By Anna Rose Welch, Director, Cell & Gene Collaborative
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As the biosimilar industry matures in the EU, sustainable manufacturing, pricing, and tendering practices have been common topics of conversation. Though the U.S. also faces similar pricing pressures, perhaps a bigger concern today is in making sure that stakeholders are actually taking advantage of biosimilars to guarantee longevity of the market as a whole. Headlines and conference discussions currently center around how we can keep high originator rebates from winning the day and discouraging equal or greater access to biosimilar competitors. We’re starting to see greater competition and more uptake at the clinic/hospital level — especially regionally. But we’re also not too far beyond a time when it was simply easier for healthcare providers to stick with the originator product as opposed to switching, thanks to some wishy-washy payer policies starting out.
In my efforts to learn more about how these products are currently functioning within the U.S. healthcare system today, I’ve spent the start of the new year chatting with healthcare professionals, whether they be doctors, nurses, or experts operating behind-the-scenes to integrate biosimilars into the different healthcare settings. One of these experts was Kathy Oubre, the chief operations officer for Pontchartrain Cancer Center (PCC). PCC was one of the earliest biosimilar adopters — in fact, it was one of the first U.S. clinical trial sites for Celltrion’s Rituxan biosimilar, Truxima. This experience with biosimilars has given Oubre a great perspective on efforts that promote or threaten sustainability in the biosimilar industry, and how such efforts ultimately impact the performance of the cancer center. During our conversation, Oubre shared what biosimilar makers can do to balance both sustainability and still promote cost savings while also supporting cancer centers and their healthcare professionals.
The Complexities Of Managing Biosimilars In Cancer Centers
PCC currently spans two locations and is in the midst of expansion, with goals of attaining five providers within the next few years. As its name implies, it is a center for oncology treatment, though it also provides medical infusions for neurological, dermatology, rheumatology, and gastrointestinal conditions. PCC is home to 21 Phase 1 through Phase 4 clinical trials, with a little more than 100 patients enrolled across the board. (PCC has also carried out several interventional trials — for instance, with Truxima.)
As with many of the other professionals I’ve spoken to, I wanted to learn more from Oubre about the impact of greater competition on the organizational and operational level in healthcare settings. Though we’re starting to see the arrival and quicker uptake of the complex oncology biosimilar mAbs for Avastin, Herceptin, and Rituxan, Oubre and PCC learned a great deal from being an early adopter of biosimilars to Neupogen and Neulasta. In particular, she clued me into the challenges some of the previous payer contracting dynamics can pose for medical centers as they strive to provide a seamless experience for patients. For example, we’ve seen a few situations in which bundled contracts have led to less reliable formulary positioning and, in turn, less availability for a biosimilar.
“On a practice level, it becomes challenging if each payer picks a separate biosimilar and/or the brand for their formularies,” she said. “It can become an issue for us in managing the inventory and, in the long run, for our own margins.”
For one, the center must stock all the available biosimilars so they are equipped to meet payers’ formulary preferences. In addition to stocking the products, there are market performance goals that are established between the biosimilar maker and the group purchasing organization. So, the more biosimilar products a cancer center needs to acquire — for example two or three biosimilars to the same reference plus the originator brand — the trickier it becomes to meet those pre-established performance goals.
We’ve long asked the question of how many competitors can coexist successfully on the market. But all too often this line of questioning is centered around whether a manufacturer could see a return on investment if it’s competing against six to 10 other products that are, essentially, other versions of itself. But too many competitors from a treatment center’s perspective can also challenge margins. “If we’re unable to meet our contracts, then it trickles down into our ability to afford patient access to different drugs,” she explained.
Needing to stock more products also increases the risk of a costly mistake being made. Should a nurse take and administer the biosimilar Fulphila, for example, instead of the brand product or another biosimilar as per that patient’s payer formulary, the cancer center would run the risk of receiving a denial from the patient’s health plan.
“These are expensive drugs to get denied reimbursement,” she clarified. “The entrance of competition and the resulting complexities from payer dynamics can leave practices beholden to market forces that are out of each center’s control.” While hospitals may be better equipped financially to handle such a mistake, an independent cancer center would have to see upwards of five patients to financially make up for such a loss. “If you make that mistake one too many times, the economics become unsustainable,” she added.
