Part 4: How Payers Can Prepare for Adalimumab Biosimilars

Readers can also check out part 1, part 2, part 3, podcast 1, and podcast 2 now.

The US biologics industry is about to face its biggest challenge yet: the introduction of between 7 and 10 adalimumab biosimilars throughout 2023, ending market exclusivity for Humira (reference adalimumab), the most profitable biologic drug in the world.

In 2021, Humira generated $20.7 billion in sales, making it the second most-sold drug on the global market that year, topped only by Pfizer’s COVID-19 vaccine. Humira is also ranked number 2 on the list of the top 25 selling drugs of all time. Biosimilars create a new opportunity for payers to save a lot of money. Overall, projections show that adalimumab biosimilars could generate $19.3 billion in savings by 2025, a 50% share of the total amount of saving expected from all biosimilars between 2021 and 2025.

Payers are likely to see the greatest financial benefits from adalimumab biosimilars. They are also likely to be at the forefront of decision-making around biosimilars, as they will oversee formulary lists and manage policies, such as step therapy and prior authorization requirements, that impact whether patients will have access to adalimumab biosimilars.

This month, The Center for Biosimilars® has examined all aspects of what the launch of adalimumab biosimilars in the US market will mean for stakeholders, from lessons learned in other markets to the need to hear from providers who must decide whether to prescribe new products.

This final installment in a 4-part series will dive into the pros and cons of certain payer policies and their effects on the potential for biosimilars savings as well as how payers can prepare for the launch of adalimumab biosimilars.

Formulary Placement and Tiers

According to Vizient’s 2022 Pharmacy Market Outlook report, when adalimumab biosimilars arrive in the US market, payers will structure formulary lists using 1 of 3 strategies: preferring Humira, preferring at least 1 biosimilar, or covering the biosimilar(s) and reference product at parity.

Some industry experts have called for a parity approach, which could allow for providers to pick the right product for their patients based on price, availability, and patient preference. Others have argued that preferring biosimilars is the best way to ensure biosimilar utilization and savings for all stakeholders.

Regardless of which strategy would be best for instilling market competition and generating savings, either may be more economically beneficial than prioritizing the reference product. According to a 2020 survey from the Center for the Evaluation of Value and Risk in Health at Tufts Medical Center, US health plans granted preferred status to biosimilars in only 14% of coverage decisions. Additionally, in rheumatology, 65% and 59% preferred reference infliximab (Remicade) over biosimilars Renflexis and Inflectra, respectively.

However, a report from the HHS Office of Inspector General found that Medicare Part D plans alone missed out on between $84 million and $143 million in savings during 2019 by prioritizing reference products over biosimilars. Additionally, Health New England, a nonprofit payer in Massachusetts, saved $1.7 million in a single year by reaching 93% utilization of infliximab biosimilars.

To achieve full benefits, payers are encouraged to evaluate which strategy is best for their organization, taking into account the needs of their practices and beneficiaries. Payers should also work with their pharmacy benefit managers (PBMs) to advocate for biosimilars. In some cases, payers may need to end relationships with current PBMs and form relationships with new ones to ensure that biosimilars can save payers money—and that employers don’t switch to another payer.

Payers may wish to re-examine formulary tiers and other savings programs to promote biosimilars. In 2021, the Association for Accessible Medicines recommended that payers such as Medicare Part D plans should include a dedicated specialty tier for generics and biosimilars, increase add-on payments to providers who use biosimilars (average sales price plus 8% vs 6%), and create a shared savings program to encourage biosimilar adoption.

Additionally, payers should keep in mind that if they restrict access to biosimilars and biosimilar savings, policymakers, such as the state legislators in Minnesota, may introduce legislation to override payer preferences by requiring coverage for all biosimilars.

Another consideration for formulary placement will be interchangeability status. Up to 5 adalimumab biosimilars are expected to have an interchangeability designation. The United States doesn’t have much experience with interchangeable biosimilars as only 1 is will be on the market until October. Until these biosimilars launch, the launch prices as well as their discounts compared to Humira will remain unknown.

