Biosimilars
Clarissa Chan, PharmD
In April 2024, FDA achieved a milestone with the 50th biosimilar approval. This landmark reflects the growing availability of safe and effective biosimilars, which are essential for treating a variety of chronic and severe illnesses.
While these approvals enhance patient access to crucial therapies, biosimilars are not cost effective despite competition. A cohort study published in March 2024 in JAMA Health Forum showed that the start of biosimilar competition did not reduce out-of-pocket costs, and reference biologic and biosimilar out-of-pocket costs were similar.
What are the primary financial barriers for the lack of reduction in out-of-pocket spending despite biosimilar competition?
There are likely two main reasons that biosimilar competition has not resulted in consistently lower out-of-pocket costs for patients, said Benjamin Rome, MD, from Brigham and Women’s Hospital, who was part of the cohort study.
“First, the drugs are often administered, and we know that many private health insurers reimburse hospitals and clinics at substantial markups. That means the price of the drug and the amount paid by insurers are disconnected,” said Rome. In a nutshell, savings are not passed on to patients.
Second, Rome said, insurance benefit design is complex. Patients have deductibles and out-of-pocket maximums, and the amount patients pay for services, like the administration of a medication, depends on their use of other services.
“Thus, the portion that patients pay can vary over time and be disconnected to the price of a drug,” said Rome.
What are the key drivers behind the higher markups of innovator biologics in hospital outpatient departments compared to physician offices?
There are significantly higher markups by hospital outpatient departments compared to physician offices for both innovator (or original) biologics and biosimilars, said M. Christopher Roebuck, PhD, president & CEO of RxEconomics LLC. Higher costs translate into either increased premiums and/or increased out-of-pocket costs.
“More research is needed to uncover the drivers of [hospital outpatient departments],” he said. “It is widely known, however, that hospitals have in recent years accelerated their acquisition of physician practices, which in turn gives them more pricing power.”
How can pharmacists be involved in advocating for these policy changes?
Pharmacists should understand biosimilars and advocate for their use; pharmacists need to educate patients that biosimilars are rigorously tested and have equivalent safety and effectiveness to the original biologic, Rome said.
“The more that we as professionals demonstrate our trust in biosimilars and convey that trust to patients, the easier it will be for policymakers to enact changes that improve biosimilar competition,” said Rome.
What policy interventions could ensure savings from biosimilar competition are passed on to patients?
“Policymakers could improve biosimilar competition by addressing patent gaming that is used to delay such competition,” said Rome. “FDA suggested removing the separate requirements for biosimilars to be deemed interchangeable with the original biologic, which could help increase patient and clinician confidence that biosimilars work just as well as the original.”
There are also some technical policy changes, such as consolidating billing codes so that there’s a single reimbursement rate for biologics and their associated biosimilars, similar to how there is a single code for a branded drug and its generics; this might spur more direct price competition, he said.
“We also might need more insurer or provider regulations to limit markups in the supply chain,” said Rome.
What strategies can be implemented to address pricing failures and reduce waste related to biologic and biosimilar costs?
To address hospital outpatient department markups, Roebuck said plan sponsors and policymakers should consider putting in place site-neutral payment policies, such as reference pricing.
“While higher [hospital outpatient department] pricing may be justifiable for certain outpatient medical services, the administration of outpatient prescription drugs does not typically require the additional resources that [hospital outpatient departments] offer,” he said.
How can pharmacists collaborate with prescribers to make cost-effective decisions without compromising clinical efficacy?
Particularly with regard to biosimilars, pharmacists should feel empowered to educate clinicians about the importance of using the option that is the lowest cost to patients since all biosimilars are tested head-to-head against the original biologic and are deemed by FDA to have equivalent safety and effectiveness.
“In most cases, the decision to use a biologic or its biosimilars should probably be made primarily based on cost,” said Rome.
This effort will require talking to insurers to understand patients’ benefits, particularly because costs can vary throughout the year, Rome said. ■