Tag: patents

Will Government Action to Spur the Biosimilars Industry Have Any Bite?

“Biosimilars are such an underutilized entity to truly drive down costs and generate savings. We are heartened by the fact that several pieces of legislation have been introduced to help change provider and patient incentives,” said Molly Burich, MS, Director, Public Policy, Biosimilars and Reimbursement at Boehringer Ingelheim.

A panel at last week’s GRx+Biosims meeting focused its remarks on the potential of legislative proposals brewing on Capitol Hill to incentivize biosimilar uptake.

Incentives for Patients and Doctors

In Medicare Part B, Ms. Burich explained, beneficiaries have a 20% co-insurance, and about 85% will have wraparound or gap insurance that covers this out-of-pocket cost. However, about 15% do not. According to Ms. Burich, removing this co-insurance for biosimilar use through the legislative process would generate sufficient savings through the lower costs of these drugs to fund it.

Molly Burich, MS

“Physicians say that patient out-of-pocket costs,” she noted, “are their number 2 concern.” She also raised the potential of utilizing a shared-savings model to incentivize biosimilar use, such as allowing clinicians who prescribe the lower-cost drug to share in the government’s savings. Legislation containing this provision has not yet been introduced, she emphasized.

Another mechanism to induce greater physician prescribing is to increase the average sales price (ASP) add-on payment, where ASP+8% may incent more physicians to prescribe biosimilars. The current payment of ASP+6% hasn’t encouraged sufficient physicians and groups to move to biosimilars, said Ms. Burich.

What About Part D?

Recognizing that virtually all marketed biosimilars are covered under a medical or Part B benefit, Mr. Burich pointed out that “we should be using this time to prepare the Part D benefit for biosimliars.” Many payers currently manage the use of self-administered injectables under the pharmacy (or Part D) benefit, and when adalimumab biosimilars are available in 2023, payers will need to be ready. She said that a couple of ideas were introduced around the Medicare Star ratings for Medicare Advantage plans, by perhaps alerting beneficiaries of lower-cost products being available on formulary.

Erika Satterwhite

As Erika Satterwhite, Head of Global Biosimilars Policy at Mylan, stated, “The core principal of biosimilars is access.” Yet, patent abuse is the number 1 challenge to bringing new biosimilars to the market. Admittedly, after the flurry of discussions earlier this year about the Federal Trade Commission (FTC) exercising its authority to invalidate anticompetitive patents, there is little activity to change this at the moment. Several current proposals in the Congress and Senate attempt to limit the number of patents for biologics that can be claimed subject to infringement (e.g., 20 in at least one proposal), but these bills, if passed, would only affect new biosimilar applications and companies choosing to participate in the “patent dance.”

    James Carey

    Even some biotechnology manufacturers are beginning to recognize the inherent problems with patents and access. James Carey, Executive Director, US Health Policy, Merck & Co., Inc, said, “Intellectual property [IP] is the lifeblood of our innovation. However, we have made it clear that we have a strong belief that once the IP has been exhausted, safe and effective biosimilars should be available on the market.” One bill in the House would require more transparency around patents; this would be reflected in a far more useful Purple Book than exists today.

    Christine Simmons, Executive Vice President of the Association of Accessible Medicines, and President of the Association’s Biosimilar Council, reminded the audience that the inter partes review system “still remains an important avenue to resolve patent disputes.” Yet, as Mr. Carey pointed out, “The courts are clogged with cases—we need more judges to get through the backlog.” Ms. Simmons believes that we must maintain the ability for the biosimilar and innovator manufacturer to settle, and avoid waiting for the full patent expirations (perceived by the reference manufacturer).

    What should be the role of the FTC? Ms. Simmons commented that the FTC has long been active on the biosimilars front. “The agency argued that an exclusivity period for biologics was unnecessary, and the FTC argued that the use of four-letter suffixes would harm their uptake. They’ve been engaged around the misinformation as well. However, much of their participation has been rhetorical. They haven’t had the opportunity to dig in,” she said. The panelists would not comment on FTC’s potential role in considering whether rebates were anticompetitive.

    Reference Pricing and Drug Pricing

    Ms. Satterwhite asserted that the success of biosimilars in Europe was not the result of an external referencing pricing model. “Implementing tenders in a place that does not use them does not get you to lower pricing,” she said.

    Reference pricing, Ms. Satterwhite emphasized, could actually reduce access. “The European Commission has recommended against its use on the continent,” she said. “You need to look at the market context of the country you’re focused on.” Ms. Burich added that in the different EU countries, “many incentives were implemented for physicians and patients,” with the objective of  driving awareness of biosimilars.

    Biosimilars in the US have long been viewed as a market-based way of increasing competition and lowering drug prices. The proposals today to negotiate Medicare drug prices for up to 250 drugs (as well as use of reference pricing mechanisms) could have a dramatic adverse impact on the pharmaceutical industry—perhaps up to $1.2 trillion over 10 years. “That means jobs will be lost and products won’t make it to market,” said Mr. Carey. He pointed out that Medicare drugs (in the Part B benefit by Medicare Advantage plans and in the Part D benefit by Part D plans) are negotiated heavily today.

    Ms. Satterwhite reemphasized that the key point is sustainability of the biosimilar market in the US. “We need to unlock the barriers to sustainable competition, not just seek a short-term price cut.”

    The question remains whether the myriad proposals put forth will enable the federal government to have a greater ability to assure this sustainability. To date, there is a great deal of talk but very little substantive action.

