Here’s a question that has been asked repeatedly over the last year or so: Does it make sense to have private label medical benefit-covered biosimilars?
We’ve seen the spread of private-label or “white-label” biosimilars, by the big 3 pharmacy benefit managers (PBMs) specifically, for adalimumab and ustekinumab. Although we’re not sure of current market utilization of the private-label versus non–private label products, we do know that the availability of the private-label products helped biosimilars on the road to uptake if not financial success.
We have in our sights some major medical benefit–covered reference products losing patent protection and marketing exclusivity over the next few years. These include Keytruda, Opdivo, Yervoy, Perjeta, and Ocrevus to name a few. All are high-cost agents that are important (if not critical) to patient care.
The discussion of a medical benefit private-label biosimilar must tease out the potential advantages/disadvantages for both the manufacturer and the provider (who in a buy-and-bill situation makes the initial prescribing decision) or payer (who decides on coverage/reimbursement). The first assumption is that PBMs generally deal far less with specialty drugs under the medical benefit (and especially oncology drugs). By their very name PBMs manage the pharmacy, not the medical, benefit. However, their affiliated specialty pharmacies are in a viable position to play an influential role, via white bagging. If that is the case, the provider’s buy-and-bill initiative would be lost, and they would be reimbursed solely for administration services. For PBMs, earning additional dollars through their specialty pharmacy, such white-labeled products seems highly promising.
The second assumption is that heavy competition at launch for medical benefit–covered biosimilars like Keytruda will result in huge, immediate net price discounts, as seen with the highly contested adalimumab and ustekinumab biosimilar launches. Competition is competition, regardless of how a drug is covered, so this is reasonable. The bigger question is whether Medicare price negotiation or most favored nations pricing hits before biosimilars launch (they shouldn’t, according to official and draft policy, but we should account for this anyway). A lower list price will mean lower cost savings for biosimilars.
A payer might be more neutral on the private-label issue. In general, private labels have not spelled greater net savings over low-WAC biosimilar versions of adalimumab or ustekinumab. They don’t seem to be extremely motivated to insist on non-private-label versus private-label biosimilar coverage. On the other hand, plan sponsors may think otherwise, based on the call for more PBM transparency. If the PD-1 inhibitor biosimilars, for instance, were available by private label through the specialty pharmacy, it would probably have little effect on payers except reducing buy-and-bill transactions for those specific products.
With the introduction of eight new Keytruda biosimilars competing for a $30 billion US market, discounts will quickly increase—regardless of MFP or MFN pricing. It should mean a virtual (delayed) free fall in average sales pricing (ASP), which will further dissuade providers from wanting to purchase these products and take on the risk of being caught underwater. If this follows, it drives purchases and distribution through the specialty pharmacy. Will the PBMs jump at the opportunity? Are there wholesaler or other relationships that they do not currently have to be in established first?
I don’t know the answers. I hope these thoughts spur a considered discussion of the advantages and disadvantages, and where this concept leads. Please lend your voice and comment on this topic.
This article was written by our Director of Content, Stanton Mehr. Stan is has been writing commentary and reporting news about the biosimilar industry since the submission of the first biosimilar 351(k) application to the FDA 12 years ago. Since that time, BR&R has been tracking the US biosimilar marketplace, with the industry’s original, comprehensive and updated database of biosimilar filings with the FDA.
