Report Points to Pricing, Litigation, and Lack of Interchangeability as Threats to Biosimilars

Life sciences consulting firm Trinity Partners has released a new report that explores reasons for the slow adoption of biosimilars among US payers.

The report, titled “The State of US Biosimilars Market Access: Payer Perception of Past, Present, and Future Hurdles to Adoption,” details findings from qualitative research with 10 medical directors at US payer organizations, representing plans covering over 100 million commercial and Medicare enrollees in the United States. Trinity researchers conducted in-depth interviews with these directors, exploring their views on biosimilar market trends, market dynamics, and market access expectations.

The report’s authors arrived at 3 explanations for the slow uptake of biosimilars:

The complexity of biosimilar pricing. Contracting among manufacturers, providers, wholesalers, payers, and pharmacy benefit managers (PBMs) is rarely transparent, and while a drug’s wholesale acquisition cost (WAC) maybe public, its net price to a purchaser is not. The report’s authors calculate, based on the Medicare payment limits published by CMS, that the average sales price (ASP) for Remicade (reference infliximab) to payers was $807—substantially lower than the biosimilar, Inflectra’s, WAC of $946.

Furthermore, the so-called “rebate trap,” a term that describes a scenario in which payers receive rebates that increase as performance metrics (such as market share or volume) rise, has a chilling effect on biosimilars. In Remicade’s case, Johnson & Johnson had contracts in place to discourage switching to a biosimilar; if payers switched products, they forfeit valuable rebates on the reference product. Trinity’s report quotes one medical director (all interviewees remained anonymous in the report) as saying, “You don’t want to poke the Humira or Enbrel bear, because they have such huge market shares. It’s not going to be worth it if you lose the discount or the rebate for such a big market share.”

Legal and promotional issues. The report points to the protracted legal battle (which recently terminated in a settlement) between AbbVie, maker of Humira, and Amgen, developer of the biosimilar Amjevita, as an example of “the great lengths to which innovators will go to protect their biologic products,” and notes that reference drug sponsors are also investing in direct-to-consumer advertising in the US marketplace in an effort to build brand loyalty for their products that could keep patients from being willing to switch to biosimilars. In 2015 alone, the report says, AbbVie spent more than $350 million on television, print, and other consumer-directed advertising for Humira.

A lack of clinical confidence. Because many biologic therapies treat chronic diseases, providers are hesitant to switch patients’ therapies if their diseases are well controlled. Thus, payers face resistance if they try to switch patients to cheaper therapies, especially because the FDA has not yet granted interchangeable status to any biosimilars. One medical director told Trinity that “…you can’t mandate the substitution, and if the physician pushes back, we don’t really have any leverage.”

Until interchangeable status becomes a regulatory reality, payers will likely default to allowing currently treated patients to remain on reference biologics.

The report identifies 4 approaches that payers are currently taking toward biosimilars:

• “Protect the status quo,” in which payers prefer brand-name products and exclude biosimilars from formularies, or restrict biosimilars by implementing step-edits. “We don’t want to be accused for a new product like this that we are jumping on the bandwagon for approval just based on cost,” said a medical director of a large regional payer.
• “Wait and see,” in which payers may not prefer biosimilars, but do not include biosimilars on a tier with lower copays or coinsurance. “Until doctors can get out and try the biosimilar, we don’t feel comfortable forcing them to do it,” one medical director of a mid-sized regional payer told Trinity.
• “Passive push,” in which payers may not prefer biosimilars, but include them on tiers with lower copays or coinsurance in order to encourage adoption. The medical director of a large national payer said that the organization’s position was not to “be too aggressive on theses just yet.”
• “Prefer and promote, in which payers actively prefer biosimilars to reference products via formulary tiering and restrictions to encourage uptake and non-medical switching. “We are endorsing biosimilars like promoting generics,” said the medical director of another mid-sized regional payer.

Some payers may not take a single approach to all biosimilars, but instead use different strategies among products. The report notes that, in cases in which payers reviewed biosimilars separately, they reported that, if there are clinical shortcomings with a biosimilar that emerge after approval, an overly restrictive coverage policy could have life-threatening implications for patients, particularly in oncology indications. “It could be that the patient dies,” said the medical director of a mid-sized regional payer.

According to the report, most payers surveyed are using either “wait and see” or “passive push” strategies, and many will likely shift to a “prefer and promote” strategy over the coming 10 years. Key changes will include more formularies preferring biosimilars and even excluding innovator products that do not drop their prices, preferring biosimilars or mandating their use for new starts while allowing existing patients to remain on their therapies in the near term, forcing non-medical switching in the longer term, implementing automatic substitution in line with state laws, and shifting toward biosimilars when interchangeable status is granted to these products.