Biosimilars, Coverage Decision Making, and Getting the Answers You Need

Stanton R. Mehr, President, SM Health Communications LLC

stan.mehr@smhealthcom.com

www.smhealthcom.com

As I’ve written in past columns, the fact of the matter is, a biosimilar won’t receive de facto preferred positioning on a health plan or insurer’s formulary. Over the past few years, we’ve come to realize that so many issues are in play, and many opposing factors that can relegate a new biosimilar agent to nonpreferred status or to put it at the head of the line in tier 2.

“It all depends…” is an answer that will have the most experienced pharmaceutical executives rolling their eyes. But in biosimilar product launches, marketing, and access, there are simply too many variables in a new market in which little real payer experience exists.

For example, let’s say Product X is a new biosimilar TNF inhibitor, and let’s assume for the sake of argument all the patent, exclusivity, and approval challenges have been worked out. The FDA did not designate the agent to be interchangeable to the reference product.

• Did FDA grant the biosimilar the full slate of indications (i.e., extrapolation)?
• What was the reference drug’s manufacturer reaction to the new product entering the market—did they cut net prices for their own product? Is the price of Product X now 20% lower than the new price of the reference product or maybe even par with it?
• Are prescribers comfortable starting their newly diagnosed patients on Product X, or will they still prefer the reference product?
• If the reference product fails to yield a satisfactory outcome, should Product X be tried next?
• What about Medicare Part D or Part B coding and reimbursement?
•  Will the payer institute a separate biosimilar tier and will Product X be on it?
•  Will patient assistance programs make it easy to afford and access Product X?

The answers to these imperative questions will affect launch expectations as well as opportunities for gaining acceptance and marketshare. It is plain that blanket answers will be of limited use, as each health plan and insurer will set different priorities and react in different ways to a new biosimilar situation.

Market research, and mock P&T programs in particular, such as P&T Insight™, can go a long way towards identifying the biosimilar opportunities and challenges that exist in several types of commercial and public plans. Contact us today to discuss how we can help untangle the answers to all of these questions. This will help inform your U.S. market access, pricing, and marketing strategies to ensure that outcomes meet sales expectations.

SM Health Communications provides writing, consulting, and innovative market research services for the payer markets. Its proprietary P&T Insight™ virtual P&T Committee program is the leading mock P&T Committee product in the field. We’ve participated in many market research projects involving biosimilar development and launch, from the point of view of the biosimilar and the innovator drug manufacturer. For more information, please visit www.smhealthcom.com or contact Stanton R. Mehr, President, at stan.mehr@smhealthcom.com.

Biosimilar Launches: Ready, Set, Not-so-Fast!

Stanton R. Mehr, President, SM Health Communications LLC

stan.mehr@smhealthcom.com

www.smhealthcom.com

I’ve written as recently as this past January on the impending FDA decision to approve Sandoz’s version of filgrastim (brand name, Zarzio). By March, FDA had approved the agent, but Sandoz was unable to launch until September 3 because of legal action by Amgen that claimed Sandoz did not adhere to the specific, somewhat tortuous pathway that a biosimilar manufacturer has to follow to demonstrate that that their agent has not violated the patent of the innovator’s manufacturer. This pathway, promulgated by legislation, includes the ability for the innovator’s manufacturer to respond in kind to steps taken by the biosimilar company, all of which must be done within a certain time table. Here’s a piece that I wrote for the Health Payer Council (www.healthpayercouncil.com) a few months ago that more fully explained this situation, which is frustrating payers’ desire to start saving some money on specialty drugs.

We are on the cusp of the long-awaited new era in biologic treatment, the introduction of biosimilars to the armamentarium. They are estimated to save the health care system tens of billions of dollars over the course of a decade, and should start saving dollars to some extent (through better contracting with the innovator product, discounted pricing from the biosimilar manufacturer, or both) the moment the initial launch takes place. However, a scenario familiar to all payers may yet unfold that can significantly slow the pace of biosimilar introductions.

Challenges to product patents have a long and infamous history in the US pharmaceutical industry. They have been the cause of delayed generic introductions and accusations of manufacturer collusion, and the source of relentless bad press for the pharmaceutical industry. Yet, they work. They delay the loss of millions of dollars in revenue for brand manufacturers, and can postpone by years the launch of more cost-effective agents. Therefore, patent challenges to biosimilars were inevitable, and there are other legal challenges as well.

