Biosimilars Looming on the Horizon: How Will Payers React?

Stanton R. Mehr, President, SM Health Communications LLC

stan.mehr@smhealthcom.com

www.smhealthcom.com

The Food and Drug Administration has been working on this for years, and the expectation is that they will get it right. Particularly since the European Medicines Agency has had a pathway for the approval of biosimilar products since 2007 and has used it successfully to introduce structurally similar biologic products to compete with expensive brands like Neupogen®, Remicade®, and others. When the first biosimilars are approved through the 351(k) pathway in the US, payers will be ready. Market research shows that payers will be itching to review these agents for formulary inclusion, and manufacturers of innovator or “reference” products will need to be on their toes if they want to remain in the game.

One defensive stance of manufacturers is that the biosimilars may not be approved for the full list of indications that was earned by the innovator product. Manufacturers shouldn’t kid themselves—if the price advantage is sufficient, the payers will be willing to either not restrict the biosimilar’s prescribing by indication or they will be ready to review prior authorization requests on a case-by-case basis.

Another line of defensive thinking is that the biosimilar may not have the same safety profile as the innovator product. That may be true, but payers will be ready and willing to act upon FDA approval, relying on both the FDA’s judgment and any European experience to help them gauge the risk. And if there are separate safety issues, these may not show up for years—putting the innovator product’s position at risk right at biosimilar launch.

Payers are looking to biosimilars as a long-awaited opportunity to pare some of the costs of biologic therapy. They know the utilization of biologics continues to rocket upwards, and payers understand that their overall pharmaceutical costs will continue to rise (especially on those covered under the medical benefit). As a result, they are moving more biologics under the pharmacy benefit for reimbursement or for management, so they can at least employ more pharmacy tools that have proven successful in the past. In other words, biosimilars and their innovator products will be defined principally by cost, contracting, and net cost.

Does this mean that aggressive contracting can save the day for the innovator products? Maybe, but don’t count on it. Payers will want parity in net costs, and they’ll want price guarantees to protect themselves against inevitable price increases. And this won’t prevent biosimilar manufacturers from taking aggressive pricing action to counter this strategy.

Make no mistake. When it comes to biosimilars, the payers are in the driver’s seat, and they can’t wait to hit the road.

Questions:

1. Does your organization have a plan for addressing biosimilar launches in the rheumatoid arthritis, Crohn’s disease, growth hormone, or oncology space?

2. Do you know how payers will view your innovator product and how they will approach your contract towards biosimilar launch?

3. What steps can you take to meet the challenges posed by biosimilars?

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.