Breaking Down Biosimilar Barriers: Payer and PBM Policies

Biosimilars offer critical savings and increased access to treatments, but they face substantial barriers before reaching patients. This series for Global Biosimilars Week, a worldwide online biosimilar advocacy event hosted by the International Generics and Biosimilars Association, focuses on 3 major areas where obstacles limit access in the US:

1. The patent system
2. Payer and pharmacy benefit manager (PBM) policies
3. Interchangeability

The Center for Biosimilars^® is a media partner for Global Biosimilars Week 2024. Each article in this series will shed light on these barriers and suggest steps to enhance biosimilar access, affordability, and equity.

PBM and payer policies significantly influence biosimilar adoption by determining reimbursement structures, formulary placements, and cost-sharing strategies. These policies often favor originator biologics through rebates and incentives, creating barriers that limit market access, reduce competition, and ultimately slow the widespread uptake of more affordable biosimilars. | Image credit: sebra - stock.adobe.com

How Payers and PBMs Influence Biosimilar Adoption

Payers and PBMs have significant influence over which biosimilars—if any— are available to patients, impacting whether biosimilars are covered and if they will be preferred over their originator biologics.¹ In various therapeutic areas, like oncology, payer and PBM involvement in prescribing has historically hindered biosimilar adoption by prioritizing certain drugs based on reimbursement strategies rather than medical need.

PBMs play a key role in determining which biosimilars qualify for rebates and reimbursement, which shapes payer policies and formulary placements. Although rebates are negotiated between PBMs and pharmaceutical companies and aim to reduce overall drug costs for insurers, they are often higher for reference drugs than biosimilars. This disparity means that patients frequently do not see lower out-of-pocket costs despite the potential savings.

Reimbursements—payments made to pharmacies or clinics for dispensing specific drugs—are negotiated by PBMs and payers. These agreements can affect which products providers are incentivized to prescribe but do not necessarily translate to lower drug costs for patients. This structure can indirectly shape prescribing habits, sometimes without transparency to either providers or patients.

Moreover, payer policies may not consistently inform physicians if a reference product or specific biosimilar is no longer covered, which can lead to unanticipated switches in a patient’s treatment. This can lead to patients with chronic conditions who may be more wary about medication changes and experiencing worsened clinical outcomes resulting from the nocebo effect, which can affect how patients view the safety of biosimilars in the future.²

For Medicare beneficiaries, cost-sharing can be even more complex. Depending on the drug and the care setting, a medication might be covered under Medicare Part D, Part B, or Part C (if the patient is enrolled in a Medicare Advantage plan). Cost-sharing obligations under Medicare can also shift throughout the year as out-of-pocket spending reaches specific thresholds, impacting what patients owe at various points. This variability in coverage and cost-sharing can make budgeting for medication expenses a challenge for beneficiaries, especially as they balance treatments across multiple types of health care services.

These initiatives have even led biosimilars companies to change their pricing strategies to play into PBM and payer interests, particularly in the insulin and adalimumab spaces.³ In both, companies have chosen to launch a branded and unbranded product at 2 price points to allow for low-cost medication access for patients while also enticing PBMs to add the higher-cost product to reimbursement lists. For adalimumab specifically, Amgen chose to launch 2 branded versions of biosimilar Amjevita (adalimumab-atto) at different wholesale acquisition costs for the same purpose.

However, many experts have called for government entities to hold PBMs accountable for preventing lower costs from reaching patients through their practices.^4,5 Additionally, providers have sounded concerns about PBMs and payers interfering in the provider-patient relationship and treatment decision-making process.

“It’s time to pull back the curtain on pharmacy benefit managers and how their practices negatively impact patients. How is it that PBMs and health plans profit from negotiated discounts on prescription drugs, while patients pay co-pays based on high drug list prices that even the plans themselves are not paying?” said Russell Kridel, MD, a member of the American Medical Association (AMA) Board of Trustees at the 2019 AMA annual meeting.⁵ “Because of market concentration and lack of transparency, patients and physicians are essentially powerless in the face of PBM pricing and coverage decisions.”

What needs to be done to rectify this? Do PBMs and payer formularies need to go for good? Or can industry action create a balance between the interests of these stakeholders and the need to lower the cost of health care?

What’s to Come for PBMs?

To address challenges with PBMs and payers, panelists at the GRx+Biosims conference recommended increasing transparency within PBM practices and implementing policy reforms to support fair competition, biosimilar accessibility, and affordability.⁶ They emphasized that transparency would help define "rules of the road," allowing biosimilars to compete fairly with reference products and enhancing patient access. Additionally, reforms should consider incorporating specialty pharmacy dispensing fees in retail settings to support biosimilar adoption across different dispensing channels.

Some actions to curb these practices have been taken. On the national level, the Federal Trade Commission filed an administrative complaint against the 3 largest PBMs—CVS Health’s Caremark, Cigna’s Express Scripts, and United Health’s Optum Rx—accusing them of forcing patients to pay higher insulin costs to boost their profits.⁷ These PBMs control 80% of US prescriptions.

