Budget Impact Modeling: Good Information but Don’t Take Them Literally

At the recent virtual conference of the International Society of Pharmacoeconomic and Outcomes Research, two budget impact models were presented in an effort to demonstrate potentially sizable benefits of biosimilar coverage by health plans. The studies were supported by Pfizer, manufacturer of the two biosimilars in question (Zirabev® and Ruxience®). Both were authored by the same research team, using similar assumptions.

In the bevacizumab study, the research team stated that a 10 million member plan could save more than $14.7 million cumulatively by year 3. For the plan, that translates to $0.12 per member per month or $20,791 per patient per year. This assumes a transition from 23% biosimilar utilization in year 1 to 70% biosimilar utilization in year 3 across bevacizumab indications. They also assume a steady 20% difference in net costs.

I don’t doubt the accuracy of the estimates, but the devil is usually in the assumptions, which is where potential savings often become narrower or less likely to occur in real life. To the authors’ credit, they did include a sensitivity analysis, calculating savings from 15% discounts to upwards of 40%. The problem is that the present net cost difference, based on Avastin®’s average sales price, and Pfizer’s stated wholesale acquisition cost at launch in January, is only 12%. Like in the budget impact analysis, this doesn’t include the existence of any rebates by either Pfizer or Roche (the maker of the reference product). At a 15% net cost difference, the authors estimate savings with the one biosimilar to be $11.0 million—still a significant amount over 3 years. After only 1 year, this savings would be $2.6 million.

On the hopeful side, when plans do decide to cover biosimilars, they often charge forward to gain greater biosimilar market share rapidly. Kaiser Permanente, for instance, switched utilization of bevacizumab biosimilars (prior to Zirabev’s launch) over almost all of their population within only 1 month in 2019. And when this type of switch occurs, you can bet that the rebates provided by the biosimilar manufacturer will create a net cost difference of greater than 15% or 20%.

With all of this considered, the best guidance a budget impact model can provide is directional. That said, the common refrain from payers has been “I’ve never seen a pharma-sponsored budget impact study where the company’s drug didn’t save money!” Manufacturers are almost expected to provide them though, and this type of modeling can describe under what conditions savings might accrue. However, your actual experience will almost never reflect these conditions!

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