In part 2 and the conclusion of our reporting on last week’s Access 2025 meeting, we cover the effect of the new private-label channel in the biosimilar marketplace, implications for the FDA of the Department of Government Efficiency (DOGE)’s early retirement initiative, and other Trump administration actions.
Private Labeling as a Mechanism for Better Biosimilar Access, PBM-Revenue Generation, or Both?
Craig Burton, Senior Vice President of AAM and Executive Director of the Biosimilars Council, interviewed Joshua Fredell, PharmD, Senior Vice President of PBM, Payer, & Life Sciences Solutions, CVS Health, on the trend towards private labeling, initiated by his PBM. Dr. Fredell said, “There’s a driving force behind what we do with our payer clients, taking care of their members’ journey. Can it meet lower costs for our clients and be adopted widely? We looked at the adalimumab space, including whether patients would accept it and whether docs would prescribe it. What about net cost? How do we get to the price point customers want?”
The immunology category remains a key concern of employers, said Dr. Fredell. “Employers feel the autoimmune category acutely with drugs on the pharmacy benefit. Inside the specialty drug spend, about half is associated with the autoimmune category. The employer sees it in every quarter.”
In a separate session, Doug Long, Senior Vice President of IQVIA, remarked, “Humira lost business last year, mostly to the private labels,” and in an interesting aside added, “private-label Hyrimoz was the best new launch of the year.” [It should be pointed out that Hyrimoz was originally launched in 2023, and not until the private-label version launch in April 2024, did it amass significant utilization.]
Mr. Long emphasized the significance of adalimumab biosimilar competition: The immunology category, while still the number 1 specialty drug expenditure, grew at a slower rate last year, at 11.6%, almost entirely due to the lower adalimumab pricing. Humira expenditures (based on nondiscounted spend) was down 19.3% for the year. However, AbbVie’s immunology portfolio, including Humira, Skyrizi, and Rinvoq, has been expanding, to close to $50 billion worldwide, driven primarily by revenue growth in the latter two agents.
Will private labeling will become the norm for pharmacy benefit biosimilars, and could it find its way to the medical benefit as well? Dr. Fredell responded, “It will be one of the models used continually going forward. Private labeling could be considered for the medical benefit, but most likely for drugs that start out covered under the medical benefit and then transitioning to the pharmacy benefit.”
Murray Aitken, MBA, Executive Director, IQVIA Institute for Human Data Science, doesn’t see the trend toward private labeling migrating into medical benefits. “It’s a different set of [reimbursement] mechanisms in the medical benefit,” he explained. However, it does represent “a new channel, if you like, to pull biosimilars through. The dynamics are not yet clear to us. How it looks from a biosimilar manufacturer’s perspective is different than our own perspective. Exclusive arrangements are not really beneficial to competition. Is private labeling the future? I don’t think it is much more than a rearrangement. It’s clear that PBMs view private labeling as a way to make more money,” said Mr. Aitken.
There are many who wonder that the trend toward private labeling does not support sustainability of the biosimilar marketplace. “We want to see a robust and long-term biosimilars market,” commented Dr. Fredell. “I can’t see how we can deliver an affordable healthcare benefit without it. But how do we make it sustainable?” he asked. “I’m not sure how this plays out, but we need to try to ensure that sustainability.”
Employee Counts, the FDA, and Drug Approvals
The effort by Elon Musk’s DOGE to reduce headcount at federal agencies may also affect the FDA. According to Scott Gottlieb, MD, former FDA Commissioner during the first Trump Administration, there are about 18,000 employees and contractors at the agency, and about 15,000 are full-time workers. “With the offered early retirements,” he predicted, “I can see 2,000 to 3,000 departures. I also think if [Robert F. Kennedy, Jr] is confirmed, this could cause more departures, because many do not share his views.”
Dr. Gottlieb, currently Partner, New Enterprise Associates, continued, “Will that have an impact on PDUFA dates and guidance releases? Absolutely. Also, the communication freezes had brought guidance issuances to a halt.” [This is a complex area, however, because FDA infrastructure for its pharmaceutical approval process is partly funded through industry-paid pharmaceutical and biosimilar user fees (under BsuFA and PDUFA). To the extent that these resources can be cut–and thus directly undercutting the approval process–is not yet known.]
User fees paid directly by industr,y do not directly fund another extremely important FDA function relating to drug approval. Scott Biggs, Director of Supplier Services, IQVIA, pointed out that at the time of the pandemic, the FDA was down 225 manufacturing facility inspectors. This was largely remedied afterwards with new hiring, but if these inspectors are let go or retire, commercialization of products could be slowed (in addition to a reduced ability to maintain the quality of the supply chain).
More Trump Administration Policy Concerns
For those concerned that the Supreme Court’s reversal on providing agency deference in rulemaking and decision making will affect the FDA, Dr. Gottlieb explained, “The FDA did not rely on the deference the court took away. We did things through regulations not guidances. I don’t know that the Office of Management and Budget will give the FDA any deference. That would be a real impediment to putting out policy.”
Dr. Gottlieb also pointed out that the question of tariffs affecting active pharmaceutical ingredient (API) supplies may be avoided in practice. He stated, “Generally, the APIs do not come directly to the US. Instead they may go to India or some other country first [where the drug manufacture is completed].” In that case, the tariff from China would be avoided.
Alex Azar, MD, former Secretary of HHS under Trump, added that there is a reason that APIs are not manufactured in the US. “APIs are made outside of the US because it is cheaper there. We don’t use a single bolt on a US aircraft carrier that was made in China because of security concerns. We pay more for the privilege of having these bolts made in the US. The same economics apply to pharmaceuticals: We would have to be prepared to pay more for APIs made in this country.” Other speakers cautioned that it would take many years to build up API manufacturing capacity in the US.
This may be a big legislative year, said Paul Heldman, Research Analyst, Health Policy, Nephron Research. “But there is a big difference between rhetoric and action. I’m not sure about Medicare drug price negotiation, part of the Inflation Reduction Act that the Republican-majority Congress would like to repeal. The President himself seems to focus on the lower price of drugs in other countries,” he said. Dr. Azar also believes that Congress might get rid of the negotiation provisions of the IRA, but not the administration. “Trump probably thinks he’s a better negotiator than Biden was, and could maybe do a better job,” said Dr. Azar.
In Congress, “there are about 20 Republicans in the House who are so dedicated to fiscal cuts,” according to Dean Rosen, Partner, Mehlman Consulting. He added that “they are not only willing to take hostages, but also to shoot them!” He fears that federal cuts to Medicaid will affect high-population states greatly, and votes may be lost in New York, California, Texas, and others. Mr. Rosen believes that Trump will be able to sell some of his initiatives, despite the long-term damage they could do.
