The Festival of Biologics USA meeting wrapped up last Thursday, and the emphasis was all about biosimilar sustainability, and the various factors threatening it. These included not only challenges but the opportunities that will be lost should we continue on our present path. In this post, I report on some of the most salient sessions, with my own thoughts added in.
BIOSIMILAR SAVINGS AND THE OPPORTUNITY IN OPHTHALMOLOGY
Ten years after the approval of the first biosimilar, Zarxio, biosimilars have contributed $36 billion in savings to the health system, stated Dracey Poore, MSN, Director of Biosimilars, Cardinal Health. She reviewed elements of Cardinal Health’s latest report.
She emphasized the need for biosimilar education, “which doesn’t end, and must continue to grow,” because biosimilars are moving into new areas—citing ophthalmology and neurology. This year’s aflibercept launches should eat into the $6.4 billion in WAC sales racked up by Eylea last year, but she worries that education is still a potential barrier. Ms. Poore cited a retina specialist, who claimed that “only one patient out of every 100 knows what a biosimilar is.”
I wonder, however, whether ophthalmology is one area where patients don’t really need to know what form of aflibercept is being injected into their eye. They never touch the medicine, and if their out-of-pocket cost for the reference product or the biosimilar is the same, does it matter? With this largely buy-and-bill market, provider education seems to be a greater issue. The existing use of compounded bevacizumab (even biosimilar bevacizumab), biosimilar ranibizumab, and new intravitreal injectable or port options, pretty much forced education onto the ophthalmology community.
Ms. Poore also pointed to their market research findings that barriers to biosimilar use seem to have improved, especially in oncology. Cardinal’s research reconfirmed the importance of pharmacist collaboration in this area, specifically in the practical areas of on-time ordering and tight revenue management. Without the skills and experience of pharmacists, it would be incredibly difficult to manage the entire ordering, supply management, and reimbursement process in oncology care.
One note about the oft-cited figure of $36 billion in savings. It comes from the Association of Accessible Medicines, and it is certainly impressive. I want to reiterate, however, that the estimate is conservative, in that it does not consider the avoidance of price increases in reference products once biosimilar competition is introduced. This is also an issue with other estimates of biosimilar savings. Assuming 8% annual increases in wholesale acquisition cost over 2 years of adalimumab biosimilar availability, this one biosimilar benefit results in $1.6 billion saved from this one product. Even with payer contracts with price guarantees, the savings figures accumulate quickly.
ASP + IRA = SUSTAINABILITY UNCERTAINTY
Craig Burton, Executive Director of the Biosimilars Council, focused on the current, critical challenges to obtaining these savings over time.
One of the key worries continues to be ASP-based reimbursement. “ASP deflation is great news…until it isn’t!” he stated. “In some cases, ASPs are dropping too low too fast. We need downward pressure on markets but downward pressure in a sustainable way.” Mr. Burton is consistently hearing from healthcare providers that because of the two-quarter lag in reporting ASPs by the Centers for Medicare and Medicaid Services, their practices are “underwater,” or losing money on buy-and-bill purchases of products like pegfilgrastim and ranibizumab. Finding themselves underwater, they resort to choosing a more expensive product with a higher ASP reimbursement. His organization and its parent, the AAM, are looking to the potential of using an ASP floor, which would theoretically set a minimum price for which reimbursement cannot go below.
Barry Chester of Pfizer believes that part of the problem is the way the ASP calculation is performed (which he believes should exclude the payer rebate). The ASP formula was designed 20 years ago and not for this biosimilar reimbursement purpose. As a practical matter, he said, “ASP + 8% is not enough! We need to make providers whole. Even increasing ASP reimbursement may be insufficient for some providers.”
Indeed, it is unclear whether ASP + 10% or even ASP + 12% is an adequate remedy or viable over the long term (see the astonishing drop in ASPs in the ranibizumab market, reported previously). Mr. Chester instead believes that the combination of an ASP floor and increased ASP reimbursement, in concert with adjusting the weighting of rebates in ASP calculation will be required.
Mr. Burton turned his attention to the IRA’s maximum fair price provisions. “Will the President’s executive order that CMS should seek even greater price concessions from manufacturers achieve its goal? Price controls erode the predictability needed for investment in future biosimilars. Will Congress have the appetite to take this on?” he asked.
Mr. Burton believes that “some PBM reform could happen this year. But whatever Congress does this year will be a first step only.”
