How Vertical Integration Drives Innovation and Access in Biosimilars

In an interview with Elie Bahou, PharmD, senior vice president and system chief pharmacy officer at Providence, he shared insights on vertical integration and its impact on the biosimilar industry. He highlighted that vertical integration allows companies to control costs, improve supply reliability, and address drug shortages.

Additionally, these organizations can provide patient assistance programs and educational resources, while gaining faster payer access and market uptake. Bahou emphasized that other biosimilar companies can learn from vertically integrated firms by streamlining operations, enhancing quality control, and fostering strong relationships with regulators and stakeholders. He also discussed that health systems can balance payer discounts and provider compensation through value-based contracts that ensure quality care, financial sustainability, and improved patient access.

This transcript has been lightly edited for clarity.

Transcript

In what ways does vertical integration contribute to biosimilar companies’ ability to invest in innovation and future pipeline development, and how might this shape the future of biosimilars?

Yeah, they can control cost since they own the full supply chain cycle. That's one. Two, there'll be better supply and less shortages. There's a huge drug shortage out there right now, and they will have built in patient assistance and co-pay assistance programs as well. And they'll be able to provide the education necessary, and they'll be able to gain payer access and that uptake a little bit faster. That's my thoughts on that, and I'm glad I wrote those down in my cheat sheet, because I would have forgotten someone else.

What lessons can other biosimilar companies learn from the success of vertically integrated companies in terms of achieving regulatory, commercial, and market success?

Yeah, so vertical integration is kind of what we're seeing out there. If you look at UnitedHealth Group, they own OptumRx. OptumRx is the PBM [pharmacy benefit manager] that owns their specialty pharmacies. So in this case, vertical integration and biosimilar companies enhances their ability to reinvest in innovation and streamline research develop and leading the cost efficiencies and a little bit faster market entry of new products, the control over the supply chain ensures higher quality and compliance, while also improving the agility and the quickness to respond to market changes.

So these factors will strengthen the competitive position these companies, but also promote a more dynamic type of biosimilar market would increase ability to be increased availability of affordable, high quality treatment options, which potentially that's the goal, would transfer patient access to these biologic type of medications so these biosimilar companies can learn from these vertically integrated firms by streamlining operations to cut costs and to quickly adapt to market changes. That's what I think the learning opportunity is so investing in quality control and building strong type of relationships with regular regulators and stakeholders can also boost our market share success and improve patient access to those treatments.

How long does it take to adopt a biosimilar in the integrated delivery network and health system setting?

It takes about 6 to 8, 9 months even sometimes, to fully adopt a specific biosimilar within a large idea. And why is that?It's due to multiple stakeholders and steps that are needed to take place, before we can fully adopt and optimize that P&T [pharmacy and therapeutics committee], adoption, acceptance, all of that stuff [comes in].

How can health systems balance the need to offer substantial discounts to payers while ensuring that providers are adequately compensated and maintain accessibility for patients?

They can manage payer discounts. These health systems can manage payer discounts while ensuring provider compensation and patient access by using value based type of contracts that eventually improve cost efficiency and offer performance type of incentives. And I believe that these strategies help maintain quality care and financial sustainability all together simultaneously.