From The Editor | June 27, 2017

5 Biosimilar Questions: The Payer Perspective (Part 1)

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By Anna Rose Welch, Editor, Biosimilar Development
Follow Me On Twitter @AnnaRoseWelch

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Time and time again, payers have been heralded as the stakeholder that will lead the biosimilar push in the U.S. This is probably an accurate claim (and if you continue to read, you’ll understand why I use the term “probably”). We’ve already seen UnitedHealth and CVS jump on board with Zarxio, and Express Scripts will likely venture into the mix in the next year or two as well.

Though to biosimilar makers it’s a no-brainer that payers should be handing over their formularies to biosimilars, it’s not so black-and-white on the payer side. And this hesitancy isn’t necessarily based on concerns about efficacy and safety (though they do play a part). Just as there’s no one-size-fits-all approach to the biosimilar business model, there are a number of unseen complexities in payers’ approaches to biosimilars. As it turns out, payers are juggling quite a few different expectations and internal concerns.

One of my favorite conference panels from the past year was a conversation between Sheila Arquette, formerly the director of pharmacy for Independent Health, and Ambrose Carrejo, pharmaceutical contracting leader for Kaiser Permanente. This honest discussion, which took place at the CBI Biosimilars Summit, revealed why payers haven’t taken the hoped-for no-holds-barred approach to biosimilars. This will be the first of two articles addressing two of the five questions they approached  

How Does A Regional Health Plan Approach Biosimilars?

When I read the conference schedule of events, I was familiar with Kaiser Permanente, given its presence throughout the U.S. and its successes with Zarxio. Kaiser Permanente, which comprises the Kaiser Foundation Hospitals, Kaiser Health Plan, and the Permanente Medical Groups, saw 96 percent uptake of Zarxio, making it one of the more aggressive integrated delivery networks (IDNs) as far as biosimilars are concerned.

But I’ll admit I’d never heard of Independent Health, which can be found in eight counties in Western New York. In addition to providing exchanges for Medicare, Medicaid, and commercial insurance, Independent Health has its own pharmacy benefits manager (PBM) and its own specialty pharmacy. If anything, putting Independent Health and Kaiser together on a panel was valuable because of the differences in the sizes and scopes of their organizations. And, as you might expect, when it comes to biosimilar uptake, the size of the payer does play a role in its decisions.

Independent Health has taken the “watch-and-wait” approach to biosimilars, though that’s not to be interpreted as a lack of interest or ignorance. Arquette was particularly excited to observe how Zarxio performed on the market because she expected adoption would be high because it wasn’t a chronic, long-term medication. But, as Arquette explained, she didn’t see a great amount of buy-in from physicians, nor did Independent Health promote the biosimilar’s arrival.  

Now that Inflectra is on the market, Arquette expressed interest in seeing the clinical data as well as if interchangeability will be an option. But she was also skeptical about whether she’d be willing to put it on a formulary in place of Remicade. Her explanation goes a long way to show just how many considerations a payer has to make when deciding whether to add a biosimilar (and probably any new drug) onto its formulary.

“I have Johnson & Johnson asking me to please keep Remicade in the same position on the formulary,” she explained. “I have providers a little bit unsure about biosimilars, and then I have stable patients. I think about those stable patients and question if I want to move them to something else that’s supposed to work, but also might not work. Though the biosimilar is a little bit cheaper, I wonder if that discount will equate to any savings for patients in general. What happens should the biosimilar not work and they end up in a hospital, which ultimately accrues more healthcare costs? What if they’re then switched back to Remicade, and they’ve developed antibodies?”

This seeming waterfall of concerns garnered some laughter from the crowd, but it’s also a comprehensive collection of current biosimilar-related concerns. Now, many of these safety, efficacy, and immunogenicity fears will likely be disproved over time, especially seeing how many positive reports of biosimilar switching data continue to be released. But buried beneath the common safety and efficacy fears is the importance of a health plan’s relationships with its members and physicians. Kaiser has its own base of physicians built into the organization. As such, it might be easier to get physicians on board and in support of formulary decisions at Kaiser. But Arquette says physicians can easily push back against her decisions.

“My main thought process is, are doctors going to jump on board with us, and how do we get them to do that?” she asked. In fact, she was empathetic with doctors’ frustrations over “non-medical” switching, or payer-driven switching. “The physicians are supposed to be treating this patient, but we’re going to tell them how to do it,” she said. “Who likes that? Obviously, nobody likes that.”

Would A Winner-Takes-All System Work In The U.S.?

By now, everyone is familiar with the Norwegian and Danish biosimilar success stories, made possible by steep discounts and a tender system allowing one biosimilar to rule the market. But the likelihood a system like this would work in the U.S. — or be a good thing if widespread — is debatable. Culturally, I’d argue the U.S. has fully embraced the famous Burger King slogan “Have it your way” in a number of aspects of our lives, healthcare included. Patients are increasingly involved in their healthcare decisions, and they value choices. Arquette described a scenario that keenly demonstrates this desire for choice. Once, Independent Health decided to go with an exclusive blood glucose test strip. Apparently, this created pandemonium amongst patients and physicians.  

“Providers and patients are used to choice,” she described. “We have to take that into account. One thing we’re witnessing with the current health insurance exchange is that we’re marketing to individual people, and they’ve become very savvy and educated. If we’re asking them to switch from a successful therapy to one with only minimal savings, they’re going to ask what’s in it for them.”

However, Carrejo argues that at an organization like Kaiser, the “one-and-done” approach is more feasible and, actually, preferred. Kaiser’s formulary is determined by physicians from the medical groups. As such, there’s generally confidence in and high uptake from the formulary, which supports this “one-and-done” approach. Though, the success of a winner-takes-all scenario also depends on the therapeutic class. Generally 10 to 15 percent of the market requires an alternative treatment, depending on the patient’s treatment history with the formulary’s preferred drug.

“We’re not able to manage to zero,” he acknowledged, especially in the multiple sclerosis or the anti-TNF spaces. But when the choice is between a biosimilar and a brand, he would personally prefer a one-and-done approach to garner the highest possible discount.


Continue on to part 2.