From The Editor | December 6, 2017

2018: The Year Of Building Stronger Biosimilar-Payer Relationships?

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

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As we embark into December, we are already being inundated by “Best of 2017” lists and 2018 predictions. Every year, I contribute to this tradition in the life sciences by writing an article for Life Science Leader magazine which features biosimilar experts’ opinions on what we can expect in the year ahead. After all, this industry is ripe for reflection on the year’s progress, and there are seemingly unlimited predictions for how things will unfold in the future. Last year, though I didn’t publish any 2018 outlook articles on Biosimilar Development, I did write what turned out to be a very popular article highlighting The Top 5 Biosimilar Developments of 2016. (I plan to do a similar article for 2017 later this month, so stay tuned!) But I’d also like to publish as much forward-looking material as I can in the upcoming month to give the biosimilar industry a greater sense of what it needs to brace for in the upcoming year. 

Generally speaking, there’s no better place to start this exercise than by highlighting some of my takeaways from a panel of experts representing the diverse company business models in this space. Though this particular panel discussion took place a few months ago at the Biosimilars Council’s Leading on Biosimilars event, I purposefully held off on my discussion until now because of the forward nature of the conversation. Throughout the lengthy conversation, four experts from Sandoz, Pfenex, Mylan, and Apobiologix shared their thoughts on some of the more common topics in the U.S. industry. There were, of course, discussions on the problematic (and, at that time, yet-to-be-revised) Medicare Part B and D policies, risk evaluation and mitigation strategies (REMS) abuses, and the seemingly overlooked benefits of the European biosimilar experience.

But, the experts strayed from these more commonly discussed policy issues and touched upon an increasingly important topic: establishing relationships with payers. Seeing as the two biosimilars for infliximab did not fare as well as Zarxio in payers’ formulary decisions in 2018, there are a several things companies must consider as they set out to address payers’ current watch-and-wait attitude in the biosimilar market thus far.

What Biosimilar Companies Must Learn From Payers

Last year, I was heartened to see CVS Caremark and UnitedHealthcare jump on board right away with biosimilar Zarxio. It seemed like this was our moment — the other larger payers would likely follow in these footsteps and the launch of more complex products like infliximab would be welcomed with open arms. Well, we did see Express Scripts jump on the Zarxio bandwagon. But the two infliximab biosimilars — Inflectra and Renflexis — were not listed as the preferred infliximab products on any formularies for 2018. In fact, outside of UnitedHealthcare, the large payers chose not to even include these two biosimilars on their formularies.

Carlos Sattler, VP and head of clinical development and medical affairs U.S. for Sandoz, pointed out that, despite great excitement for biosimilars, payers have “been a bit shy to leave the sidelines.” This shows there is a great need — and a good opportunity —for biosimilar companies to establish action plans for educating and/or partnering with these key stakeholders.

To date, there is no transparency into the dealings among companies and pharmacy benefit managers (PBMs), and third-party payers. Pfizer’s law-suit against J&J’s contracting practices is a good example of the frustration arising from the processes that have typically been used in brand-to-brand competition. But there’s also an element of concern that the industry itself has yet to put its best foot forward when it comes to working with payers over biosimilar uptake. And part of this arguably has to do with the way we approach the payer landscape: as one homogenous entity. Just as the biosimilar companies boast different business models, so do payers — though, admittedly, it’s much easier to loop integrated delivery networks (IDNs), regional third-party insurers, national insurers, and PBMs under the simple term “payers.”

Sattler, for instance, reminded us all, “Payers have different strategies and goals, different customers, organizational structures, and cultures.” As such, depending on their models, they may be more or less willing to take certain risks. In fact, I wrote two articles earlier this year that demonstrated how different perceptions can be amongst different types of payers — in this particular case, between the large IDN Kaiser Permanente and a small regional insurer in Western NY.