The Biologics Price Competition and Innovation Act of 2009, a subsection of the Affordable Care Act, not only directed FDA to set up the 351(k) pathway for biosimilars but also set up a framework for working through biosimilar patent disputes. Although similar to the statutory regulations contained in the Hatch–Waxman Act to address conflicts over patents for branded products by generic drug manufacturers, there are complex differences. According to one analysis of the Act.¹ “The filing of a biosimilar application under the Biologics Act constitutes an act of ‘infringement’ sufficient to allow the maker of the innovative product to bring an action against the follow-on applicant in federal district court, but a series of patent exchanges must occur between the parties before any such suit is initiated.”

The first step in this complicated process is that the biosimilar manufacturer supply a copy of its application to the innovator company within 20 days of application acceptance. Then within 60 days, the innovator must send the biosimilar manufacturer a list of patents it believes would be infringed by the new agent. At this point, the originator’s manufacturer is compelled to list which, if any, of these patents it may be willing to license to the biosimilar’s manufacturer. Within another 60 days, the prospective biosimilar manufacturer is directed to detail for each patent on the list their factual and legal support for why it believes that the patent is not valid, unenforceable, or will not be infringed or a statement that the applicant does not intend to begin commercial marketing of the biological product before the official patent expiration date. Within yet another 60 days, the originator’s manufacturer must refute these arguments.¹ Each of these steps in general represent opportunities for noncompliance and ongoing litigation.^2,3

Sandoz, which gained the FDA nod for its biosimilar version of filgrastim (Zarzio) on March 6, has been battling Amgen over its US patent.⁴ Amgen’s product patent for filgrastim (Neupogen) expired in 2013. However, biosimilar manufacturing is more complex and more variable than that of conventional generic products. US patent law (unlike European patent law) stipulates that Sandoz must reveal its manufacturing process to Amgen so that the latter can better determine whether its patents have been violated. Sandoz, however, has not complied.

In May, a U.S. Court of Appeals overturned a March 19 ruling by Judge Richard Seeborg, from the San Francisco federal court, disallowing the launch of Zarxio until an appeal by Amgen is heard. Judge Seeborg had ruled that the “patent dance” outlined above was not mandatory but optional. Amgen appealed, arguing further that Zarxio would cause “irreparable price erosion” to Neupogen. However, this win can cost Amgen plenty down the line. In the event that Amgen ultimately loses its appeal, it must post a bond to reimburse Sandoz for each day of lost sales revenue from Zarxio.⁵  As lawsuits and motions are fired back and forth across the biosimilar battlefield, this sets up precedents for other legal actions involving biosimilars, explains legal experts.^3,5 (The appeals court later ruled on July 22 that provision of the biosimilar application to the originator company within 20 days of filing was indeed optional, clearing the way for a launch after September 2.)

In an unrelated case, Sandoz filed suit to have Amgen’s patent for etanercept invalidated, even before Sandoz filed a biosimilar application. In this instance, the judge threw out the case because Sandoz had not yet filed the application and thus had no standing under the Act. (Sandoz subsequently filed for FDA review on October 2, and it is unclear whether the company will refile its suit).

Celltrion filed a 351(k) biosimilar application for its own form of infliximab (Remsima) in 2014, but the patent for Johnson & Johnson’s pioneer product Remicade was not set to expire until 2018 in the US (it expired in 2014 in Europe, where Remsima is available currently). In February, the US Patent and Trademark Office rejected the 2018 patent expiration, however, and Celltrion has said that if FDA approval is received, it will launch this year.^6,7 A statement from J&J claimed that it will "pursue all available appeals" to protect its patent through the 2018 expiration date.⁷

Another aspect of legal challenges to biosimilars will involve their use in combination therapies. As the patent expiration approaches for some biologics, their manufacturers have sought to expand their market by pairing their product with another agent or conjugate. Can the approved biosimilar component be substituted and paired with the combination agent, and will the outcomes be the same? 

This issue may be tested legally for biosimilars, particularly for oncology agents like trastuzumab.⁸

This is a very slow learning process for payers who are hoping to see biosimilar savings or at least innovator company discounts, but finding it difficult to predict when this vision may be realized.

