FDA Biosimilar Plan Offers Employers Saving Strategy Solution
Based on 2017 FDA research, the delayed market launch of nine biosimilars represented $4.5 billion in potential savings.
In 2017, biosimilars generated $3 billion worldwide in revenue and present growing market competition to the specialty biotech market. Escalating specialty drug costs present a challenge for many employers who struggle to balance health care spend with business financial livelihood.
Based on 2017 FDA research, the delayed market launch of nine biosimilars represented $4.5 billion in potential savings. As part of the FDA Biosimilar Action Plan, biosimilar drugs are poised to offer a solution that could help deliver significant cost advantages without compromising therapeutic efficacy, safety, or quality.
Biosimilars are biologic drugs that are highly similar in structure and function to existing FDA approved reference drugs. With fully established FDA safety and efficacy data, reference drugs are used as the benchmark to which biosimilars are compared to.
For example, Neupogen is the reference drug for both biosimilar products Zarxio and Granix. Biosimilars must demonstrate no clinically meaningful efficacy differences and equal safety to gain FDA approval.
Biosimilars should not be viewed as generic drugs, but rather an alternative form of brand medications that would usually be categorized as specialty.
“Biosimilars can provide greater access to treatment options for patients, increasing competition and potentially lowering costs,” Leah Christl, PhD, associate director for therapeutic biologics at the Office of New Drugs in the FDA Center for Drug Evaluation and Research.
As part of the President Donald Trump’s efforts to reduce drug costs, the FDA has released a plan to expedite the approval and market launch of biosimilars.
FDA Commissioner Scott Gottlieb, MD, said the agency will “work with the Federal Trade Commission to stop ‘gaming tactics’ like piling up patents to extend the commercial dominance of brand-name medicines.”
Many biosimilars gain FDA approval but few are available on the market. Once FDA-approved, biosimilar products face an extended period between the approval and product market launch. This is due to the lengthy reference manufacturing patent review process that delays the number of biosimilars available for prescribing.
Dr. Gottlieb condemned reference manufacturer maneuvers to delay biosimilars market launch, saying, “We’re not going to play regulatory Whac-a-Mole with companies trying to unfairly delay or derail the entry of biosimilar competitors…we’re not going to wait a decade or more for robust biosimilar competition to emerge.”
Currently, biosimilars are not interchangeable with reference products, which further delays the prescribing and dispensing process. The Federal Trade Commission (FTC) requested the FDA release a statement allowing biosimilars to be automatically substituted.
The FTC said in a statement, “Experience with generic drugs teaches that automatic substitution is crucial for successful generic drug entry, market acceptance, and consumer savings.”
Automatic substitution would increase market access, drive costs down, and improve affordable patient access.
Biosimilars currently offer significant savings of 10% to 35% over reference drugs. For example, the reference drug Remicade treats inflammatory conditions such as rheumatoid arthritis or psoriasis. Specialty inflammatory drug expenditures have high utilization trends and accounted for 39% of the top 5 specialty products, according to Express Script data.
Remicade costs between $31,753 and $52,922 per year for an average weight American male. Biosimilars Renflexis and Inflectra offer 19% to 35% average wholesale price savings over the reference drug Remicade for a total savings of between $11,268 and $18,780 per year per patient. Likewise, Zarxio and Granix, both biosimilars of reference drug Neupogen, offer savings between 10% and 17%.
Savings would be amplified for all specialty patients if more biosimilars were available on the market, which is a savings value that is quite significant for payers and self-funded employers. With specialty drug costs predicted to be $6300 per claim by 2020—a surge that increased claim costs by 379% from the previous decade—biosimilars provide greater market competition and less expensive specialty drug therapy choices.
Most manufacturers and pharmacy benefit managers (PBM) generally will exclude biosimilars from specialty rebate guarantees. Consequently, biosimilar costs turn into a numbers game between manufactures, PBMs, and employers.
One alternative solution would allow PBMs to drive cost competition by incorporating biosimilars into formulary utilization management criteria. Step therapy has been proven effective in saving 2.3% of total drug spend.
The proposal would allow biosimilar products to serve as a formulary step 1 criteria, requiring patients to try and fail lower cost, safe, and clinically equivalent therapies before coverage of more expensive medications. By adding to step therapy criteria, PBMs will promote biosimilar education and awareness in the medical community, which would continue to drive utilization.
Employers need strategies to contain specialty prescription costs. Step therapy programs have a proven history of success with biosimilars regulating costs and reducing clinical risks. Coupled with FDA plans to continue approval and market launch, greater biosimilar market penetration would help to increase competition and lower costs without compromising quality, efficacy, or patient safety.
About the Author
As a Confidio Clinical Consultant, Genevieve supports Health Plans, Employers, and PBMs in clinical strategies and formulary cost management. Genevieve Regal, PharmD, HC-MBA, received her Doctor of Pharmacy from the Philadelphia College of Pharmacy, University of the Sciences and graduated Summa Cum Laude from George Washington University with a Healthcare Master of Business Administration Degree. Genevieve has 13 years pharmacy leadership experience in Medicare Part D plan administration, quality improvement, CMS Compliance, Program Audits, Sanction Remediation, Part D Best Practices, MTM & Pharmacy Operations. For questions or comments, Genevieve can be reached at Genevieve.Regal@confidio.com
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