Biosimilar Policy Roundup: September 2019

With the US Congress back from its summer recess, September marked a busy time on Capitol Hill for policy proposals that touch on drug pricing, biosimilars, and patient access to high-cost therapies.

First, a group of more than 20 groups, representing patients, employers, and others, in a letter addressed to HHS Secretary Alex Azar, asked HHS to end cost sharing for Medicare Part B patients when a provider administers a biosimilar rather than a reference biologic. In order to develop the US market, incentives must align, claims the group, and out-of-pocket savings in Medicare Part B could influence the rest of the payer market, as many commercial payers take their cues from CMS payment policies. Signatories included the American Cancer Society Cancer Action Network, the Association of Community Cancer Centers, Employers Health, CVS Health, and others.

Also proposing changes to Part B cost sharing is the Biosimilars Council. In a new component of its white paper on barriers to biosimilars, the industry group proposes both waiving cost sharing for patients when a biosimilar is administered and implementing a shared-savings model for biosimilars. In Part D, the group proposes making biosimilars subject to lower cost sharing, ensuring automatic coverage of biosimilars immediately after launch, placing biosimilars on separate formulary tiers to reduce patient cost sharing, and providing specialty tiers for biosimilars above the CMS specialty threshold.

AARP also highlighted the problem of high annual drug costs; a new report issued this month finds that retail prices for widely used prescription drugs increased by an average of 4.2% in 2017, while the general inflation rate was 2.1%. The report also found that, during 2017, the average annual retail cost for drugs used to treat chronic conditions was almost $20,000 per year, or nearly 20% higher than the average Social Security retirement benefit ($16,848).

Issuing a report of its own was America’s Health Insurance Plans (AHIP), which shed light on what it views as drug makers’ gaming of the Orphan Drug Act’s incentives to develop products for the treatment of rare diseases. Drugs including brand-name etanercept, infliximab, and adalimumab, all of which are top-selling products, carry orphan indications that confer benefits like 7-year market exclusivity from the date of orphan designation approval, a 50% tax credit for expenses incurred during clinical testing, and a waiver of the New Drug Application fee.

The House Ways and Means Committee also published new data this month showing the extent to which US patients pay more for their drugs than do patients in other countries. The report examines patterns of US drug pricing relative to other international comparator countries, and it found that Danish patients spent on average $318 annually per capita, the lowest in the study, while US patients paid $1220 each year per capita, the highest.

As a proposed answer to some of these problems, House Speaker Nancy Pelosi, D-California, unveiled her plan to bring down drug prices. Under the plan, HHS would be authorized annually to negotiate prices for up to 250 of the most costly drugs that lack a generic or biosimilar competitor. The maximum price for a drug would be determined using a blend of international prices that must not exceed 1.2 times the average price in Australia, Canada, France, Germany, Japan, and the United Kingdom.

HHS would also be allowed to assign penalties to companies that refuse to negotiate their prices. While the plan shares some features with the Trump administration’s blueprint to bring down the cost of drugs—such as using an international index to determine prices—it remains to be seen whether the plan can be passed in the Senate.

Two more bills of note for biosimilar stakeholders were introduced this month: The Bolstering Innovative Options to Save Immediately on Medicines would temporarily increase reimbursement for biosimilar drugs in a 5-year effort to help increase their use, while the Advancing Education on Biosimilars Act of 2019 would create federal programs to promote biosimilars, including the development of continuing education programs for healthcare providers.

Additionally, the Safe Step Act of 2019 was introduced in the Senate this month. This item of legislation would amend the Employee Retirement Income Security Act to require group health plans to provide an exception process for step therapy so that patients can access treatment without delays.

The bill comes shortly on the heels of the American College of Rheumatology’s release of survey findings that show that step therapy is being widely used, with 46.49% of patients with rheumatological diseases having been required to undergo step therapy in the past year. Step therapy is often used to require that patients take less expensive, often older drugs before gaining access to products like biologics and biosimilars.

Meanwhile, the war of words between Peter Bach, MD, and his detractors continued; Bach and coauthors have argued that that biosimilar competition is an inefficient way to achieve the goal of lower prices for drugs and that the US government should instead regulate the prices of off-patent originator biologics. Critics, including authors from the American Enterprise Institute, weighed in as well, saying that Congress can make changes to the law to help biosimilars get a foothold in the US market.

Speaking with The Center for Biosimilars^® in an interview, Amitabh Chandra, PhD, Ethel Zimmerman Wiener professor of public policy and director of health policy research at the Harvard Kennedy School of Government, said that, while what Bach and colleagues propose is not impossible, the US government has had little success with price regulation: “You can see that all the time with the postal service, with the railroads. Every time we try to do it, it’s not particularly clear that we do a good job.” Chandra added, “My own sense of this is that we need more regulation to increase and expedite their entry. We do not need regulation that goes as far as price regulation.”

Former FDA Commissioner Scott Gottlieb, MD, also weighed in on this issue of roadblocks to biosimilars; speaking with The Center for Biosimilars^® in an interview, Gottlieb said that the United States should consider eliminating safe harbor for drug manufacturers’ rebates for biologics when biosimilars enter the marketplace. “The existence of a rebate, or the ability to rebate off of the incumbent biologic, truly is anticompetitive in that setting,” Gottlieb said.