SM Health Communications provides writing, consulting, and innovative market research services for the payer markets. Its proprietary P&T Insight™ virtual P&T Committee program is the leading mock P&T Committee product in the field. We’ve participated in many market research projects involving biosimilar development and launch, from the point of view of the biosimilar and the innovator drug manufacturer. For more information, please visit www.smhealthcom.com or contact Stanton R. Mehr, President, at stan.mehr@smhealthcom.com.

References

1. The Biologics Price Competition and Innovation Act of 2009. (http://fdaregulatory.net/index.php/fda-regulatory-articles/buiologics). FDA Regulatory.Net 2013. Accessed June 19, 2015.

2. Stotland Weiswasser E, Gauger M. Biosimilar patent disputes: an update of the last 6 months. Law 360 March 31, 2015 (http://www.law360.com/articles/637389/print?section=appellate). Accessed June 15, 2015.

3. Rosenthal M. Biosimilars arena still littered with litigation. Specialty Pharmacy Continuum June 4, 2015. (http://www.specialtypharmacycontinuum.com/ViewArticle.aspx?d=Web%2BExclusives&d_id=530&i=June%202015&i_id=1199&a_id=32622). Accessed June 20, 2015.

4. Ledford H. First biosimilar drug set to enter US market. Nature January 13, 2015 (http://www.nature.com/news/first-biosimilar-drug-set-to-enter-us-market-1.16709). Accessed June 16, 2015.

5. McDermid R. Court blocks Novartis AG (NVS)'s recently approved "biosimilar" form of Amgen (AMGN)'s Neupogen. Biospace.com May 8, 2015 (http://www.biospace.com/news_story.aspx?StoryID=376077). Accessed June 19, 2015.

6. Staton T. Celltrion revs up Remicade biosim for U.S. rollout this year. Fierce Pharma April 1, 2015 (http://www.fiercepharma.com/story/celltrion-revs-remicade-biosim-us-rollout-year/2015-04-01). Accessed June 16, 2015.

7. Johnson & Johnson announces Patent and Trademark Office action related to Remicade (press release). PR Newswire February 18, 2015 (http://www.prnewswire.com/news-releases/johnson--johnson-announces-patent-and-trademark-office-action-related-to-remicade-300035468.htm). Accessed June 15, 2015.

8. Nelson KM, Gallagher GC. Biosimilars lining up to compete with Herceptin: opportunity knocks. Expert Opin Ther Patents. 2014;24(11):1149-1153.

Pharmaceutical Pricing: Real Value vs. Revenue Forecasting

Stanton R. Mehr, President, SM Health Communications LLC

stan.mehr@smhealthcom.com

www.smhealthcom.com

The pharmaceutical industry sometimes forgets how payers calculate the value of their products. Payers do not view value solely through the lenses of clinical efficacy, safety, and utility.

In the prelaunch phase, before drug pricing is set, payers are often given a wide range of figures, either by company reps or in market research studies, as an FYI, instead of asking the payers what approximate price would make financial sense based on the product’s apparent value. It seems an obvious question, but it does happen, and too often. This leaves payers (and most other stakeholders) with the impression that the price is an actuarial business decision: let’s pick a price point that maximizes revenue. This doesn’t mean the price is indefensible, but it does imply there is no transparency or clinically based logic to the pricing.

This was clearly the impression Gilead left with the launch of Sovaldi, generating tremendous animosity in the face of drug launch that should have been triumphant. This public relations debacle was a nightmare on several levels: the ink was not only aimed at the public and providers, but the payers as well. Everyone, including corporate employers, felt blindsided by the initial $84,000 price tag of treatment. Few doctors, health plans, or hepatitis C patients would give Gilead the opportunity to make its case that this represented real value versus the price of a liver transplant.

As it turned out, Gilead’s concept of real value was reconsidered under threats from major PBMs to exclude coverage, in favor of AbbVie’s competitor product.

Also a little more than a year ago, doctors from Memorial Sloan Kettering Cancer Center in New York decried the high cost of oncology drugs, and called on the industry for price transparency. The same question is being raised over many oncology drugs, including the $150,000 cost of Revlimid, which produce much more incremental benefits.

