Follow-on Insulin Glargine, Generic Glatiramer Illustrate Medicaid Drug Rebate Issue, Study Says

The market share of injectible generic pharmaceuticals with large price increases—follow-on insulin glargine as well as glatiramer acetate—rose among Medicaid managed care organizations (MCO) compared with fee-for-service (FFS) Medicaid plans, indicating that pharmacy rebates and preferred drug lists (PDL) play a large role in substitute agent preferences, according to a recent study.

The list price of brand name insulin glargine, Lantus, sold by Sanofi, and brand name glatiramer acetate, sold as Copaxone, tripled between 2008-2018.

Boehringer Ingelheim’s Basaglar, the first FDA-approved insulin glargine follow-on, launched in 2016 after a lengthy patent litigation with Sanofi. There are several generic versions of Copaxone, including Glatopa.

Researchers sought to compare their use in 4 groups: states with only FFS Medicaid, states with MCOs not subject to statewide PDLs, states with MCOs using statewide PDLs, and states with MCOs where drug benefits had been carved out.

The study showed that the market share for generic versions was highest among MCOs without statewide PDL regulations. For follow-on insulin glargine, market share was 59.1%, and 52.8% for generic glatiramer acetate.

In states with MCOs subject to PDLs, market share for follow-on insulin glargine and generic glatiramer acetate was 2.4% and 18.0%, respectively.

Additionally, share was also low in states with only FFS Medicaid (0.9% and 1.7%) or states where drug benefits have been carved out of MCOs (0.0% and 1.0%; all P < .001).

There was a significant correlation between state-level MCO penetration and share of generic/biosimilar products (R = 0.50 for follow-on insulin glargine and 0.57 for glatiramer; all P <.001).

Nationally, the market share of these generic was higher among MCOs than FFS (60.5% vs. 3.7% for insulin glargine; 59.4% vs. 5.7% for generic glatiramer; all P < .001).

One factor in why MCOs without PDLs contribute to the market for these generic competitors is that these particular kind of MCOs are not incentivized to push branded drugs like the other types of plans studied, according to lead researcher and assistant professor at the University of Pittsburgh School of Pharmacy, Inmaculada Hernandez, PharmD, PhD.

The 2 groups with the lowest market share numbers are also the plan options that are most likely to push brand name medications instead of biosimilar and generic versions. Those groups are fee-for-service (FFS) plans and MCO plans with benefits carved out.

Noting the low use of follow-on insulin and generic glatiramer acetate in FFS plans as well as ones where drug benefits were carved out, Hernandez said both of those types of plans benefit from the rebate structure and are incentivized to prescribe branded prescriptions.

The rebate system requires drug manufacturers to pay money to the state for all of their outpatient prescriptions as a condition to have Medicaid cover their drugs. States MCOs with carved-out drug coverage means that drug benefits are provided by the state agency, so as with FFS Medicaid, rebates flow back to the states. Prescriptions with high list prices, often times branded medications, typically produce higher rebates, and thus lower net prices to the states, Hernandez explained in an email to The Center for Biosimilars^®.

By comparison, in order for them to keep rebate amounts low, MCOs are incentivized to promote drugs with low list prices, which is how generic products typically capture a larger portion of that market.

States have recognized that the rebate system is helpful to them, said Scott Soefje, PharmD, MBA, BCOP, FCCP, FHOPA, an assistant pharmacy professor of Pharmacy at the Mayo Clinic College of Medicine and Science, in an email.

“Some of the drugs, due to the inflation rebate formula, actually have rebates at or greater than 100%. Basically, it is free for the branded drug to be used,” he said. “If the states sees enough of these situations in their MCO, then they carve out the prescription benefit to take advantage of the rebates.”

However, the Medicaid and CHIP Payment and Access Commission (MACPAC) has called for the removal of the rebate cap, which limits total rebate amounts for innovator drugs to 100% of the average manufacturer price (AMP) per unit. Doing this will produce even higher rebate amounts and make it more attractive for states to continue encouraging branded drugs, Hernandez predicts.

The authors said this is the first study to examine the differences of brand name drugs with large price surges when generic alternatives are available.

According to a recent issue brief published by the Kaiser Famly Foundation, at least 45 states use PDL requirements in their FFS programs. More states are implementing PDL requirements for MCOs, which will further increase differences in use of brand name alternatives, Hernandez speculates.

Reference

Hernandez I, Gellad WF. Differences between Managed Care and Fee-for-Service Medicaid in the use of generics for high-rebate drugs: The cases of insulin glargine and glatiramer. J Manag Care Spec Pharm. 2020;26(2):154-159. doi:10.18553/jmcp.2020.26.2.154