Payers may want to consider not restricting formulary placement to adalimumab biosimilars with interchangeability as it may limit competition in the market, which will impact adoption rates, potentially giving rise to misunderstandings about what interchangeability designations mean. Interchangeable biosimilars are neither safer nor more effective than noninterchangeable biosimilars. Interchangeability only impacts the ease to which pharmacists can distribute certain biosimilars to patients. Prioritizing interchangeable adalimumab biosimilars over other adalimumab biosimilars could limit savings for payers as well as the rest of the health care system.

In addition, payers should remember that most adalimumab biosimilars will not launch until the second half of 2023. In January 2023, only 1 biosimilar to Humira will be available (Amjevita). Up to 9 others are expected to launch in July 2023, with some high-concentration options expected to launch in 2024 and beyond. Payers who wish to add adalimumab biosimilars to formulary and want to generate the most savings possible should ensure that their formulary modification policies are updated so that biosimilars can be added as soon as they enter the market.

Rebate, Reimbursement Structures

Rebates and reimbursements are known to influence prescription habits, formulary placement, and prevent biosimilar dissemination to patients. Both structures tend to incentivize the use of reference products. However, payers may want to look into ensuring that rebates and reimbursements encourage biosimilar use to ensure that better savings and clinical outcomes can be achieved.

Over the past few years, more payers have been adjusting their reimbursement strategies to incentivize biosimilar prescriptions, according to a report from Magellan Rx Management. The report found that most payers indicated that biosimilar pricing was the biggest influence on their reimbursement decisions, and provider willingness to switch patients from a reference product to a biosimilar was cited as the next most impactful factor.

Payers may want to negotiate rebates and reimbursement agreements with their PBMs and practices, respectively, to ensure that lower-cost biosimilars are accessible to beneficiaries and result in cost savings for everyone.

Payers should also keep in mind that short-term benefits from rebates could prevent long-term savings from biosimilars, thus diminishing incentives for businesses to invest in future biosimilars, limiting market competition that could drive down prices and lead to further lost savings for payers.¹

Obviously, payers will do what is best for business, and it may be tough to convince many to take a chance on adalimumab biosimilars, especially if rebates for Humira prevent payers from adding adalimumab biosimilars on formulary lists. However, several health systems have been able to generate significant savings from adopting policies that enable biosimilars to be added to formulary:

1. Providence St. Joseph Health saved $26.9 million in 2 years by adding biosimilars
2. Texas Oncology generated $4 million a month converting patients to 3 biosimilars
3. Pharmacare, a public payer in a Canadian province, anticipates savings will reach about $80 million (about $61 million USD) by 2024 after it added 5 adalimumab biosimilars to formulary in 2021

Additionally, the Biosimilars Forum has a state-by-state savings calculator that quantifies the amount that states could save if biosimilars accounted for 75% market share.

Reframing Prior Authorization and Step Therapy

Prior authorization and step therapy policies can aid payers by giving them and PBMs more of a say in which medications are prescribed to patients, especially if those medications have higher rebates. Both presenting challenges to biosimilars and preventing providers from being able to give them to patients.

In addition to presenting another barrier to biosimilar utilization, prior authorization policies create undue administrative burden on payers and practices. In a survey from the American Medical Association, providers reported that they have to wait between 1 to 5 days to receive a decision on prior authorization requests from payers, forcing patients to wait longer periods of time to receive their medications.

A big concern providers have is that prior authorization, in a way, negates formulary coverage by requiring practices to ask permission to prescribe their patients a medication, according to a panel discussion on prior authorization at the Association of Community Cancer Centers’ 2022 Annual Meeting & Cancer Center Business Summit. One panelist argued that using prior authorization for formulary management is inappropriate because it puts extra burden on practices to stock more biologics than could be easily managed and requires nurses to keep track of more formularies, making it more difficult for practices to manage costs related to biosimilars.