Ultimately, companies need to begin engaging payers on a one-on-one basis — which, of course, includes educating them. But this engagement goes far beyond teaching them about the importance of biosimilars from a cost, access, and safety and efficacy standpoint (with all the science about the molecules in between). Biosimilar makers also need to approach their engagement with payers as a form of education for themselves. Only by engaging payers one-on-one can companies learn more about the intricacies of payers’ operations and objectives, and in turn, fine-tune their own commercialization strategies.

As Mike Woolcock, SVP of commercial operations for Apobiologix, advised, it’s important to consider whether a payer is taking a short- or long-term view of the market. “For some, it’s going to be ‘What costs less?’ and for others it will be a long-term strategic play,” he said.

As we’ve noted from certain areas in Europe, biosimilars aren’t likely to provide the most appealing short-term gains. And, so far, the less-drastic biosimilar discounts in the U.S. certainly don’t bode well for any significant short-term gains. But countries like Germany, for instance, have had greater success overall with biosimilars because “they’ve created an environment with the payers and physicians to encourage competition and to encourage use of biosimilars,” said Woolcock. (These mechanisms include prescribing quotas, a copayment system favoring the use of lower-cost treatments, and tender and open-house contracts. I’ve also read the potential for automatic substitution exists, but only for specific groups of biosimilars — for instance by the same producer.)

All the experts argued the importance of teaching and promoting sustainability at this point in the U.S. Since day one, building a sustainable market has been the central focus of companies. Even the FDA has been devoted in its own to sustainability, if we consider the amount of time it took to “get the science right” so biosimilars’ reputations’ wouldn’t be jeopardized by safety/efficacy issues. Similarly, the game-changing revisions of Medicare Part B were made in an effort to encourage sustainability. But as manufacturers seek to understand payers’ individual missions and long- and short-term goals, manufacturers also have to emphasize the importance of sustainability and why biosimilars need to be a long-term goal that provide savings year-over-year.

Building Relationships With Payers: How To “Get The Ball Rolling”

It’s clear there is work to be done on both the payer and biosimilar-maker sides to ensure both parties are not just watching and waiting for each other. I appreciated the moderator’s line of questioning around how companies can “get the ball rolling” when it comes to working more closely with payers — a challenge I expect will take center stage in the next year or so. One of the suggestions from Patrick Lucy, chief business officer of Pfenex, involved the promotion and development of a biosimilar tier. Not only would this keep payers from needing to fit biosimilars within a specialty or generics tier, but it would encourage uptake without cutting drugs from formularies. It could also provide financial incentives for patients to switch.

For instance, as Brian Lehman, a former employee of the Ohio Public Employees Retirement System (OPERS), described in a past article, patients taking biosimilars were paying 40 percent coinsurance with a $150 maximum when their biosimilar was included in the specialty drug tier. However, by creating a biosimilar tier, patients on the biosimilar would see their maximum payment go down to $100. (Coinsurance would stay at 40 percent.)

Overall, what companies can do to build relationships with payers is a topic I hope to explore more in-depth throughout the next year. How to “get the ball rolling” with payers, arguably, has taken a back seat to a number of different efforts — whether they be regulatory-, scientific-, or education-related. I’d argue the slow uptake by payers (in part) reflects this. The tactics that have been used to help brand companies compete against each other are now being employed against biosimilars, and lawsuits (like that of Pfizer against J&J) are only going to carry companies so far.

The biosimilar industry has begun to call attention to some of the workings that traditionally happen behind the scenes, whether it be in the doctors’ office or in formulary contracting practices. But this also sets the stage for another practice companies and trade organizations are going to have to get increasingly comfortable with moving forward. Woolcock put it best when he said, “We need to be concerned about what we’re not seeing. In fact, I would caution everybody that we don’t just look at what’s really visible to us, because this inevitably leads to an even more concerning question, ‘What can’t we see ahead?’ I’m sure there’s something else going on that we’re not seeing yet.”