Cancer centers in general have faced increasing cost challenges over the past few years. In addition to issues posed by the 340B drug pricing program, sequestration continues to impact reimbursement for chemo and other oncology drugs. In 2013, sequestration resulted in an $11 billion cut in Medicare. From that point forward, many cancer clinics had to shift certain portions of their Medicare populations to other treatment locations, like hospitals, or shut down rural branches. As Oubre explained, prior to sequestration, cancer centers were able to rely on the revenues from patient treatment alone. However, today, practices are now branching out into other services — for instance, clinical trials — to help supplement margins.
While these decade-old issues aren’t attributable to biosimilars, it is nonetheless critical for cancer centers to be efficient and well organized when integrating biosimilars into their healthcare eco-system. At PCC, managing claims and knowing how long it takes to obtain payments for J-code products (which doesn’t happen overnight) is a “well-oiled” process. As Oubre explained, proactively identifying new treatments, including biosimilars, and integrating them into your process can bode well for a treatment center’s overall revenue. In fact, being less wary about implementing biosimilars could provide relief to oncology centers and clinics during this tricky reimbursement landscape.
A Multi-Stakeholder Approach: Keeping Oncology Centers, Sustainability Front-Of-Mind
Market and inventory complexity aside, Oubre is a firm believer in the promise of biosimilars. Though the discounts may not be what everyone was hoping for at the start of the industry, she nonetheless believes that biosimilars are having a positive economic impact. For patients that face reset deductibles at the beginning of every year, the difference of even a few hundred dollars can be the difference between the patient’s ability to afford a treatment or not.
The excitement biosimilars are drumming up among some clinicians and patients is not necessarily shared by all stakeholders in all healthcare settings. But for PCC, Oubre believes they are a critical part of the center’s culture. “We’ve always been early adopters of new drugs, and we were early adopters of biosimilars,” she said. “We believe in the innovation. We believe in the science behind the product, and we firmly believe in our moral responsibility to patients to give them the best care possible at the lowest cost to help reduce their financial toxicity by any means we can.”
Throughout the industry, we’ve discussed the importance of implementing biosimilars using a multi-stakeholder approach. Every stakeholder has its own needs that must be met in order for the industry to succeed in the long-term. That Oubre and her colleagues at PCC understand the importance of biosimilars and have implemented them is only one part of the equation; biosimilar manufacturers must also consider a cancer center’s needs as they contract with payers and their wholesaler partners.
Maintaining parity — ensuring that there isn’t exclusive selection of just one product over another by a wholesaler, GPO, and/or payer — is one of the most important factors for a cancer center’s success with biosimilars. Oubre emphasized that parity in contracting demonstrates that the manufacturer and the other stakeholders in the supply chain are willing to be partners with medical practices. The patient-physician relationship is protected, and treatment decisions remain at their discretion, not those of the payer or another removed party. Contract parity also promotes competition and eliminates the risk of shortages that could occur if a party places its faith in just one product. On the cancer center level specifically, there are also several operational challenges that changing up product selection regularly poses; for instance, the center is required to reauthorize treatments and integrate them into a treatment plan, which comes at a cost to the practice.
I found it refreshing to hear Oubre’s take on the importance of responsible payer contracting and pricing. Though there is impatience from payers, patients, and physicians to see larger discounts from biosimilars, Oubre also cautioned that manufacturers be smart and keep a close eye on their average sales price (ASP) during contract negotiations. There can and have been instances in which offering a lower price than those of competitors has been appealing to stakeholders and can help that product attain market share more quickly. But from a sustainability standpoint, this leaves plenty to be desired.
“A steeply discounted price can certainly incentivize the practice to use that particular treatment or portfolio,” she admitted. “But as a market, we must remember that we need biosimilar innovation to help right the ship of the currently unsustainable U.S. healthcare system. Manufacturers, payers, and providers need to be measured in their contracting.”
So far, it seems manufacturers have taken the long-term view to heart. Oubre has noticed that, in cases where a manufacturer comes in at a much lower price point than its competitors, other biosimilar manufacturers have banded together and remained at an equivalent price point to promote greater long-term market sustainability.
“You need to be business minded and not look at the short-term gains,” she concluded. “You need to look at the long-term goals and manage your ASP, and the market, as a whole, needs to acknowledge that we’re only in the infancy of biosimilars.”