Payers should evaluate whether prior authorization requirements for adalimumab biosimilars will reduce efficiency within health systems and the amount of biosimilar savings payers could receive.

Step therapy policies in which patients will be required to try the reference product before a biosimilar can exacerbate costs for payers in ways they may not anticipate. An analysis from Avalere found that patients who were forced to start therapy with a reference product and experienced negative outcomes were likely to max out their deductible and copay requirements as soon as 5 months into a plan year, leaving payers to pay for the patients’ new medication for the next 7 months. However, patients with no step therapy requirements likely would not hit the maximum out-of-pocket costs until the end of the 12-month period.

Additionally, payer costs were 37% higher in cases where patients underwent step therapy with a negative outcome, costing them an average $50,000 more monthly. The impact that step therapy could have on adalimumab biosimilar use, and subsequently payer costs, is likely to be even more dramatic considering that Humira is one of the most expensive and top-selling drugs in the world.

However, step therapy policies that require patients to start therapy on a biosimilar before switching to a more expensive product could help foster savings for payers. An analysis from Magellan Rx Management found that giving payers the option to use step therapy that promotes biosimilars or parity reimbursement helped the PBM achieve a 90% utilization rate of oncology biosimilars over a 1-year period, showing that these policies on their own can boost adoption rates and cut costs.

Payers should consider whether step therapy requirements benefit them and their beneficiaries. Payers with requirements favoring reference products may want to change them to favor biosimilars instead or they may want to do away with them altogether. They should take an individual approach to evaluate which outcome would generate the most savings for them, especially as over 7 adalimumab biosimilars are expected to enter the market at potentially significant discounts to Humira.

What Providers, Patients, Pharmacists Want

Providers, pharmacists, and patients are all asking for better access to biosimilars. Biosimilars offer the entire health care system, not just payers, the opportunity to save money on expensive biologics, including Humira.

They are asking for more options, easier access, realigned incentives, and lower cost products. Many providers have indicated that they’ll prioritize interchangeable biosimilars, and many patients will be seeking a high-concentration formulation, especially those who are already using high-concentration Humira, which accounts for 80% of US adalimumab prescriptions.

Many clinicians are looking to have better communication with payers and are looking for payers to provide more transparency on drug pricing, formulary placement, and point-of-care information on cost savings.

One indication that providers and beneficiaries want biosimilar access is automatic substitution policies, which allow reference products to be substituted for a biosimilar regardless of interchangeability status. Some practices may implement automatic substitution policies to make switching patients to biosimilars easier and cut costs. While these policies will not get around prior authorization requirements, these policies could be viewed as a sign that providers and patients are willing to take action to ensure biosimilar use and lower drug costs.

Payers should also keep an eye on the growing cries for Congress and government agencies to step in and create frameworks that safeguard access to biosimilars. Employers have called on Congressional leaders to make drug coverage more affordable for American workers. The American College of Physicians have urged policy makers to reform the regulatory and market systems to remove barriers to biosimilars. A group of 16 advocacy groups called for HHS to make zero co-pays for all biologics as part of a drug price reform program. Also, the Federal Trade Commission is investigating PBM business practices and their impact on formulary decisions and patient outcomes.

Payers have much at stake in the adalimumab game and have a lot of power to change things to make biosimilars accessible, affect market dynamics, and generate savings across the health care industry. But the question remains, will they take a chance on adalimumab biosimilars, thus playing a massive part in how the market will develop, or will they choose to sit back and let the potential savings pass by?

Reference

Arad N, Staton E, Lopez MH, et al. Realizing the benefits of biosimilars: biosimilars and rebate walls. Duke Margolis Center for Health Policy. Published March 2022. Accessed August 31, 2022. https://healthpolicy.duke.edu/sites/default/files/2022-03/Biosimilars%20-%20Overcoming%20Rebate%20Walls.pdf