In addition to PBMs and payers, employers could face the price for offering plans with PBMs and payers with policies that force patients into paying higher costs. A Johnson & Johnson (J&J) employee with multiple sclerosis filed a class action complaint against J&J and its Pension & Benefits Committee, claiming they violated federal law by failing to properly manage prescription drug benefits.⁸ The complaint accuses J&J of not securing the best market rates, pushing beneficiaries towards costly options, and allowing the PBM to profit at employees' expense. If successful, the lawsuit could lead to financial restitution for employees, improved benefit management, and heightened awareness about benefit rights. It could also set a precedent for future cases, promoting better adherence to ERISA standards across other companies.

A recent editorial by 2 industry experts suggested that reforming Medicare reimbursement policies and revising payer formularies could help prioritize biosimilars, potentially through strategies like step therapy (requiring patients to try biosimilars before the originator) or offering reduced co-payments for patients.⁹

Alas, the fate of the health care sector as a whole is up in the air as former President Donald Trump prepares to step into his role in the White House come January 2025 to begin his second presidential term. But PBM reform will likely remain a focus, according to Lindsay Bealor Greenleaf, JD, MBA, vice president and head of federal and state policy for ADVI Health, during a recent interview with The American Journal of Managed Care^®, a sister site of The Center for Biosimilars.¹⁰

Greenelaf stressed that PBMs are likely to see continued scrutiny and potential reforms in a second Trump term. During Trump's first term, he attempted to implement PBM reforms, such as the Office of the Inspector General rebate rule, which sought to limit PBM compensation tied to a drug's list price. This rule was repealed under the Inflation Reduction Act. Greenleaf predicted that Trump may view this as unfinished business, implying that he could revisit and potentially finalize such reforms if reelected.

Greenleaf highlighted that there is bipartisan support for PBM reforms focused on improving transparency and delinking PBM compensation from list prices, especially in Medicare. These reforms could be pursued during the lame duck session of Congress or in the early years of a second Trump term, particularly if Republicans control Congress.

Given Trump’s history with PBM issues and the likelihood of continued Republican support in Congress, these reforms could be a major focus in the coming years. However, much of the exact direction will depend on how the political landscape shapes up following the 2024 election, as well as the role of PBMs in broader health care policy discussions.

References

1. Jeremias S. The age of adalimumab is upon us: how stakeholders can prepare. The Center for Biosimilars. June 28, 2023. Accessed November 12, 2024. https://www.centerforbiosimilars.com/view/the-age-of-adalimumab-is-upon-us-how-stakeholders-can-prepare

2. Jeremias S. Switching patterns highlight nocebo effect in European patients using Amgevita. The Center for Biosimilars. July 23, 2024. Accessed November 12, 2024. https://www.centerforbiosimilars.com/view/switching-patterns-highlight-nocebo-effect-in-european-patients-using-amgevita

3. Jeremias S. Happy birthday adalimumab biosimilars: reflecting on the first year of US competition. The Center for Biosimilars. January 31, 2024. Accessed November 12, 2024. https://www.centerforbiosimilars.com/view/happy-birthday-adalimumab-biosimilars-reflecting-on-the-first-year-of-us-competition

4. Jeremias S. Eye on Pharma: ustekinumab updates; ranibizumab trial; Julie Reed PBM piece. The Center for Biosimilars. August 6, 2024. Accessed November 13, 2024. https://www.centerforbiosimilars.com/view/eye-on-pharma-ustekinumab-updates-ranibizumab-trial-julie-reed-pbm-piece

5. O’Reilly KB. Time to scrutinize PBMs’ outsized role in Rx decision-making.AMA. June 10, 2019. Accessed November 13, 2024. https://www.ama-assn.org/house-delegates/annual-meeting/time-scrutinize-pbms-outsized-role-rx-decision-making

6. Jeremias S. How policy reforms in PBM systems could change the adalimumab market. The Center for Biosimilars. October 28, 2024. Accessed November 13, 2024. https://www.centerforbiosimilars.com/view/how-policy-reforms-in-pbm-systems-could-change-the-adalimumab-market

7. Jeremias S. FTC takes legal action against 3 largest PBMs over insulin costs. The Center for Biosimilars. September 30, 2024. Accessed November 13, 2024. https://www.centerforbiosimilars.com/view/ftc-takes-legal-action-against-3-largest-pbms-over-insulin-costs

8. Jeremias S. Patient with MS sues J&J over ERISA violation. The Center for Biosimilars. February 14, 2024. Accessed November 13, 2024. https://www.centerforbiosimilars.com/view/patient-with-ms-sues-j-j-over-erisa-violation

9. Jeremias S. Overcoming challenges to improve access and reduce costs. The Center for Biosimilars.November 12, 2024. Accessed November 13, 2024. https://www.centerforbiosimilars.com/view/overcoming-challenges-to-improve-access-and-reduce-costs

10. Caffrey M. The Trump sequel: what to expect on PBMs, 340B, drug pricing, and RFK Jr. November 12, 2024. Accessed November 13, 2024. https://www.ajmc.com/view/the-trump-sequel-what-to-expect-on-pbms-340b-drug-pricing-and-rfk-jr