Mylan’s Fulphila Pegfilgrastim Biosimilar Launches at Big Discount

The first pegfilgrastim biosimilar (Fulphila™) in the US has begun marketing, and Mylan/Biocon are offering a 33% discount to the wholesale acquisition cost (WAC) of the originator product Neulasta®. The Center for Biosimilars reported a communication from Mylan confirming the action. This is a watershed moment for the pegfilgrastim category and could signal the beginning of large savings opportunities for payers and patients.

At a WAC of $4,175 per syringe, the pegfilgrastim biosimilar may be very attractive to health plans and insurers. It is also assumed that this will effectively drive down the average sales price (ASP) of the category over time. The ASP includes the WAC as well as any rebates or discounts given by the manufacturers.

The pegfilgrastim biosimilar, like the reference drug, Amgen’s Neulasta, is approved to decrease the incidence of infection as manifested by febrile neutropenia in patients receiving myelosuppressive chemotherapy.

Although patent litigation between the partners and the maker of the originator product (Amgen), Mylan/Biocon have decided to launch at risk. This means that if the District Court sides with Amgen, Mylan’s could face large financial penalties, including profits on the sales of the biosimilar.

What Will Cost Savings on 2023 Adalimumab Biosimilars Really Be Worth?

AbbVie executives are sticking to their pledge to restrict annual price increases on Humira® below 10%, but even payer price protections won’t mitigate the increasing expenditures before adalimumab biosimilars hit the market. In 2023, when adalimumab biosimilars become available, the savings biosimilars represent may not be real savings at all.

Pharmaceutical companies generally seek to lock in preferred coverage status for their agents through the use of rebates, which lowers the net costs. Typical in these contracts is a price guarantee, which shields the payer from annual (or more frequent) price increases for the duration of the contract. The contract life is one or two years, after which the health plan, insurer, health system, or pharmacy benefits manager must renegotiate—that means significantly higher costs for each successive contract renewal.

Humira adalimumab

Drug price increases for self-injectable medications like adalimumab, are reported on top of its wholesale acquisition cost (WAC), or the list price. Rebates are applied to WAC pricing. Therefore, if for example, a manufacturer announces 9% price increase to drug X, that applies to the WAC price and does not include consideration of rebates or price guarantees secured by a payer. Rebate information is notoriously difficult to obtain, as payers and pharmaceutical companies consider them proprietary.

However, in a January piece in the New York Times, the author cites research by SSR Health, which concludes that the price of Humira with rebates rose 100% since 2012 to an average of approximately $38,000. Assuming AbbVie executives hold to their price increase pledge, raising their prices by only 6% per year, by 2023 when patent expirations will bring a rash of biosimilars to market, Humira’s price after rebates would have risen 33.8%, to $50,844. If the price is jacked up 9% per year, that would be an increase of 53.9%, to $58,482. This is assuming of course that AbbVie does not increase the rebate at each contract negotiation to offset the higher net cost. To make this dystopian vision complete, let’s not forget that the full savings will not obtained over a population unless all utilization is fully converted to a biosimilar from Humira. That may require an interchangeable biosimilar product (which has not yet been approved) .

As we reported last year, the Institute for Cost-Effectiveness Research established that to meet accepted thresholds for cost-effectiveness, Humira would have to be discounted 55% from its list price. Rises in the cost-effectiveness thresholds (currently $100,000–150,000 per quality-adjusted life-year) would never keep up with this pace of price increases. By 2023, Humira will be even further off the mark in terms of providing value.

The most important point of this, is that the cost savings of the biosimilars that are finally introduced could be an illusion. If a price war in 2023 for newly available adalimumab biosimilars results in 50% discounts, we may have received little but a roll back in costs to those of today. From the perspective of 2018, that’s not savings. That is price stability.

I wrote in 2016 of the same effect for Enbrel®. Because Amgen had taken multiple price increases in the previous years, the WAC cost jumped 37%. And in 2018, no biosimilar is presently marketed for prescription in the United States. The relative discount by Sandoz (presently the sole US company with an approved biosimilar etanercept) needed to actually save payers money for etanercept will not be realistic.

Savvy Move or Illegal Anticompetitive Action?

Merck, which markets Remicade® in Europe, may have stepped over an anticompetitive line when Pfizer’s Inflectra® biosimilar was first made available, according to the U.K.’s Competition and Markets Authority. In the US, however, this activity would be considered routine. Certainly, nothing prevents this action and it would be fully expected, in terms of net costs.

According the UK’s Competition and Markets Authority, Merck took unfair advantage of “dominant position through a discount scheme for Remicade that was likely to restrict competition” from the biosimilar infliximab when it was launched in 2015. In this scheme, the drugmaker “unfairly” discounted the product to customers who remained loyal to the product.

Is this really different than offering rebates for preferred positioning? Anecdotal reports in the US indicate that Janssen Biotech, which markets the originator agent in North America, has taken similar action with rebates against Inflectra® (infliximab-dyyb). In fact, Amgen did the same to ward off competition from Zarxio® (filgrastim-sndz). In their cases, they did not discount the wholesale acquisition cost (WAC) to meet the biosimilars’ but simply increased the rebate to yield an equivalent net cost.

This action may be more attractive because it may have fewer implications for “best pricing” discounts required by Medicaid and other payers. Certainly, the maker of the originator product can cut their WAC costs if they desired; at the biosimilars’ modest 15% discounts, this would simply roll pricing back to 2015 levels.

