Unless the pharmaceutical rebate is applied at the time patient cost sharing is calculated, there may be no patient incentive to ask for a biosimilar. It’s all in the timing of the drug rebate.
Consider the scenario in which a patient with inflammatory bowel disease is prescribed infliximab by the doctor. Let’s use Health Affairs figures from 2019: The list price or wholesale acquisition cost (WAC) of Remicade® was around $1,175 per 100 mg vial in Q1 2019. The net cost to plans and insurers was approximately $500 after discounts and rebates. It is well known that the average sales price of Remicade is higher than that of the biosimilars. The difference is primarily made up through rebates from Janssen Biotech.
The drug rebate monies are traditionally transferred after utilization of the product, on a periodic basis (e.g., monthly or quarterly), well after the patient has had to pay the cost share. In the case of a drug covered under the medical benefit, this rebate is somewhat more difficult to apply at the time of cost share billing compared with at a pharmacy counter. When the bill comes, the patient is charged a cost share (10% or 20%, for instance) based on whatever the WAC or simple discounts off the list price has been agreed to by the patient’s plan or insurer. That is, further price reductions resulting from the rebate are not considered in the cost sharing amount.
For the sake of argument, let’s use the following figures:
Remicade WAC cost per 100 mg vial: $1,175
Price to plan after simple 20% discount: $940
Price to plan after additional 40% rebate: $564
The patient who uses only one vial of Remicade will be billed a cost share of $188 ($940 × 20%). If the rebate was applied to the patient’s 20% co-insurance, the out-of-pocket cost would be reduced to $113. Now, multiply that by 3, because an average patient will require 3 vials per infusion. That will likely send the patient over the plan’s maximum cost-sharing threshold, which might be $200. Otherwise, the cost difference between cost sharing with rebate versus without rebate considered would be $225 per administration in our example.
However, rebates are not the only factor detrimental to encouraging patient choice of a biosimilar. As discussed in October 2019, the ease of accessibility of patient copay coupons from the manufacturer can erase the likelihood that a patient will ask for a biosimilar over a reference product. These coupons are available from biosimilar makers and reference drug manufacturers alike. They knock down out-of-pocket costs to nominal amounts (often $5 or less per infusion) compared with full co-insurance.
One answer is instituting a biosimilar tier with far lower patient cost-sharing. Otherwise, pharmaceutical rebates will continue to conflict with a patient’s request for a less-expensive alternative to the reference product.