Tag: competition

A Health System Biosimilar Survey’s Implications

When asked about potential cost savings with the infliximab biosimilar, nearly one-quarter of health system respondents did not believe that it represented a cost savings opportunity for their organization, according to a newly published survey in the Journal of Managed Care and Specialty Pharmacy.

Conducted by Premier, Inc., a group purchasing organization, 57 US health systems responded to its questionnaire in April and May 2017 (before the launch of Merck/Samsung Bioepis’ Renflexis® biosimilar). All of the health systems currently used infliximab at their facilities.

The greatest barrier to adoption cited by the health systems was the reimbursement from payers (28%), with actual cost of the biosimilar being a lesser concern (10%). According to the survey, about one-third of the respondents had had communications by that time with payers regarding the latter’s approach to biosimilar coverage.

Interestingly, 62% of those systems represented by the survey respondents had not reviewed Pfizer’s Inflectra® in their Pharmacy and Therapeutics Committees. In large part, thiBR&R Logo Transparent1.5-21-2017s was a continuation of a “wait-and-see” approach, particularly in view of the relatively small discounts offered by Pfizer. Others responded that they were awaiting Merck’s entry into the marketplace, to review both biosimilars at the same time.

“For sites of care that approved formulary addition of the infliximab biosimilar, implementation strategies ranged from full product conversion to ‘new patients’ only,” wrote the author, Sonia T. Oskouei, PharmD, Director of Pharmacy Program Development-Biosimilars at Premier. “Some sites added it to their formularies as a preferred product but only when payer coverage supported it.”

Seventy-six percent of respondents perceived that there was a cost savings opportunity for biosimilars compared with the reference product. What are the expectations of the remaining health system executives? If they don’t believe biosimilars do not save the system money, why not?

Fuzzy Patent Logic

Over the past week, month, year (you name it!), we’ve read too much about the trials and tribulations of patent litigation. The latest, involving Pfizer and Roche, has the latter suing Pfizer for infringing on upwards of 40 Roche patents in Pfizer’s development of a trastuzumab biosimilar. This is pretty common these days, and even the number of patents involved fails to surprise. Yet, other competitors may reach the market before Pfizer; it has not yet filed for a 351(k) approval with the Food and Drug Administration (FDA) or the European Medicines Agency.

BR&R Logo Transparent1.5-21-2017

This does not apply to other potential players. Celltrion cleared the Roche patent lawsuits in April 2017, enabling it to sell its trastuzumab biosimilar in its home country of Korea. This does not necessarily apply to sales in other countries, however.

Positive results were announced for a pivotal phase 3 study of Pfizer’s trastuzumab biosimilar PF-05280014 in Europe in September. These results will likely form the clinical backbone of its 351(k) application.

First launched in 1998, principal patent expiration of Herceptin in the US should be 2018 or 2019 and was 2014 in Europe. It may be assumed that Amgen/Allergan will wait for patent expiration before marketing their product in the US and subsist on sales in Europe in the meantime.

A similar but more protracted situation exists with Abbvie’s Humira®, for which competition will be fierce once the patents expire fully in 2023 (if they are not found to be invalid earlier). Amgen settled with Abbvie to obtain a global license from the originator’s manufacturer, applying to sales after this time. However, Amgen’s biosimilar will still have to compete with severals once the patents expire or are ruled invalid.

I’d like to post others’ opinions as to how the marketshare wars will play out when some patent agreements are made and others are not. What do you think will happen on the Herceptin front?

Additional Thoughts on CMS’s Changes to Biosimilar Part B Coding

The biosimilar news articles of the last week have included more data and announcements from the American College of Rheumatology on clinical outcomes of biosimilars to the reference product, debates over their prescription and utility of interchangeability, and of course, and frustration over the delays in biosimilars reaching the market caused by patent litigation. As interesting as all of these are, it does mean that last week’s major announcement by the Centers for Medicare and Medicaid Services (CMS) remains number 1 at the biosimilar box office.

With less “new” news to report, I’ve had a chance to reflect on what Medicare’s change in the way biosimilars are coded and reimbursed will mean to various stakeholders.

cropped-cropped-web-image-1As a reminder, all biosimilars for one originator product are given the same temporary Q code under the current policy. The reference product retains its unique J code. The average sales price (ASP) is calculated on the volume-weighted utilization of these grouped biosimilars. Physicians who buy and bill are paid ASP + 6% (actually + 4.3% because of the financial sequester), with that spread being based on the (higher) ASP of the reference product. The new policy would provide a specific Q code to any new biosimilar, and the ASP for reimbursement purposes would be calculated for individual drugs and not as a group.

