Biosimilar Policy Roundup: February 2019

February 2019 was a busy month for biosimilars on the policy front, with pharma executives called to testify before law makers and industry attempting to navigate a raft of proposed Trump administration policies aimed at reducing the cost of drugs.

The month kicked off with an HHS proposed rule to block rebates and discounts given to pharmacy benefit managers (PBMs), Medicare Part D plans, and Medicaid managed care organizations by ending safe harbor protections that currently shelter drug makers’ rebates from penalties under the federal Anti-Kickback Statute. The rule would also create new safe harbor for discounts offered to patients.

The rule has substantial implications for the biosimilars market, where rebates have allegedly played a role in stymying biosimilar competition. According to allegations brought by Pfizer against Johnson & Johnson (J&J) in an ongoing antitrust lawsuit, Remicade-maker J&J used the so-called “rebate trap” to block competition from infliximab biosimilars in the United States. (Canadian officials this month, however, said that they had found “insufficient evidence” that J&J’s conduct in the Canadian market had substantially impacted biosimilars’ ability to compete.)

Response to the proposed rule on rebates was mixed; drug makers represented by the Pharmaceutical Research and Manufacturers of America, known as PhRMA, and the Association for Accessible Medicines praised the rule’s attempt to address misaligned incentives that lead to higher list prices, and provider group the Community Oncology Alliance called the plan “extremely good news for patients.” However, the Pharmaceutical Care Management Association, which represents PBMs, said the rule would lead to higher out-of-pocket spending, and the Academy of Managed Care Pharmacy called the plan’s aims “unrealistic.”

Drug makers continued to call the current rebate system into question during a full committee hearing before the US Senate Committee on Finance near the end of the month. In his testimony, Pascal Soriot, executive director and chief executive officer (CEO) of AstraZeneca, called the current system of rebates unsustainable. He said the United States should move away from the rebate system, but if that proves to be impossible, it should dedicate a portion of discounts and rebates to instituting caps on out-of-pocket spending for patients.

Albert Bourla, DVM, PhD, CEO of Pfizer, added that he supports passing all rebates to patients. Currently, the rebates are “swallowed up by the supply chain,” he said, agreeing on the need to cap seniors’ out-of-pocket costs. Both Bourla and Soriot called on Congress to “knock down barriers” to biosimilars as another means by which to reduce the cost of drugs.

Several of the drug makers who testified also voiced concern about another of the Trump administration’s proposed policies: the International Pricing Index (IPI), which would which would link drug prices in the United States to prices paid in other countries. Olivier Brandicourt, MD, CEO of Sanofi, warned that using the model would be “outsourcing price decisions” to overseas players, and Jennifer Taubert, executive vice president and worldwide chairman of J&J’s Janssen, added that she sees a need for an “American solution to an American challenge.”

As the United States considers implementing the model, stakeholders are beginning to pay closer attention to how drugs are priced in the nations the United States may use as benchmarks. The German system, for one, is the subject of a recent issue brief that outlines a system under which drugs that offer incremental benefits are subject to price negotiation between pharma and a single umbrella organization of health plans. The brief’s authors suggest that the German model offers an alternative to the US system and its especially high burden on patients.

Other European nations had successes with price negotiation this month; the United Kingdom’s National Institute for Health and Care Excellence (NICE) recommended pertuzumab (Perjeta) for use in patients with HER2-positive early breast cancer who have lymph node—positive disease. The recommendation was a breakthrough after previous rejections of the drug for routine use based on its high cost. According to NICE, Roche offered a confidential price reduction on pertuzumab, and biosimilar trastuzumab added cost savings that brought the therapy within an acceptable cost threshold.

Among other Trump administration proposals to rein in drug pricing is a potential requirement for drug makers to include list prices in direct-to-consumer advertising, and some drug makers are launching ads with list prices ahead of such a requirement. J&J this month announced that it will begin including list prices and potential out-of-pocket costs in its ads during the first quarter of 2019.

However, some research suggests that adding list prices to ads may not impact consumer behavior with respect to high-cost drugs; a study published this month found that the inclusion of statements that a patient could have a low out-of-pocket cost for a high-priced drug mitigated reluctance to discuss such a drug with a provider.

Finally, insulin, a therapy that is a continual focal point of criticism about drug costs given repeated price hikes, will be the subject of a bipartisan probe by the Senate Finance Committee. Senators are seeking details about pricing, research and development costs, rebates, PBM pacts, patient assistance programs, donations to patient advocacy groups, production, marketing and advertising, revenues and gross margins from selling insulin, and the companies’ funding of patient assistance programs.

Meanwhile, a proposed class-action lawsuit against 3 major insulin makers was allowed to proceed this month. While a judge threw out racketeering claims in the lawsuit against Novo Nordisk, Eli Lilly, and Sanofi, the court will allow the case, which argues that drug makers artificially inflate drugs’ list prices to placate PBMs, to move forward, denying the drug makers’ requests to dismiss the suit.