Just the FAQs: Biosimilars

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Question: How are payers managing biosimilars at this point? Do you see that changing?

Jeff Casberg: Biosimilars are so new to the U.S. market that payers are still very much in the process of defining their strategies. At this point, what we see most often is payers preferring both the biosimilar product and the reference product, giving providers and patients maximum flexibility.

It's important to remember, however, that there haven't been very many products on the market to date, and many that have launched were done so under circumstances that we don't expect to continue. For instance, early Remicade (infliximab) biosimilars were priced at a very minimal discount to the reference product, allowing Johnson & Johnson to maintain its market dominance with price cuts and bundled rebates. Similarly, the launch of Neupogen (filgrastim) and Neulasta (pegfilgrastim) biosimilars was complicated by the arrival of Amgen's Neulasta OnPro, which is more convenient for patients because it enables at-home administration. 

That's all to say that, to date, payers haven't made wholesale changes to policies because they really haven't needed to. However, the combination of additional competition in these existing biosimilar spaces, forthcoming launches for blockbuster products like Humira (adalimumab) and Enbrel (etanercept), and increasing patient and provider familiarity with biosimilars all signify that more specific payer management should arrive in short order.

Q: What should providers consider when setting their own strategy for biosimilars?

Leslie Fish: First and foremost, biosimilars present a physician education challenge. Since biosimilars are not interchangeable with a reference product in the same manner as generic pharmaceuticals, providers must prescribe a specific biosimilar product by name for a patient to receive it.

As such, to prevent access issues, providers need to be knowledgeable about not only the clinical landscape of these products, but also the nature of payer coverage for their patients. For example, we've seen payers update their coverage to include coverage of brand Neulasta (filgrastim) and only one of the two available biosimilar products, a choice that will create administrative headaches for patients and providers if they don't prescribe the specific biosimilar covered by the patient's plan.

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Another key consideration for providers is financial. In the acute-care setting, what we think of as a "closed system," biosimilar utilization is simpler to manage. Once approved through the P&T process, acute-care facilities can create policies for automatic substitution, potentially reducing cost if biosimilar agents are available at a lower price.

But it's a different story on the outpatient/clinic side. Medicare, for instance, typically reimburses providers for the "average" cost of a drug administered in their clinic or office (a value known as "Average Sales Price," calculated by CMS), plus a standard "administrative fee" of 4.3%. To incentivize use of biosimilars, however, CMS has committed to calculating the 4.3% fee not based on the average cost of the biosimilar, but on the average cost of the reference product. As is typically the case, many commercial payers have followed suit to prevent provider confusion and incentive biosimilar uptake when it aligns with their formulary and management strategy.

For example, if I administer a biosimilar of Neulasta (filgrastim) instead of the brand name product to a Medicare beneficiary, my reimbursement is the "Average Sales Price" of the biosimilar, plus 4.3% of the (likely higher) average cost of brand Neulasta (filgrastim).

As such, providers have an opportunity to capture additional margin by acquiring and utilizing less expensive biosimilar products for all Medicare and many commercial beneficiaries.

Q: How will the recent FDA guidance regarding interchangeability impact this market?

Casberg: The recent FDA final guidance creates a clearer path by which manufacturers can apply for and receive the "interchangeable" designation. This designation will allow pharmacists to switch out biosimilar products for reference drugs at the point of dispensing, whereas today that switch requires a call to the prescriber (unless the drug is administered in an inpatient or clinic setting with automatic substitution policies). No products have received this designation at this point, but once we begin to see approvals, we should see a noticeable uptick in biosimilar adoption.

It's important to note, however, that interchangeability at the point of dispensing is controlled on a state level, and nearly all states have passed some type of specific legislation regarding substitution of biosimilars.

Overall, organizations should educate their providers about their specific state's guidance and regulations concerning when and why patients may be receiving biosimilars in place of reference drugs.