Biosimilars, Employers, Medicaid, and Rebates

At last week’s World Biosimilar Congress, much of the content revolved around increasing access to biosimilars. That topic automatically invokes the controversial use of rebate contracting. Robert Popovian, PharmaD, Former Vice President, Govt Relations, Pfizer, asserted that access for oncology biosimilars is much greater than that for infliximab biosimilars because of the latter’s reliance on rebates. “Rebate contracting is a huge barrier,” he said, “and not just for biosimilars, too. Rebates equal formulary access.” Dr. Popovian believes that “employers are the lynchpin to really turning the tide [towards biosimilar uptake].”

Robert Popovian, PharmD

That will require employers to take a stand on the rebate issue. Employers are also not immune to the lure of rebate traps, however. For many pharmaceutical contracts, self-funded employers demand the lion’s share of rebates from their pharmacy benefit manager or health plan vendor.

Asked if we can wean our system away from rebates, Dr. Popovian said that if biosimilar price discounts result in extremely low  net prices, plans and PBMs will no longer be able to turn a blind eye—they will have to go for the lowest net price as well. He pointed out, “Price competition doesn’t exist today. It’s rebate competition.”

Dr. Popovian believes that better adoption of lower-cost products will be necessary, because without it, “there will be no space within the benefit design for gene therapies and other game changers.”

Medicaid Preferred Drug Lists Also Focus on Rebates That Hold Back Lower-Priced Biologics and Biosimilars

Inmaculada Hernandez, PharmD

The rebate issue has snarled the Medicaid program as well, according to Inmaculada Hernandez, PharmD, Assistant Professor, Pharmacy and Therapeutics, University of Pittsburgh. States are incentivized to use originator drugs with high list prices, that after rebates, have lower net prices than biosimilars. According to her 2020 paper published in the Journal of Managed Care and Specialty Pharmacy, prior to 2010, states only received rebates for drugs administered through the fee-for-service Medicaid program. Since the passage of the Affordable Care Act, states also received rebates through Medicaid managed care organizations (MCOs).

In order to be listed on states’ Medicaid preferred drug lists (PDLs), the manufacturer must provide significant rebates to the program. Dr. Hernandez illustrated the problem with the follow-on insulin glargine Basaglar® version of the originator product Lantus®. “All nine states that included glargine in their PDLs favored Lantus over Basaglar. We analyzed Basaglar use between states with only fee-for-service Medicaid, states with managed care plans not subject to PDLs, those subject to them, and states with MCOs where drug benefits are carved out through fee-for-service drug benefit.” The uptake of Basaglar was minimal in all situations, except in MCOs not subject to PDLs. “Medicaid PDLs prevented uptake of Basaglar by listing it as nonpreferred. These results reflect the strong financial incentives of rebates,” Dr. Hernandez concluded, and “more states are implementing PDLs.” This has continued implications for the uptake of Basaglar as well as biosimilar versions of insulin glargine yet to be introduced.

The Congress was held as part of the 2021 Festival of Biologics USA virtual conference.  

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