This week, another article appeared in the New York Times addressing the high price of other oncology medications. Also this week, the first of a new class of hypercholesterolemia drugs, the PCSK9 inhibitors, will be approved by the Food and Drug Administration, for use in patient populations that could theoretically bust the pharmaceutical bank. It’s announced pricing was above the estimates payers had been anticipating. I would not be surprised if we heard a renewed, vigorous call for Medicare to be given the power to negotiate drug prices.

For the pharmaceutical company like Gilead, if the price of a liver transplant is $300,000, isn’t a Sovaldi price tag of $84,000 a bargain in comparison? Well, no, said the payers, in unison. Interestingly, Gilead did achieve one goal though: Even with heavy discounting demanded by payers, Sovaldi is challenging for the number 1 spot in terms of pharmaceutical sales revenue.

Too many specialty drugs today and in the pipeline tomorrow carry price tags that do not align with their claimed value. Biopharmaceutical companies should expend considerably more time and effort incorporating payers’ assumptions and opinions on the value of new medications before setting price, or at least really gauge their reaction to proposed pricing well before launch. This will result in at least some degree of price acceptance at launch or at least the impression that the company cares about the payer perspective.

In a value-based health system, this will matter a great deal. 

Questions: 

(1) Does your prelaunch market research allow for payer consideration of potential price points? 

(2) Is the goal of the market research to validate the company's concept of drug value or to gather data on what coverage decision makers think?

SM Health Communications provides writing, consulting, and innovative market research services for the payer markets. Its proprietary P&T Insight™ virtual P&T Committee program is the leading mock P&T Committee product in the field. We’ve participated in many market research projects involving biosimilar development and launch, from the point of view of the biosimilar and the innovator drug manufacturer. For more information, please visit www.smhealthcom.com or contact Stanton R. Mehr, President, at stan.mehr@smhealthcom.com.

Which Types of Questions Cannot be Answered by Payer Market Research?

Stanton R. Mehr, President, SM Health Communications LLC

stan.mehr@smhealthcom.com

www.smhealthcom.com

This question frequently comes up in discussions of projects that are already underway. In the process of creating the survey tool, research sponsors want the most direct, unambiguous response they can get to their critical questions. 

In the vast majority of instances, it is possible to meet this need based not only on how the question is asked but on which format is chosen. For example, in-depth telephone interviews have the ability to both clarify and confuse: having the ability to “drill down” into an answer helps to clarify, but the interviewee may raise personal conflicting perspectives in a long and winding response. Multiple choice survey questions can also restrict variance in response, as long as the choices are worded well and account for all possible responses.

There are, however, some research questions that really cannot be answered by payers. We cannot expect a medical director to recall individual patients who have a particular condition who are being treated in a certain way, unless they happened to review an identical case just the other day. Asking them to provide information that may violate HIPAA would of course be prohibited. Questions regarding strategic directions of a plan or payer may be proprietary or as is often the case, needs to be targeted to a C-suite level survey sample.

In many cases, payer responses to a particular question will vary considerably, based on plan type, geographic location, and often by whether they serve a commercial (or even individual, exchange, or small/large groups), Medicare, or Medicaid populations. For these projects, it is often possible to lay out unambiguous responses for each payer segment, if the research sample is sufficiently large.

I’ve found that nearly all market research questions are answerable. Removing ambiguity in those responses (involving estimating probabilities and cautious interpretation of results) is a subject for future discussion. This can be best answered through the use of one of several format choices: in-depth telephone surveys, Web-based surveys, the use of on-line communities, or employing scenario-based research, like mock P&T Committees.

What Will Be the Single Greatest Change in Paying for Biopharmaceuticals Over the Next 5 Years?

By Stanton R. Mehr

President, SM Health Communications

Within the next 5 years, pharmaceutical companies will start to reach that long-predicted tipping point, when specialty pharmaceuticals have become too expensive for the health system to afford and payers will have begun to aggressively push back, curtailing access to products that do not provide value in line with the price being charged.

This year, specialty pharmaceuticals are expected to account for more than one-quarter of all US pharmaceutical sales. By the year 2020, this figure may reach 50%. Manufacturers cite the relatively small patient populations that many of these new biologics will treat, the difficulty in manufacturing, and the risk in bringing them to market as factors behind high retail pricing. At pricing levels that we are seeing today with the new hepatitis C agents, health plans and other payers are more willing to aggressively exclude these from coverage if alternatives exist, even if the manufacturer offers significant discounts. In addition, we are seeing price increases in conventional generic medications because of fewer manufacturers producing the lower-cost agents, as well as a curiosity by drug makers to see how much they can jack up prices before payers begin to push back (consider the price of doxycycline today).