    In other biosimilar news…Biogen is taking a more active role in promoting biosimilars in the US market. The Massachusetts-based company has been a principal investor in Samsung Bioepis. In 2018, it increased its investment in the South Korean company (to 50%). On November 6, it announced a deal with Samsung Bioepis to be the commercial marketer for SB11, an investigational ranibizumab biosimilar (reference drug, Lucentis®), and SB15, an investigational aflibercept (Eylea®). The new agreement also covers marketing rights for these products in Australia, Canada, Europe, and Japan. Biogen already markets Samsung biosimilars for etanercept, infliximab, and adalimumab biosimilars in Europe.

    How Will Biosimilars Be Affected by Trump’s Drug Price Reform Measures?

    Trump on BiosimilarsWhen President Trump announced the broad strokes of his drug price reform initiative, some of these measures seemed on target to benefit the biosimilars industry. However long awaited, makers of originator biologics seemed not to be worried about its implications. The President may not be able to effect much change, without causing unintended adverse consequences.

    According to its blueprint, the Trump Administration “believes it is time to realign the system in four ways: increasing competition, improving government negotiation tools, creating incentives for lower list prices, and bringing down out-of-pocket costs for consumers.”

    Increasing competition is critical to improving biosimilar access. But this cannot be achieved with one action. Several areas—some addressed and others not by the blueprint—are key.

     

    Reining in Drug Patent Abuse

    Aimed squarely at drug makers who try to extend exclusivity through multiple patent filings, this is the one action that could improve biosimilar prospects. Limited biosimilar access is caused by the inability to market these drugs after Food and Drug Administration (FDA) approval. Patent litigation is the number 1 issue here. The President said, “Our patent system will reward innovation, but it will not be used as a shield to protect unfair monopolies.”

    Trump Drug Cost Reform BiosimilarsWithout significant overhaul of the drug patent system (or the system for ruling on the validity of patents), this is unlikely to benefit biosimilar manufacturers in the near term. This effort could take many years and may have negative effects on the protection of legitimate intellectual property.

    This is likely to result in little relief for the biosimilar industry.

     

    Price Disclosures in Consumer Advertising

    The fact that originator specialty biologics—the medications targeted for biosimilar competition—cost thousands of dollars may be a revelation to consumers who pay fixed copays for them. President Trump’s plan would require manufacturers to disclose the cost of the drug on direct-to-consumer advertisements.

    Biosimilars The assumption is that this would be required across the board, including biosimilars. Would consumers recognize that their Renflexis® biosimilar costs thousands less than Remicade® in terms of wholesale acquisition cost? Not likely. In terms of net cost to the payer (not the patient generally), the price differential is far less. Even if the true costs were posted on consumer advertising, Mr. and Mrs. Smith would still hear or see that Renflexis costs thousands of dollars. They may even be further confused, because their out-of-pocket cost will likely be far less, unless a deductible applies.

     

    An Emphasis on Value-Based Purchasing

    The Obama Administration was committed to expansion of value-based purchasing. The present administration wants to further explore the potential of this policy, but it has not spelled out any specifics. It could be a boon to biosimilars based on the implications of value-based purchasing itself. After all, biosimilars are in existence to provide better value. More details are needed on its extent and whether implementation will occur through Health and Human Services or through Congress before useful opinions can be rendered.

     

    Lower Drug Prices in US, Higher Elsewhere

    The United States has very little ability to compel drug prices to rise for health systems in Europe, Canada, or Mexico, for instance, and as a result, lower them in this country. Pharmaceutical companies charge what the market will bear. Unless the Trump Administration can somehow convince the UK to pay more for Rituxan®/MabThera®, Humira®, or Enbrel®, these drug prices will not be altered.

    There are reasons these countries pay the prices they do. It is related to their bidding or tender systems and the fact that other countries will exclude coverage at higher prices.

    Trump Drug Cost Reform Consider another practical issue—why does a price increase in Germany mean a price decrease in the US (and for whom—Medicare, Medicaid, 340b facilities, commercial plans)? If such a move could be achieved, how does the Administration convince drug makers to apply those greater revenues obtained globally to greater discounts or rebates to Americans? It is more likely that the pharmaceutical industry will pass the increased profits to shareholders.

    If these specialty drugs were forced to lower their price in the US, would that apply to biosimilars as well? That may not work towards long-term viability of the industry, depending on the measures taken.

     

    Removing Rebates and Improving the Value of Biosimilars

    One thing can actually improve cost transparency and possibly force pharmacy benefit managers (PBMs) to change their value model. If the Congress decides that drug rebates run afoul of laws against kickbacks, this could compel far lower wholesale acquisition costs (WACs). It would also have the effect of lowering patients’ cost sharing. Co-insurance is commonly based on the WAC not the net cost of the drug to the payer or PBM.

    In this case, biosimilar manufacturers’ true WAC discounts can be applied directly and drive the “rebate trap” out of existence.

    Applying this rule to commercial plans, Medicare Advantage, and part D providers would be a direct improvement in the current situation and could lower system-wide health costs. That assumes that manufacturers don’t sense an opportunity to raise prices by say 8% when they no longer have to pay 15% rebates.

     

    Missed Opportunity: Using the Negotiating Power of Medicare

    If the Administration was interested in reining in drug costs, the first serious step would be to let the Medicare program negotiate with manufacturers. This large purchaser getting its best deals from the natural competitive marketplace. It may require some adjustments in Medicaid “best price” assumptions, however.

    It does seem that biosimilar makers could benefit from several of the policy changes proposed by the Trump Administration. However, the blueprint released is just that—weak on details and not specific to avoiding unintended consequences. Furthermore, it does not anticipate the reactive responses of the stakeholders involved. I guarantee there will be much more discussion as the government’s actions are announced.