that high market share.
Now, I haven’t seen much of this in print, but payers are angry—they’re angry at these 10% to 20% increases in costs each year from the innovator drug manufacturers. As a payer, if a biosimilar is available, why would I want to support that innovator maker, who has dramatically raised costs for the last 10 years? That gives biosimilar manufacturers the advantage: “Hey, I’m the new guy helping you to reduce costs. How about supporting me instead?” I think many payers will act on this message.
BR&R: In our conversation in April 2016, that was the gist of what you said.
Avey: And I haven’t changed my mind.
BR&R: I asked, how soon are you going to drop the AbbVie contracts (when there was some expectation that biosimilars would be available before 2020), and you said, “As soon as humanly possible.” And you weren’t the only one who said this.
Avey: Absolutely. And now the timeline has been extended to 2023. This just made us all the more angry, because this is because AbbVie filed 100 patents on Humira®, which overwhelmed what the BPCIA was intended to address. The result is that AbbVie is going to make $16 billion a year (and more each year) for 4 more years before we’ll be able to see some competition for their market.
BR&R: Genentech (Roche) is coming out with subcutaneous forms of Herceptin® and Avastin®. Will these introductions change the way you position the biosimilars for these two cancer agents, when they are finally launched?
Avey: We’ve dealt with this 15 years: It’s really no different than what we’ve seen occur with conventional agents. Consider a sustained-release form of a brand that is approved around the time the generic for the immediate-acting formulary is launched. You look at the new product and ask, what does that premium in pricing buy us? Is it a site-of-care advantage? Maybe, but does it really offset the cost of using that more expensive agent? We generally decide to cover the lower-priced (albeit it not as convenient) dosage form. With biologics, the cost differential between the new agent and the biosimilar is very large, and there is very little advantage for the new subcutaneous formulation.
BR&R: We are seeing something similar playing out right now with pegfilgrastim. Most of the market has moved to the use of Amgen’s on-body injector OnPro®, and the biosimilars are being launched using prefilled syringes. To the extent that payers are interested in eroding OnPro’s marketshare, assuming the price difference is substantial, OnPro does represent a bit more patient convenience. Some payers may be thinking this way. To the extent that this will happen may predict some similar effect for the trastuzumab and bevacizumab markets.
Avey: You have to remember that payers are receiving a lot of criticism that we’re not doing a good job of supporting the biosimilars. Quite frankly, the biosimilar drugs that have been approved up until now are really covered under the medical benefit. We have a little trickle that can be covered under the pharmacy benefit. Payers have only so much bandwidth. They know that under present conditions, a new biosimilar has to build market share from scratch. Some have said, “You know, it’s not worth the effort. We have other fish to fry. We’re not going to get too excited yet about these products.”
We have an HMO client that did an amazing job moving market share away from Neupogen® to Granix®. But they own their prescribers and they can easily analyze the combined medical-pharmacy spend. They saw a dramatic lowering of expenditures.
BR&R: Are you expecting biosimilar products for trastuzumab and bevacizumab to be managed under pharmacy?
Avey: We see those drugs under the pharmacy benefit now. Remember that those drugs have a greater utilization than the other biosimilars that have been launched to date. I do think that they will attract a lot of attention. And if the rebates do go away, that takes the market share question right off the table. The biosimilars will do quite well.
BR&R: The four-letter suffixes: The FDA recently came out with an updated guidance, saying that the agency will no longer consider adding four-letter suffixes to previously approved reference agents. However, they will continue to add suffixes to newly approved biosimilars and interchangeable agents.
Avey: Everybody is trying to figure out what’s next here. When we look at biosimilars’ pharmacokinetic information, one biosimilar is going to be somewhat different than another. I don’t think it will be an insurmountable problem, but just a headache. We’ll just have to be more in synch with our specialty pharmacies to ensure that they stock and dispense this one biosimilar with this one four-letter code.
BRE&R: Have we made any progress from an educational standpoint here? Do providers and patients still think that a product with a four-letter code is not comparable to the originator brand? What is the level of discomfort today?
Avey: I’ve watched this carefully over the last year. I don’t think there will be huge angst from the payer. The prescribers and to some degree the patients that will need more educating to make them feel more comfortable. We will need better educational materials and communications for them. The situation is really no different than when we started instituting the generic substitution laws. We heard a lot of claims that docs will never prescribe generics, patients will never take them. We had to do a lot of educating to alleviate their fears, and to help prescribers understand that these drugs work like the brands work. At the end of the day, I don’t think that this will be a long-term challenge.