From a provider standpoint, this might help alleviate any confusion that may exist now and in the future about which biosimilars are prescribed (or dispensed). Today, only infliximab has more than one biosimilar on the market for the same originator biologic. In the not-too-distant future, competition may be rife for etanercept, pegfilgrastim, trastuzumab, among others. However, the current policy, under which related biosimilars have the same Q-code, could also perpetuate the confusion that all of the biosimilars are biosimilar to each other. The new policy would remove that potential source of confusion. This may be less important, though, as National Drug Codes (NDCs) are unique today, and full NDC information includes descriptors regarding their manufacturer and biosimilar status. And many payers require NDC codes for physician reimbursement of buy-and-bill biologics.

In terms of cost savings, the positive effect of the new policy will be relegated to the future. In the short term, the current policy encouraged greater immediate discounts. Consider an originator drug that cost $5,000 per month. The first biosimilar, approved in 2017, for example, might be priced at a modest 15% discount ($4,250). The originator would have little reason not to meet that price through rebates. Under current policy, consider a second biosimilar that is approved in 2018. With the same Q code, there is little to differentiate the two biosimilars except price. Add a third biosimilar to the mix (at a 35% discount or $3,250), and you can see rapidly increasing discounts—a boon to the payer, and possibly the patient, but a real problem for the manufacturers. Since the product’s ASP reimbursement is volume weighted, as agents are introduced into the category at greater discounts, one would expect that reimbursement would rapidly decrease as well. In total, the biosimilar industry has argued, this would cool interest in biosimilar development over the long term, and could hurt the amount of competition for future biologics coming off patent (and future discounts).

Under the new policy, biosimilars having different HCPCS codes may slow this “race to the bottom.” Or it may not. The nature of biosimilar competition is not based solely on similar coding but on gaining marketshare through payer preference (or exclusions). The real issue is that an insufficient mass of providers are fully at risk who can take greatest advantage of lowest drug pricing and not rebate-associated costs. If your organization is at risk, that is the best incentive to use the lowest priced agent. It is a better exercise in cost-efficient medicine.

The Biosimilars Forum believes that using separate Q-coding for each biosimilar would result in an additional $15 billion in savings over 10 years. This would be attributable to a much higher utilization rate (projected by the Forum of up to 65% at 10 years vs. a projected 35% under current policy). Basically, if these assumptions were taken seriously, they would argue that more immediate price decreases under current policy would not yield greater utilization faster, and thus greater savings. The Forum posits that less competition over the long term will be the result of fewer manufacturers interested in the biosimilar market.

Pfizer Sues J&J on Anticompetitive Practices on Infliximab in the US

In late May, Merck was named in a UK lawsuit by Pfizer, which has been trying to expand its market for Inflectra®. Merck, which markets Remicade® (infliximab) in the EU, was accused of anticompetitive practices. On September 20, Pfizer brought a similar complaint against Johnson & Johnson (the parent of Janssen and the manufacturer of Remicade®) in the US, according to a lawsuit filed in US District Court (Eastern District of Pennsylvania).

Whereas Pfizer has made some inroads to the US market, since its launch at the end of 2016, Janssen has done a good job of blocking and tackling—playing the contracting game. The lawsuit claims that Janssen has withheld or threatened to withhold rebates if payers do not keep Remicade in an exclusive preferred position. Pfizer may have invited such action to an extent by entering the market at a 15% discount to the originator’s wholesale acquisition cost (WAC). Many experts expected this type of approach by Janssen. Payers were candid in their reluctance to switch to the biosimilar, especially if Janssen would counter the modest discount with rebates that narrow or eliminate the difference in net costs. In other words, a greater discounted price may have opened the market to Pfizer more rapidly, because Janssen may have been less aggressive in its efforts to match the net cost.

In an August earnings call, Pfizer indicated that although Medicare is covering Inflectra, its overall US marketshare was only 2.3%.

According to the press release announcing Pfizer’s lawsuit, “[Johnson & Johnson’s] exclusionary contracts and other anticompetitive practices have denied U.S. patients access to therapeutic options and undermined the benefits of robust price competition in the innovative and growing biologics marketplace for patients… J&J’s systematic efforts to maintain its monopoly in connection with Remicade® (infliximab) by inappropriately excluding biosimilar competitors violates federal antitrust laws and undermines the principal goals of the federal Biologics Price Competition and Innovation Act (BPCIA).”

This may be the first time that routine contracting efforts to defend against generic competition and maintain a monopoly within a drug category have been cited as a violation of antitrust legislation. What may have amplified Pfizer’s ire was its assertion that several insurers originally placed Inflectra at parity coverage with Remicade. These payers changed their position after “J&J threatened to withhold significant rebates unless insurers agreed to effectively block coverage for Inflectra and other infliximab biosimilars.”

