From The Editor | June 29, 2017

5 Biosimilar Questions: The Payer Perspective (Part 2)

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By Anna Rose Welch, Editor, Biosimilar Development
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In the first of this two-part article, Sheila Arquette, formerly the director of pharmacy at Independent Health, and Ambrose Carrejo, pharmaceutical contracting leader for Kaiser Permanente, addressed several complexities impacting their organizations’ biosimilar uptake. This conversation, which occurred in January during the CBI Biosimilars Summit, goes a long way to illustrating just why payers have not quite lived up to the industry’s hopes of seeing biosimilars quickly shepherded to market. Beyond considerations of price and efficacy/safety concerns, there are a number of other complex factors that payers are considering when it comes to adding biosimilars to their formularies. In this article (the second of two parts), Carrejo and Arquette elaborate on some of their expectations for the market and how they — in partnership with companies — can encourage biosimilar acceptance.

Has The Market Played Out As Payers Suspected?

As you can imagine, discounts were a big topic of discussion. At the time of this panel (late January), Zarxio and Inflectra were available on the U.S. market. And, though we’ve seen some more approvals, thanks to ongoing legal struggles, the U.S. has a growing list of approved but temporarily shelved biosimilars. As such, we’ve seen no competition between biosimilars of the same originator product, and prices compared to the originator are still only 15 to 20 percent lower. Not surprisingly, this has disappointed payers. 

Part of this disappointment stems from expectations that biosimilars would swoop onto the market and immediately cut down the high costs of brand biologics. But what this expectation doesn’t take into account is their molecular complexity, which is several hops, skips, and jumps away from small molecule generics.

“I think everyone initially equated biosimilars to a generic,” said Arquette. “We were going to see those similar savings, but I think we learned relatively quickly the cost savings aren’t going to be what we expected. I don’t think anybody appreciated biosimilars’ complexity.” 

That complexity extends well beyond the molecule. Part of what makes this such an interesting industry is the number of unknowns. However, many of these unknowns weigh quite heavily on a payer, in turn affecting their notion of what the discounts need to be.

Carrejo isolated three variables that are particularly concerning. Obviously, there’s physicians’ and patients’ hesitance to accept biosimilars. There is also the realization that some patients may switch back from the biosimilar to the biologic for any number of reasons. As Carrejo pointed out, a certain percentage of patients in the NOR-SWITCH study saw their disease progress. He argued, “If I’m a patient whose disease has progressed after being placed on a biosimilar, it’s not that my disease is progressing, it’s that the payer changed my treatment to a knockoff drug and I want to get back on the originator.”

There are also concerns about the Medicare Part D “donut hole” patients will run into, which will mean they’ll end up spending more on a biosimilar than a biologic.

As Carrejo said, if you consider the extreme cases for each of these variables, you can determine just where a biosimilar will need to be discounted in order for switching to make sense. “I hear people say 30 to 40 percent discounts for a biosimilar, but when I do my math, the percentage is very far north of that,” he offered.    

What Role Do Payers Play In Creating Biosimilar Acceptance?

Education is one of the oft-cited methods of encouraging physician and patient use, and, in turn, greater biosimilar acceptance. In the past year or so, we’ve heard about the Biosimilars Forum’s and Biosimilars Council’s efforts, as well as those of individual companies, the FDA, and patient organizations. But apart from typical utilization management tricks — prior authorization, step-therapies, and other reimbursement incentives — I haven’t heard quite as much about how payers will work to build this acceptance. Nor have I heard much about how payers themselves are getting educated on the concept of biosimilars.

I was particularly impressed by Kaiser’s efforts to ensure the organization is educated about these new products. As Carrejo described, Kaiser has taken some of its specialists to visit biosimilar manufacturers and their facilities to learn how biosimilars are made. They’ve also sat through presentations in order to understand the science and how the manufacturer characterizes the molecules. 

But when it comes to creating acceptance of biosimilars, both Kaiser and Independent Health emphasized the importance of data and evidence-based evaluations. Within Kaiser, products placed on the formulary have to prove themselves via evidence. A drug information services group composed of specialist pharmacists from each therapeutic area culls literature and other sources of evidence to create a monograph for each product. This is then shared with physicians from the specific therapeutic class who vote whether to approve the product or deny access to the formulary.

