Payers Focus More on a Biosimilar’s Price Than on Clinical Data: A Retrospective

It can be fun to go back in time! That’s the case with an old column I wrote for the Center for Biosimilars, just after Zarxio was approved. Here, I reprint a portion of the column, with some additional commentary.

A RAND study from 2014 boldly predicted $44.2 billion in savings from biologic drugs over the 10-year period ending in 2024. The study’s authors believed that upwards of 20% of the savings would come from the anti-TNF inhibitors alone.

These savings would salve the wounds of payers and purchasers suffering annual double-digit increases in specialty pharmaceutical costs. It has kept them up at night. Worries about the affordability of medicines have kept patients and their families on edge. All of this light focused through the magnifying glass, refracting to a point, has heated up attention on the first biosimilars in the 351(k) approval process. US health plans, pharmacy benefit managers, and insurer executives have been anticipating the push to biosimilars and their possible savings since the implementation of the Biologic Price Competition and Innovation Act in May 2010.

Expectations have pent up that biosimilars will begin to relieve the pressure building from the annual double-digit specialty drug trend. If payers are given 20% and 25% lower net prices, they will likely jump at the opportunity to save millions of dollars, if they can. That means putting net pricing ahead of clinical data when making coverage decisions (assuming no significant immunogenicity differences, as payers and providers would consider this a powerful disincentive).

Payers may presuppose that the Food and Drug Administration (FDA) will do its utmost to evaluate the equivalence in outcomes and pharmacokinetic/ pharmacodynamic characteristics of the agent. The real question is whether payers care enough about the clinical data to make extrapolation a potential issue if the FDA does not. They may well leave that decision to the prescribers, taking a more laisse faire approach, as they did in the very early days of generic drug introductions (before the days of automatic generic substitution).

Today’s Commentary:

Well, the verdict seems to be in, both from payers’ and providers’ perspectives. Payers are leaving it up to the FDA, and in some cases, without any clinical data in patients (just phase 1 trials in healthy volunteers), to determine the appropriateness of biosimilars in several disease states.

Proprietary market research, as well as individual conversations with payers, support that they have crossed a critical point of confidence—the safety and effectiveness of using a biosimilar instead of a reference product is no longer much of an issue. Any question about extrapolation, similarly, is no longer deemed clinically relevant in approved biosimilars. This may not be the case with a future product. We must also await experience involving FDA approvals of products with “skinny labels” or limited indications. In these cases, we don’t know yet whether plans and insurers will discourage use of a biosimilar for the reference product’s full slate of applications (privately, they have told me they wouldn’t discourage this use, assuming similar dosage forms).

However, payers hunger for biosimilar choices. Not necessarily to add to their formularies, but to force originator manufacturers to halt further price increases. They want the opportunity to worry less about one biologic agent for which next year’s expenditures will jump—and by how much exactly? The few biosimilars approved in the US have forced WAC pricing (and ASP pricing) down. We are expecting the same for the latest market entrants, like pegfilgrastim.

As for RAND’s predictions? Not enough has happened from 2014 until now to make one think that cumulative savings of $44 billion is realistic. It is possible, however, if one considers the near-term launches of trastuzumab and bevacizumab biosimilars. The one-year savings from adalimumab biosimilars may top $8 billion by itself (out of total revenues exceeding $20 billion prior to the introduction of these biosimilars).

It should not have even been this close.

Biosimilar News Bytes to Wrap up 2016

A Shrug of the Shoulders on Savings Payers are becoming increasingly pessimistic that they will be seeing substantial savings with biosimilar products in the near term. The results of several market research projects we’ve conducted point to payers’ assumption that the 15% discounts seen today with Inflectra® and Zarxio® introductions will be mimicked by manufacturers of new biosimilar and follow-on products (assuming they cross the FDA approval and patent litigation barrier). Risking these introductions, the payers assume that makers of the originator products will simply match the offer, enabling the payer to take the path of least resistance and stick with the originator. But this means that the predicted tens of billions in savings to be gained by the biosimilar introductions will remain a mirage, at least until several competitors enter the market for the same originator.

Trastuzumab Biosimilar Data Published The Mylan and Momenta partnership announced that the phase 3 trial data on its biosimilar version of trastuzumab, previously announced at major medical meetings this year, has been published in the Journal of the American Medical Association. The HERITAGE study confirmed the safety and efficacy of MYL-1401O.

Final Guidance Released by FDA The Food and Drug Administration finalized and released its guidance “Clinical Pharmacology Data to Support a Demonstration of Biosimilarity to a Reference Product,” which describes how biosimilar products may be listed as “not similar,” “similar,” “highly similar,” and “highly similar with fingerprint-like similarity.” The latter, it is assumed, will be used as a basis for considering interchangeability designations. The guidance is a belated tool to assist drug makers with proving pharmacologically the similarity of their molecule to the originator.