Furthermore, the suit claims that clinicians and hospitals were reluctant to purchase Inflectra, with the belief that insurers may not reimburse them for its use. These providers may have been further influenced by an insistence by J&J on their signing contracts that dictated significant discounts on Remicade only if they would not purchase Remicade or other infliximab biosimilars.

At this time, Inflectra is priced at an average 19% discount to Remicade’s wholesale acquisition cost (WAC). Pfizer says that it is offering additional discounts on top of this to persuade payers into covering their biosimilar. Merck’s launch of its own biosimilar infliximab (Renflexis®) comes with a price tag of 35% below that of Remicade, which adds tremendous pressure on payers to reconsider their positions. This also signals the early closing of Pfizer’s window of opportunity as the first biosimilar entrant, on which it gambled an at-risk launch.

Lessons From a New Report: Do More Biosimilar Approvals Necessarily Mean Greater Access to Biologics?

By 2025, biosimilars may well fulfill their potential in the US, and we will be awash in biosimilars approved by the Food and Drug Administration, which have cleared patent issues through expiration, settlement, or litigation. Beyond meaning that we will finally have several adalimumab biosimilars on the market and perhaps even an approved pegfilgrastim biosimilar, access to biosimilars will almost certainly be widespread at that time.

Biosimilar concept art.5-15-2017A new study from Avalere, funded by the Biosimilars Council, was released this week, and its principal finding is that by 2025, an additional 1.2 million US patients could gain access to biologics owing to the availability of biosimilars. The implication is that current restrictions by private, Medicaid, and Medicare Advantage plans on the use of expensive biologics will be eased once less-expensive biosimilars come to the market and that lower costs will result in more patients being able to utilize biologics than before.

Although I’m not aware of any studies specifying the percentage of the insured population (public or private insurance) who do not have access to biologics, we do know a good deal about the way payers approach them in general. One of the greatest priorities of plans and insurers is to manage the specialty pharmaceutical category. The stated goal is to ensure that patients have access to appropriate therapy (not all therapy). The most common way to achieve this is through the use of stringent prior authorization criteria or step therapy. For noncancer biologics, virtually no payer or purchaser (including government and employers) would allow first-line access of a biologic without trials of conventional treatment first. This is done to limit costs of treatment as well as to mitigate the risk of adverse events.

Another routine mechanism for controlling costs of these agents is to leverage their net costs by offering preferred or exclusive coverage to one or two agents in a category. For patients in the US, this means that the vast majority of insured patients may have access to 2 or 3 anti-TNF agents, but not all of them. The introduction of lower-cost biosimilars may influence this, as it could be possible that payers include a wider choice of biologic medications once biosimilars for all of these products are available. The reference products may also benefit, in that the competition-driven lower costs may well allow for wider choice of medicines within a class.

It is questionable whether lower costs will permit the wholesale removal on restrictions of biologics in a category. Will a biologic be available for use as a first-line agent rather than a third-line agent? The major professional autoimmune disorder societies have not written clinical guidelines that urge biologics use far earlier. That is partly because each of these agents carries significant, serious risks, which cannot be minimized. They may occur infrequently, but they can be devastating in patients unfortunate enough to experience them.

In the Avalere report, researchers cite the European experience, in which “introduction of biosimilars led to an average increase in utilization, compared to the year prior to the biosimilar entrance, of 32%.” If that did occur in the US, it would be a boon to manufacturers.

They pointed to the lower costs being the primary driver of greater use. Gillian Woollett, MA, DPhil, Senior Vice President, Avalere Health, confirmed via Email that “[increased biosimilar availability] will disproportionately benefit women and low-income individuals. The assumption is two-fold: That biosimilar competition will lead to better access due to lower-cost products (either the biosimilar or reference biologic or both). Additionally, competition between biosimilars and their reference products is expected to improve tiering through placement on lower tiers, higher rates of coverage, earlier use, etc.”

Their results were based on an evaluation of seven blockbuster biologics in particular: adalimumab (Humira®), bevacizumab (Avastin®), etanercept (Enbrel®), infliximab (Remicade®), pegfilgrastim (Neulasta®), ranibizumab (Lucentis®), and rituximab (Rituxan®). All of these products are expected to be marketed by 2025, although patent litigation could, of course, change this scenario.

The present assumption is that a significant portion of nonoptimized utilization of biologics like Humira is due to high cost-sharing requirements. With the wider availability of biosimilars, special biosimilar tiers (with relatively lower cost sharing) may be a good bet in the future. Dr. Woollett stated, “While the analysis doesn’t specifically assume the increased utilization due to specific actions (we don’t ascribe X% better access to more biosimilars tiers, etc.), we do assume that payers respond with efforts to incent utilization of either the biosimilar or the reference biologic (depending on contracting) and that leads to better access.”