“I could garner a 100-percent discount,” said Carrejo, “but if there’s no evidence to support the product, it wouldn’t get picked up for the formulary.” As such, sufficient evidence, which continues to be emphasized by all payers for formulary and pricing negotiations, should play a key role in creating biosimilar acceptance.

Arquette also emphasized the importance of other non-integrated delivery networks (IDN) payer organizations sharing that clinical evidence with physicians. “I think it’s on us to go out and provide them with the clinical assurance that they need, so that when we make the switch, they know it’s going to be OK for their patients,” she said.

But it’s also important to recognize that, especially in these early days, physicians are faced with different health plans that are promoting different preferred products. As such, this leads to some angst. Arquette pointed out, “A physician’s performance is based on how well they care for a patient. I think as much data that we have to use in order to improve physicians’ confidence in their choices will be helpful.”

In addition, should the payer choose not to incentivize a product through a reimbursement or shared-savings type of model, it will need to make it easier for physicians to get the product. This might mean eliminating prior authorization in order to create a path of least resistance, Arquette said. Unlike Kaiser, which has its own base of physicians who are unified with the formulary, Independent Health faces a diverse array of providers who vary in specialty and levels of expertise. As such, a regional payer, in particular, needs to be sensitive to these differences and adjust their utilization management techniques accordingly to promote a new medicine and instill confidence.

What Advice Do Payers Have For Biosimilar Makers?

Though she acknowledged many biosimilar makers might be hesitant to look into some form of direct-to-consumer (DTC) advertising, Arquette homed in on how effective at reaching patients these ads have been for reference drugs. Big Pharma ad spends may be controversial, but marketing efforts for biologics like Humira are nothing to scoff at. (In fact, not a half hour on the treadmill goes by that I don’t see at least one ad for Humira and/or Toujeo.) If patients are going to help drive the biosimilar push, in addition to physicians and payers, they’re going to have to know they’re available. Arquette described one particularly amusing scenario in which people who don’t even have cancer have approached her asking to be put onto Opdivo, no doubt because the utopia-like advertising has done its job.

Whether it be DTC advertisements or some other method of outreach, “Manufacturers have to get this information out there so that patients know it’s an option,” she offered. “It will also be important to reach employers — especially self-funded employer groups. These employers are always looking for cost-effective ways to reduce their healthcare spend, because these benefits help them retain and attract talent into the business.”

Biosimilar manufacturers also must not underestimate the relationship brand companies have with patients. Though DTC advertising may seem impersonal, I’d argue the example Arquette shared about Opdivo is one way brand manufacturers establish relationships with prospective patients. This relationship is significantly strengthened by other mechanisms — for instance, copay assistance programs. Carrejo argues the overall relationship will be another significant hurdle for biosimilar manufacturers to understand, especially given the alluring savings these can provide to patients. (I’ve heard Humira, in particular, has a stunning, and therefore hard-to-beat, copay program.)

Both payers highlighted the fact that biosimilar prices aren’t low enough to entice people to switch. As much as we’d like to see a large and innovative pharmaceutical market, it’s perhaps an uncomfortable truth that payers cannot be expected to continue financing that market. As patients continue to pay healthcare bills each month that could rival those of mortgage payments, Carrejo admitted, “We as payers don’t have much more room on what we can charge before we start losing patients or they start making worse decisions to just not have healthcare, period.” As such, payers and manufacturers need to collaborate to reach price points that will enable the manufacturer to make a profit and keep the payer from losing all profits.

This won’t always be an easy process, especially in these early days, because all stakeholders — physicians, patients, payers, and companies — need to be in agreement. That said, Arquette urged companies not to give up. As this and part one of this article (hopefully) revealed, there is a lot going on behind-the-scenes within a payer. But that doesn’t mean there can’t be ongoing discussions about how manufacturers and payers can make biosimilars work together.

“Sometimes when you come and talk to us, it’s not that we want to say no,” she explained. “It’s just very complex to try to manage all of this. When you come speak to us, provide the tools that we need to make the most effective decision — both cost and clinical — so that we can tell the biosimilar story, too. It might not be a win for us here, today, but maybe, going down the road, there is a win.”