By 2020, what will the market bear, and how will it pay? Change may be largely driven by the high out-of-pocket requirements from members of non-Medicaid plans, as payers shift as much cost as they can, until a tipping point is reached.

The implication of this scenario is that payer pricing and contracting will have to change considerably—and a risk-based or outcomes-based arrangement may finally have its day in the sun. This raises the questions of “how much risk” and “what type of outcomes?”

Risk-based contracting for medications has been tried, on a very small scale. It was attempted last decade in the osteoporosis arena, but had limited success. There are a few reasons for its lack of expansion. It has long been an undercurrent in managed care that health plans did not want to engage in risk-based contracts for 2 main reasons: (1) the administrative work and administrative systems needed to monitor critical performance metrics cited in these contracts and (2) the loss of today’s rebates through such an arrangement. Pharmaceutical manufacturers avoided risk-based contracts because (1) well, they are risky and (2) they have concerns about how performance will be measured. One other word about the risk for drug makers: Patient outcomes are often not solely the result of medications and medication-taking behaviors. It is difficult to control for all factors that would ensure a high level of satisfaction that a negative drug outcome was solely related to the performance of the medication (e.g., lowering cholesterol levels optimally may require rigorous medication use in addition to improved diet and exercise).

The search for incremental value at the upper end of the pricing range will inevitably reach a point where risk-based contracts are seriously considered and implemented. This may be abetted by companion diagnostic testing to lessen the risk of therapeutic failure, but in any case, payers will have the right to ask for far better proof of value.

This proof may be in population-based measures (e.g., average length of stay reduced by 2.5 days for groups of patients versus an active comparator) or in clinical outcomes (e.g., greater differences in complete response achieved).

Progressive biopharmaceutical manufacturers will seek to measure these types of outcomes earlier in the investigational trial program through comparative-effectiveness research to ensure that they can quantify the risk for themselves. Only then will they persuade that the high price they place on new products will truly bring value to the health system. 

A Postmarketing Surveillance Effort for New Biosimilar Agents

Stanton R. Mehr, President, SM Health Communications LLC

stan.mehr@smhealthcom.com

www.smhealthcom.com

Consider the following hypothetical scenario: A new infliximab biosimilar is approved for use in patients with rheumatoid arthritis and Crohn’s disease. Nine months after its introduction, an unexpected safety problem is revealed in 8% of patients—severe vestibular dysfunction, resulting in disabling imbalance and dizziness. How would this adverse effect be linked with the new drug and how quickly would this link be established? That may be dependent on how the drug is identified (with the same or different nonproprietary name as the innovator) and the capability of the adverse effect reporting system. It is one thing to monitor for side effects associated with the reference drug, but it is quite another to be able to identify something that is entirely new.

In November 2013, the Academy of Managed Care Pharmacy hosted a Task Force conference discussing the highly anticipated approval process for new biosimilar agents and how to monitor their safety and efficacy. The results of this Task Force was published January 2015 the Journal of Managed Care and SpecialtyPharmacy.

The Food and Drug Administration (FDA) was charged by Congress with implementing the pathway to approval, called the 351(k) pathway. Over the years, the FDA has been cautious about releasing details of the biosimilar regulations; many in the United States (including clinicians and manufacturers of innovator products) are concerned about the efficacy and safety of biosimilars, which are not simply generic copies of their biologics. The experience of the European Medicines Agency may be instructive here: Since 2007, it has approved several biosimilars, including versions of filgrastim, epoetin, infliximab, and follitropin, without any significant red flags in terms of safety or efficacy. This extensive clinical use of biosimilars in Europe does not erase all concerns about these agents, however.

There is no shortage of expensive biologics whose patents have expired or are near expiration. An unpublished analysis from Express Scripts estimated that the introduction of biosimilars for 11 biologic agents whose patents have expired could result in more than $250 billion savings for the US health system over 10 years. Two important caveats to this estimate are (1) this analysis is was based on 30% savings per prescription (today, this is more conservative, at 15% to 20%, according to our market research) and (2) it does not consider the potential costs of any new and unforeseen adverse drug events (ADEs) resulting from the use of new biosimilars. However, the second point is of more relevance to this discussion.