Two New Trastuzumab Biosimilars Submitted for FDA Approval

The team of Mylan and Biocon may have some company in the biosimilar competition for Herceptin® (trastuzumab). Two additional partnerships announced the filing of their 351(k) applications for trastuzumab biosimilars.

Amgen and Allergan are hoping ABP 980 will have smooth sailing through the approval system. The phase 3 study in patients with early-stage HER2-positive breast cancer was completed in January 2017, with study results reported in July 2016. This study enrolled 725 patients, and yielded positive results in terms of safety, efficacy, and similarity to the originator product.

Celltrion submitted their product application for CT-P6 (Herzuma™) to the FDA on July 30 as well. Its partner Teva will distribute and market the product in the US, upon approval. The phase 3 study for this product is ongoing, but the results of the primary outcome data from 549 patients were published in June 2017. The outcomes were found to be similar to those of Herceptin.

Mylan and Biocon had submitted their biosimilar version on November 1, 2016. The FDA Advisory Committee reviewing their product gave it their unanimous support on July 13, and the final FDA decision is expected by September 3, 2017. If approved, Mylan will have at least a 9-month time advantage to get their foot in the door of a $2.6 billion trastuzumab marketplace.

This sets up a very interesting pricing dynamic. I had originally thought that this scenario might occur first with adalimumab after the patent litigation was resolved, but it is very possible that multiple biosimilars for trastuzumab may be launched first and in a very short timeframe.

Assuming Mylan gets the nod from FDA first, they have a couple of obvious paths they can travel: (1) launch with a substantial discount in an attempt to capture as much marketshare as possible before the other market entrants arrive or (2) launch with a modest (but attractive) discount in an effort to maximize their revenue while their product remains the sole biosimilar available. It will then be a guessing game as to how Amgen/Allergan and Celltrion/Teva play their turns in this poker game. With sudden market competition, such as their launches could potentially pose, payers may play a bit of a waiting game themselves, to see where the chips fall.

Will Approval of an Interchangeable Biosimilar Mean that Others Are Inferior?

In terms of the biosimilar market and utilization, the US has been at least one full decade behind Europe in every respect but one. Yes, we have the EU beat in a game they avoided playing: The interchangeability gambit. The Europeans never defined interchangeability as a separate concept for biosimilars, thus leaving the individual countries to decide whether to allow unencumbered switching of biosimilars for their originator drugs.

As in other areas of biosimilar policy and regulation, the US started very slowly. Leah Christl, PhD, Associate Director for Therapeutic Biologics, OND Therapeutic Biologics and Biosimilars Team, Food and Drug Administration (FDA) stated last week at the Drug Industry Association’s annual meeting in Chicago that she expects the first interchangeable biosimilar to be approved within about 2 years. This is probably realistic, based on the timeline of the adoption of the agency’s interchangeability guidelines. Comments on the draft guidance are being read by the FDA at this time. Seven years after the passage of the legislation calling for the biosimilar approval pathway. If there were competitors in this game, we’d be desperately trying to catch up!

It seems unlikely that the FDA has any active 351(k) applications seeking the interchangeability designation, although Dr. Christl did not reveal whether this was the case. The application process is confidential; a submitted application is publicized only if the drug maker issues a press release on its ownDeck 1.png. It would seem premature to seek the interchangeability designation before the FDA’s own guidance on what the review entails is released. This may not prevent a biosimilar manufacturer that has already received approval from taking the quick step towards interchangeability, especially if they have conducted a series of switching studies that meet the FDA’s criteria (e.g., NOR-SWITCH).

Payers are chomping at the bit for an interchangeable product in the 36 states (and 3 pending) that have signed legislation allowing pharmacies to automatically substitute a biosimilar for an originator biologic.

Others have pointed out that the interchangeable biosimilar may be a boon to its manufacturer, but it may have negative effect on competitive markets. For example, a noninterchangeable infliximab may be considered by prescribers or patients somehow inferior to the interchangeable version, devaluing this biosimilar. On the other hand, the maker of “infliximab-int” could experience increased demand and boost prices (or avoid decreasing prices in the face of other noninterchangeable biosimilars coming to the market). And this may be justified. No one really knows the manufacturer’s incremental cost of achieving this designation, based on:

  • The cost of conducting additional switching studies
  • The potential cost of responding to FDA requirements for more data
  • The opportunity cost in marketing time, resulting from a delay in the application or approval

The race for a product with this extremely valuable designation drags on at a snail’s pace. I hope I’m still writing about it by the time someone reaches the finish line.