The rebates given to pharmacy benefit managers to secure a
drug’s place on the formulary have become a difficult barrier to coverage for
new products. The rebate income for these PBMs is sometimes passed on to health
plans, insurers, and employer purchasers, but more often it is not.
A big issue is that managed care organizations tend to
become addicted to millions of dollars in rebate “income,” and this mindset
prevents serious consideration of new medications at competitive costs.
For
biosimilars, Pfizer and Merck have had a difficult time dislodging Janssen,
maker of Remicade®, from its preferred formulary position, despite
lower prices based on wholesale acquisition cost (WAC). Janssen has simply
matched the net cost (through increasing rebates), while keeping its WAC costs
high—tempting plans with ever-increasing rebate revenue. The health plans don’t
see the benefit of incurring the administrative costs of moving masses of
patients from the preferred product to a new one, or seeing this revenue stream
interrupted, without an overall further improvement in net costs.
Managed care plans have long said that discounts of 25% or
more will be necessary to release the rebate stranglehold of preferred
products. In the case of infliximab, this has not yet occurred, based on recent
minor inroads made by Merck’s Renflexis® biosimilar, despite larger
discounts. Until greater competition is available, which drives down the WAC
prices (and then average sales prices [ASPs]), barriers to accessing new
medications will remain. In fact, when competition does increase, makers of the
originator products, like Janssen, can simply ratchet up their rebates to
maintain a hold on sales (and a billion-dollar plus profit).
Perhaps the best way around this is to force a change in the
marketbasket. This can be accomplished in a couple of ways. The first, by
instituting separate tiers for biosimilars and reference agents, takes the
biosimilars out of the 1 of 2 preferred drug contracting restrictions, and
allows patients to access biosimilars as well as preferred brands.
A second way is to reconsider biologic agents according to
indication-based contracts or mechanism-of-action (MOA) based differences.
Therefore, the marketbasket is modified to consider anti-TNFs separate from interleukins,
allowing preferred agents in each separate category. This would allow, for
instance, for more effective psoriasis agents to be well covered, and maintain
the preferred position of Humira® and Enbrel® for
appropriate patients.
A third way is to work out some innovative value-based
contract, in which the manufacturer and health plan/insurer reaches an
agreement on (usually) the expected outcomes of drug use and additional rebates
or performance guarantees if the medication fails to deliver on this
performance. The most important consideration in this agreement is the
practicality of measuring an outcome of interest or ensuring adherence.
The rebate trap seems to be ensnaring more manufacturers of new
biologics and biosimilars. Without greater consideration of the overall good, this
trap can cause systematic problems for the pharmaceutical industry and
discourage drug innovation and accessibility.
