Of the several pieces of legislation floating in the netherworld of Congressional action (or inaction) is the bill that was introduced by Senators John Cornyn (R-TX) and Michael Bennet (D-CO) early this past summer. Entitled the Increasing Access to Biosimilars Act of 2020, it directs the Centers for Medicare and Medicaid Innovation to create a shared-savings model for part B biosimilars. This proposal will likely be reintroduced next year, and a session at this week’s GRx+Biosimilars meeting delved into some of the forces behind it.
John O’Brien, PharmD, MPH, Managing Partner, South Capitol, said that when he served as advisor to the Secretary and Deputy Assistant Secretary for Health Policy at Health and Human Services, the department recognized that two major payment barriers existed for biosimilars. They were (1) rebate traps, “which will be really problematic for part D biosimilars when they exist” and (2) a misaligned incentive that pays doctors more for prescribing reference products than biosimilars. The use of rebates are ingrained in the system, he pointed out, and “as long as that profit motive exists for prescribers, it will be a challenge for biosimilars,” said Dr. O’Brien.
Jim Carey, Executive Director, US Health Policy, Merck,added that most of the biosimilars are 15% to 35% lower by WAC when first introduced onto the market. “If providers begin to use biosimilars and share in those savings, the idea is that they will adapt their behavior. If there is no savings, there is no sharing.”
Since there is limited ability to address buy-and-bill medications from the health system perspective, a biosimilar shared-savings model has been suggested. In a previous article, we addressed this question from an administrative standpoint, as in: “Is it practical?” Dr. O’Brien emphasized that a potential shared-savings model to biosimilars would have to pass muster with actuaries at CMS. They will want to know whether the savings accrued will be worth the effort. Only then would CMMI be given the challenge of creating a demonstration project.
Dr. O’Brien cited a report from Milliman, indicating the savings from a biosimilar shared savings demonstration may not be huge. He stated that Milliman’s calculated accumulated savings by 2029 to the federal government will be $1.9 billion to $12.5 billion, while paying bonuses to physicians of $3.4 billion to $7.4 billion. This may be a close call. We were unable to find the Milliman analysis, so we cannot verify the assumptions on which it is based.
Mr. Carey noted that regardless of whether the shared-savings model is based on a fixed percentage of savings going back to the physician or on some other calculation, “we model significant savings to the system.” He stated that “the results of these economic models are not yet published but will be soon.”
The idea of shared savings for biosimilars seems as enticing as it does for general medical care. And Dr. O’Brien said, “The momentum for this type of approach is growing. Personnel is policy in the fed government.” In a new Biden administration (even without a Democratic majority in the Senate), he expects some Obama alumni to be part of it, and they were behind the push for biosimilar savings in the first place. “Even the folks who are there now, generally support policies like this,” he said.
In Other Biosimilar News…Samsung Bioepis released the one-year results of its phase 3 trial of SB11, a biosimilar of ranibizumab, at the American Academy of Ophthalmology 2020 virtual meeting. This study confirmed the interim results, which were reported in May 2020. “The 52-week data confirms SB11 has equivalence in efficacy and pharmacokinetics as well as a comparable safety and immunogenicity profile with the reference product,” stated Hee Kyung Kim, Senior Vice President, Samsung Bioepis in a press release. The biosimilar maker filed for approval with the European Medicines Agency in October, and an FDA filing on SB11 is expected in the next few months.
One thought on “Thoughts on the Savings From a Biosimilar Shared-Savings Model”
Thanks for this article. I would point out to an important fact which we have learnt from the EU experience: if the ‘model’ is only focused on sharing ‘money’ between the system and the physician (prescriber), this may not be sufficient. the other important actor in the system is the patient (and all the other HCPs in the chain of care). In Ireland, an incentive for biosimilar prescription was introduced (500€/prescription for the physician). The results? well, not much despite the fee being very substantial (compared to a normal doctor’s visit). The main issue: the end user of the medicine was not involved in the set up of the system and is actually not seeing any tangible benefit.
Other more virtuous systems have indeed shared the savings between the healthcare system and eg the hospital care unit (eg rheumatology department). This was transparently announced and the department is then free to spend the new budget into improvements for the department (ie, not just by raising physicians revenues but considering equipment, staff, or premises upgrade or even new medicines prescription as appropriate) which for the most part will be directly linked to improvements in patient care.
In Canada, the provinces switching programmes also very transparently announced exactly how the savings would be reinjected into more care for patients: broadening screening programmes, financing more patients receiving a biologic or allowing access to new medicines which were to date out of reach (prohibitive costs).
So shared-savings yes, but benefit sharing is more likely to succeed as it impllies a broader reflection on where the needs are and how the released budget will serve to answer those needs.