Biosimilars are not exact copies of the innovator, or reference, agent. Biologics are complex proteins, and differences in manufacturing processes alone are enough to result in unique physical structures—for example, a new fold in the molecule may occur, which may expose more or less of its surface to target cell receptors. It may also result in slightly different chemical structures, such as glycation, which may not result in clinical differences. Does this mean that biosimilars are as efficacious and have the same safety profile as the reference medications? Although the ordinary use of biologics like TNF-alpha inhibitors in practice cannot exactly be called safe, the experience accumulated over more than a decade has provided a solid picture of their safety profiles.

The 351(k) pathway does not require large-scale clinical trial programs to prove that the use of a biosimilar results in the same outcomes as the innovator product, so we may not have full confidence that the biosimilar agent performs exactly the same way that the innovator drug does. For this reason, policy experts cite the need for a mechanism to evaluate real-world outcomes with newly approved biosimilar agents, including a method of collecting data on the long-term use of these biologics. This effort would also be helpful to validate biosimilars’ effectiveness compared with their reference products.

The Task Force’s recommendations may start the ball rolling to establish a mechanism for how this postmarketing surveillance will be performed, who will coordinate it, and how any results or safety signals will be reported. I suggest you read the report. It opens a window onto the current pharmaceutical surveillance system and raises important questions.

SM Health Communications provides writing, consulting, and innovative market research services for the payer markets. Its proprietary P&T Insight™ virtual P&T Committee program is the leading mock P&T Committee product in the field. We’ve participated in many market research projects involving biosimilar development and launch, from the point of view of the biosimilar and the innovator drug manufacturer. For more information, please visit www.smhealthcom.com or contact Stanton R. Mehr, President, at stan.mehr@smhealthcom.com.

Biosimilars: A Time of Reckoning Has Arrived

Stanton R. Mehr, President, SM Health Communications LLC

stan.mehr@smhealthcom.com

www.smhealthcom.com

On Wednesday January 8^th, 2015, a Food and Drug Administration Advisory Committee unanimously recommended that the first agent to gain biosimilar status through the 351(k) pathway be approved. This has been a very long, slow road to reach a point that Europeans passed more than 7 years ago. Finally, however, the FDA is preparing to approve Sandoz’s version of filgrastim (brand name, Zarzio), and perhaps for all of the indications of Amgen’s innovator product, Neupogen. The FDA’s final decision is expected to be announced in March.

This move may finally open the door to other 351(k) applications and decisions, not only for filgrastim biosimilars but for epoetin, infliximab, adalimumab, and a number of other long-marketed biologics.

In announcing the decision, the health care community at large hopes that the FDA will finally go public with other associated and long-awaited determinations, which will have implications for biosimilar utilization, coding, and reimbursement.

Biosimilar naming conventions, indication extrapolation, and interchangeability designations are eagerly anticipated by the U.S. payer market. Market research tells us a great deal about how health plans, insurers, and pharmacy benefit managers will react to the potential choices each of these nuances present. Payers believe that FDA decision making in each area will significantly affect not only how quickly biosimilars are accepted onto drug formularies but how soon competitive forces may rise to lower biologic prices. For example, if the FDA judges a biosimilar to not be interchangeable with the innovator product, and also limits its approval to one indication rather than all four, this may force the manufacturer to offer large discounts to gain market access. In this situation, manufacturers trying to retain their marketshare may decide to similarly cut prices or add to rebates, to coax payers to prefer their biologic. This may compel payers to move from 4-tier formularies to 5-tier structures (i.e., from one specialty tier to preferred and nonpreferred specialty tiers).

The initial answers are finally right around the corner. We are all awaiting that green light. One thing is known: whichever way the FDA decides to go, we have a pretty good idea which way the payers will turn.  

SM Health Communications provides writing, consulting, and innovative market research services for the payer markets. Its proprietary P&T Insight™ virtual P&T Committee program is the leading mock P&T Committee product in the field. We’ve participated in many market research projects involving biosimilar development and launch, from the point of view of the biosimilar and the innovator drug manufacturer. For more information, please visit www.smhealthcom.com or contact Stanton R. Mehr, President, at stan.mehr@smhealthcom.com.