In other news…A case report has been published from New York City, in which a patient switching from the reference infliximab agent to the biosimilar version experienced papulosquamous lesions a few days after the change in medication. Skin biopsy revealed the existence of a lichenoid eruption. This adverse event has not been cited previously in the literature with the reference agent Inflectra®. The direct cause of the drug reaction is unknown but further monitoring is warranted, according to the authors.

On June 2, the European Medicines Agency accepted Sandoz’s application for biosimilar infliximab and adalimumab. Sandoz has not filed a 351(k) application with the US Food and Drug Administration for either product.

Unlocking the Rebate Trap: A Challenge for Biosimilars

An article published in JAMA Internal Medicine on May 1 caused a bit of a stir on the biosimilar blogosphere. The authors, from Yale University, posited that biosimilar manufacturers cannot win the rebate battle. And they are at least partly right.

Using a pretty extreme example of rebating/pricing and utilization in the biologic marketplace, they found that if 50% of patients switched to a biosimilar, the payer could be paying more money for the drug category in total compared with simply accepting the high prices and rebates of the originator’s manufacturer. Under the scenario set forth, the health plan or insurer would in fact not be saving the money expected, because of a so-called “rebate trap.”

In their example, the originator’s WAC was $50,000 and with a 50% rebate, the payer’s net cost was $25,000. The biosimilar, on the other hand, was priced at only $10,000. Based on 1,000 patients in total taking the autoimmune drug, they assumed that 50% of patients started using the biosimilar instead of the originator product. This would evoke the originator’s manufacturer to completely withdraw their rebates. The result is that the net cost on the remaining 50% who are still taking the originator product would now be $50,000 (not $25,000). That may be true; however, if the rebate no longer exists, what is the incentive for the health plan to cover the originator product? Without interchangeability in play, it may be difficult to switch patients, but with this price difference, payers will be motivated to exclude the originator. The decision of the originator drug manufacturer to not compete will make that decision much easier.

The example assumes an extreme discount on the biosimilar. It will be difficult to obtain such large discounts in an environment where 15% discounts on WAC are the norm. What is more likely is that the originator manufacturer will increase their rebate to prevent greater biosimilar utilization (at that more modest savings), resulting in some savings over the pre-biosimilar environment. Otherwise, the question is whether the originator drug maker will cut out their rebates altogether. Not likely, if they want to maintain significant marketshare. In addition, the introduction of multiple adalimumab biosimilars will likely blow up the existing market basket for the autoimmune category, which could redefine the way in which these agents are contracted.

ICER: Current Biologics for Rheumatoid Arthritis Well off the Mark for Cost Effectiveness

The Institute for Clinical Effectiveness and Research (ICER) released its report on biologic treatment of rheumatoid arthritis on April 10th, and it wasn’t pretty. The group, which assesses the value of therapies based on effectiveness and cost, found that none of the available immunomodulators approach the cost-effectiveness threshold of $100,000 to $150,000 per quality-adjusted life-year (QALY).

Of course, the price of this drug class plays a large role in ICER’s calculation, utilizing a discounted wholesale acquisition cost (WAC) that reflected rebates and discounts. The base WAC was the price obtained from the February 2017 Red Book. Although this figure may not be accurate for individual payers, the conclusion of the study was that Humira® would have to be sold at roughly half its quoted $40,415 annual cost to reach an acceptable level of cost effectiveness. At the current net price used and when used as monotherapy, its cost per QALY was $232,644. AbbVie’s Humira adalimumab originator took the brunt of the heat in the study, because it was considered the most costly anti-TNF inhibitor. However, even Janssen’s Remicade® (infliximab), the least expensive anti-TNF inhibitor cited (at $28,906 per year), was not deemed cost effective, at $202,824 per QALY.

Of any biologic used to treat rheumatoid arthritis, Genentech’s interleukin-6 inhibitor Actemra® (tocilizumab, subcutaneous injection) was deemed to have the best monotherapy cost per QALY, at $168,660.

One issue for the immunomodulator class is that a major component of the calculation‑the number of QALYs over the time horizon (the lifetime of the patient‑was closely bunched. They ranged from 12.95 for adalimumab to 13.35 for tocilizumab IV, compared with 10.75 for conventional DMARDs. These figures were slightly lower when the immunomodulators were added onto conventional DMARD therapy (although drug costs were somewhat lower).

Although the calculation did not consider the real issues of dose escalation for certain medications, a sensitivity analysis showed that virtually under all scenarios, the biologic drugs failed to meet the ICER threshold for cost effectiveness. However, it should be pointed out that ICER’s evidence of efficacy was based on patients achieving a fairly low standard: 20% improvement in American College of Rheumatology scores. Therefore, the actual cost to treat patients to a higher standard of improvement should be greater.

The evaluation was done by the New England Comparative Effectiveness Public Advisory Council, an ICER group. According to ICER’s value-based benchmark prices for these targeted immunotherapies, WAC discounts must be slashed from 29% (for tocilizumab subcutaneous) to 55% (for adalimumab) to reach the $150,000 cost per QALY level. In other words, for a biosimilar of Humira to be deemed cost effective by today’s reckoning, it would have to require a WAC discount (or net cost through rebating) of 55% below that of February’s Humira pricing.

This magnitude of reduction in net costs would effectively bend the specialty cost curve in the US. However, without several biosimilar competitors for the same drug, this is unlikely for the monoclonal antibodies. Cost reductions of 50% or more have been seen in certain European countries for first-generation biosimilars, but this would represent an alarming “race to the bottom” for US manufacturers and might dissuade future biosimilar development.