We have spent considerable digital space on the lack of uptake of the part D (pharmacy benefit) biosimilars and its potential consequences for future biosimilar development. We have contrasted that with the overwhelming success of the part B (medical benefit) biosimilars in terms of cost savings and dominant biosimilar uptake in those drug categories. Yet, the part B biosimilars may also be facing their own unique threats, according to a webinar hosted by IQVIA on March 5.
Funded by Pfizer, the webinar focused on the infused biosimilars covered through the medical benefit, expanding on the findings of the IQVIA report released in January. The main message is that as average sales prices (ASPs) keep falling for these buy-and-bill agents, two dangers arise: (1) the manufacturers stop producing biosimilars because profitability is erased and (2) the providers who purchase them may begin losing money on the reimbursement of these drugs. Whereas the first is fairly straightforward, the second addresses “provider net-cost recovery.” The problem lies in the fact that drug rebates are given to the payers, not to the providers. As a result, the providers may then pay more to purchase the product than the amount (based on ASP) they are reimbursed by the payer.
The Implications for Manufacturers of Falling Biosimilar ASPs
Conrad Amani, an author of the IQVIA report, pointed out that the ASP of these part B biosimilars dropped an average of 50% three years after launch. However, “the ASP continues to fall because of competition, and at what point does it no longer make sense to continue to manufacture the agent?” he asked. It seems we’re seeing that with Sandoz’s Ziextenzo® pegfilgrastim biosimilar, which has not been included in the Centers for Medicare and Medicaid Service’s (CMS’s) ASP list for the past two quarters. Apparently, Sandoz has already made this decision, according to Mr. Amani, and “if this occurs elsewhere, it could impact competition and the savings potential of part B biosimilars.”
“We worry about an ASP death spiral,” said Neal Lambert, Senior Director, Pricing Strategy, U.S. Oncology Biosimilars, Pfizer. “Unfortunately, when that happens, it is no longer profitable to provide the product. In that case, it is time to start thinking about ways to realign incentives and the reimbursement system.”
The Implications for Providers of Falling Biosimilar ASPs
Jeff Patton, MD, CEO of OneOncology, represented the provider’s viewpoint. He said, “When the Avastin®, Herceptin®, and Rituxan® biosimilars were approved, we embraced them. We were very confident that they would provide good outcomes. Over time, the ASPs have dropped because of discounts from the manufacturer to the payers.” Dr. Patton pointed out that “the government didn’t fix this problem in the generic world 11 years ago, and [the reimbursement system] doesn’t work for biosimilars today. I hope the government fixes it. The payment methodology does not lead to long-term viability.”
An oncology pharmacist working with providers at the Mayo Clinic, Scott Soefje, PharmD, added, “We, too, had no issue with oncology biosimilar uptake. We saw significant cost savings in a very short time. Now we see ASP erosion, and our net profit disappearing.” He continued, “And our net profit on drugs supports so much at our institution. The whole system is broken. CMS needs to rethink this, perhaps by taking the rebate out of the reimbursement equation.” Dr. Soefje mentioned the issue of provider preferring the reference product or excluding the biosimilar “probably because of the rebates they receive from manufacturers. There’s so much pressure from payers. We need parity in reimbursement.”
“Yet another implication of the falling biosimilar ASPs in part B is Medicare’s drug packaging threshold,” according to Steven Lucio, Senior Principal of Vizient. If the ASP for a drug without pass-through status fell below $140 for 2024, it can no longer be charged separately from other bundled provider services, included instead within the bundled price. At that point, providers are compelled to use the higher priced agent (i.e., the reference product) to ensure separate reimbursement for the drug, he explained.
Mr. Lambert remarked, “We need all input from all of the stakeholders. We don’t want to end up solely with an innovator product, because that will result in increased ASPs each quarter. We need cooler heads to prevail. It all worked until the ASP began to drop so precipitously. When the ASP drops to a certain price, can you explain to stockholders why you’re still in that market?”
It does seem that the economic success of the biosimilar market for medical benefit drugs has created serious issues that could, in the longer term, gut the competitive market. As Dr. Patton summarized, “The unsustainability is driving a discussion. We would love to have rebates and discounts come out of the [ASP] calculation. It was designed for branded products, not for generics or biosimilars. They need to be treated differently.”
In Other Biosimilar News
Biocon Biologics has settled with Johnson & Johnson, earning it a launch date of February 2025 for its ustekinumab biosimilar candidate Bmab 1200. The manufacturer acknowledged also in a press release that the FDA accepted its application for approval of Bmab 1200 in February, which may align with its negotiated launch date.
