Analyst Notes: US pharmacy benefit managers talk tough on biosimilars, opine that deep discounting needs to become the "new norm"

The ink might not have dried on the approval letter, and the product hasn't even been launched. But that's not stopping two of the largest pharmacy benefit managers (PBMs) in the US, Express Scripts and CVS Health, from using Novartis' Zarxio, which was approved by the FDA in early March 2015 as a biosimilar to Amgen's Neupogen, as a stick to beat the biosimilars industry into relenting to steep discounts on their products.

Publication in early March 2015 of Express Script's annual drug expenditure report (see US prescription drug spending up 13.1 percent in 2014, lifted by speciality medicines: report) highlights in particular the high level of spend in the inflammatory market where the anti-TNF mAbs and fusion proteins compete (see ViewPoints: US spending data highlight biosimilar battleground for inflammatory drugs). Furthermore, rival PBM, CVS Health suggested that payers may be able to extract higher-than-expected discounts for biosimilars of between 40 percent and 50 percent by utilising strategies such as formulary exclusion.

Insights, Analysis & Views

Despite the brash proclamations from both Express Scripts and CVS Health in recent months about drug prices in the US, PBMs are set to play a leading role in the US biosimilars market, particularly for drugs that are financed through pharmacy benefit schemes – covering Medicare Parts C and D, and commercial insurance plans – which include self-injected therapies such AbbVie's Humira and Amgen's Enbrel. As a result, pharma companies either developing biosimilars or facing biosimilar competition in the US need to understand what PBMs are thinking in terms of biosimilars, and how aggressive they'll actually be when it comes to driving biosimilar usage in the country.

A new report from FirstWord – Biosimilars: US Payer Perspectives – provides contemporary insight and opinion from C-suite stakeholders that work for some of the leading PBMs in the US. The report includes PBM views on payer and physician awareness of biosimilars, the FDA's regulatory requirements for biosimilars, and what PBMs really think about some of the potentially market shaping issues of naming, indication extrapolation and interchangeability.

Payer awareness of biosimilars seems to be high, driven by an excitement that permeates the payer brethren that biosimilars provide an opportunity to save money, assuming that biosimilars are significantly cheaper than the originator's branded biologic. As the Formulary Advisor from a national PBM comments in the report: "I'd say payers are quite aware of biosimilars. We are waiting for an opportunity to lower the costs of biologics and assuming biosimilars are cheaper than the branded products, they offer that opportunity."

Physicians, it seems, remain a key area of concern for staffers at the large PBMs in the US. Insights from the report suggest that there is a universal belief amongst payers that physician knowledge and awareness of biosimilars is very low in the US. While some physicians, including specialists, might have a basic understanding about biosimilars, general physician awareness is some way off where it should be. As an executive vice president of prescription analytics at one of the PBMs opined: "Physicians don't know anything about this. Specialists in certain areas might, like oncology, but in other areas, like neurology, awareness is pretty low. It depends on the disease state, but I'd say over all awareness is very low. They may know they're coming. They maybe have that awareness, but they're not going to know all the costs and coverage nuances like the payer will."

In relation to the potentially market shaping issues of naming, indication extrapolation and interchangeability, opinions and insights from senior staffers at the PBMs that were interviewed for the report are very much aligned.

In relation to biosimilar naming, a pharmacy director from a national PBM commented that "we need to know which company made the product and be able to track back if there's a problem. I think I'm in the camp that thinks there should be a unique name; it could be trastuzumab-N for Novartis or infliximab-P for Pfizer," a belief that is shared by several other payers in the report.

While support exists for indication extrapolation, there was a general sense that all of the key stakeholders that need to understand the scientific rationale require further guidance. A chief pharmacy officer from a national PBM opined that extrapolation is a concept that all payers need support from the FDA on, as it determines a lot how plans are going to be able to use these drugs in practice. He continues: "Personally, I'm supportive of extrapolation. I think indication extrapolation is something positive from our perspective and once the drug has demonstrated that it's highly similar with fingerprint-like similarity, then why not? The trouble is, physicians remain unconvinced."

Perhaps the area that creates the most amount of debate amongst payers is interchangeability. While the FDA hasn't released its long-awaited interchangeability guideline, which is due in 2015, says the FDA, payers believe this one issue has the potential to influence future market evolution. Payers interviewed for the report universally agreed that that switching of patients from brands to biosimilars needs to be handled carefully, and that how a biosimilar is approved by the FDA – as interchangeable or not – will influence decision making, both medically and financially. The FDA is very much in the spotlight in relation to interchangeability, and payers wait with baited breath as to how this is going to be handled: "This has a lot to do with what the FDA ends up saying in relation to interchangeability. If a biosimilar is therapeutically interchangeable then we can do it. There will be data to support the switch. If we can’t, the market is likely to be sluggish and we'll have to be very aggressive in places where we potentially don’t want to be."

For companies operating in the biologics market in the US, including biosimilar developers, branded biotech, PBMs and MCOs, Biosimilars: US Payer Perspectives is a must read. The report gives actionable insights and commentary on some of the most critical issues in the US biosimilars market, and provides perspectives on how biosimilars could fair in a market ripe for change. For more information, please click here.

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