Pharmacy Benefits Uncut

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Biosimilars can help employers reduce their drug spend, but implementing a strategy to maximize use of these drugs is key to realizing their full savings potential.

So today I’m going to share with you four key things you need to know about biosimilars and strategies to unlock the full extent of drug-spend savings they offer.

Let’s dive in.

#1: What is a biosimilar?

Before we get to talking about biosimilars, we need understand what a biologic drug is. Biologic drugs (often simply called biologics) are produced from cell lines of living organisms such as bacteria, plants, or animals. They are typically larger and more complex than conventional drugs (think acetaminophen, commonly known as Tylenol).

They are usually given to patients by injection or infusion and may require administration by a healthcare professional. Examples of commonly use biologics include insulins (e.g. insulin glargine sold under the brand name Insulin Lantus) and drugs to treat inflammatory conditions such as rheumatoid arthritis (e.g. adalimumab sold under the brand name Humira). Cell and gene therapies are also considered biologics (e.g. onasemnogene abeparvovec, sold under the brand name Zolgensma).

Biosimilars are biologic drugs that are highly similar to an existing biologic (often referred to as the reference biologic or originator biologic) that has already received market authorization. There are no expected differences in effectiveness or safety between a biosimilar and its reference biologic. Biosimilars were developed to reduce the cost of biologics, just as generic medications were developed to reduce the cost of branded conventional medications.

#2: How does the FDA regulate biosimiliars?

The FDA uses rigorous, specific evaluation criteria to ensure each biosimilar that is approved is clinically equivalent to its reference biologic, meaning it is equally effective and safe.

Biosimilars that meet additional requirements may be designated as interchangeable, meaning that they can be substituted by a pharmacist for the reference biologic without approval of the prescriber, subject to state pharmacy regulations. Keep in mind that laws on interchangeability vary by state. Biosimilars not designated as interchangeable require approval of the prescriber before they can be substituted for the reference biologic.

This distinction between biosimilars and interchangeable biosimilars is a legal one designed to promote biosimilar uptake. However, it has led to confusion and misunderstandings among both patients and providers by creating the impression that biosimilars designated as interchangeable are more effective and safer than those not designated interchangeable. Because of this, the FDA is considering scrapping this distinction.

Here's the bottom line: if a biosimilar has been approved by the FDA, it is equally effective and safe as its reference biologic regardless of whether it has received the interchangeability designation.

#3: How much will my pharmacy benefits plan save by increasing biosimilar uptake?

While biologics represent only 2% of all prescriptions in the US, they consume almost half of total drug spend, with $260 billion spent on these therapies in 2021. Spending on biologics increased by 50% from 2014 to 2018 and is likely to continue on this trajectory since the drug development pipeline is dominated by biologics.

Using biosimilars in place of their reference biologics could reduce costs by up to 35%, yet their uptake remains low, in many cases less than 30%, in the employer-sponsored insurance market for several reasons: slower regulatory approval of biosimilars in the US compared to other jurisdictions (e.g. Europe), financial disincentives for adoption, and confusion around interchangeability.

As of August 2023, 74 biosimilars were approved in the European Union compared to only 42 approved in the US. Evidence from the generic drug market suggests that meaningful drug price reductions are realized when more than three generic versions of a drug are available. Currently there are many biologics for which three or fewer biosimilars are available.

PBMs often negotiate rebates from manufacturers of reference biologics in return for favourable formulary placement of their products (see December 5^th’s newsletter for a detailed discussion of PBM rebates), thereby disincentivizing use of biosimilars. This practice drives profits for PBMs and manufacturers while increasing costs for employers and plan members. A recent study found that biosimilars are subject to more formulary restrictions than reference biologics in 20% of cases, with plans more likely to restrict coverage for biosimilars used to treat the most common conditions.

As mentioned above, the two-tier FDA system for approving biosimilars has caused confusion around their interchangeability, since the clinical and legal interpretations of interchangeability are often conflated. This has led to the incorrect perception by some providers that only biosimilars designated as interchangeable by the FDA can be used in place of the reference biologic.

#4: What can employers do to increase biosimilar uptake?

You need to use a two-pronged strategy to increase biosimilar uptake.

First, you need to ensure that both prescribers and plan members have access to unbiased, evidence-based information about biosimilars. When prescribers understand that any biosimilar can be used in place of its reference biologic, either when initiating therapy or when switching patients from a reference biologic, without concerns about effectiveness or safety adoption increases greatly. It may be difficult for prescribers to obtain this type of information since manufacturers of branded biologics may be, intentionally or not, creating confusion about the effectiveness or safety of biosimilars. That’s why employers need to ensure they share accurate information with prescribers in their network, including the significant cost savings of using biosimilars in place of biologics. The same goes for plan members. Many of them may hesitate in switching to biosimilars but developing a systematic outreach program and providing factual, understandable information on the benefits of biosimilars will help alleviate concerns. Pharmacists could play an important role in these biosimilar education initiatives.

Second, you need to take control of your formulary and eliminate misaligned incentives designed to limit or delay biosimilar adoption. Make sure you use a biosimilars first strategy that is not rebate driven, but rather based on achieving the lowest net price. Further incentivize biosimilar use by streamlining administrative processes for prior authorization and making them affordable for plan members by offering low or no copays. Be sure to communicate all formulary changes to prescribers, pharmacists, and plan members.

See you in 2 weeks,

Nina

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