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.

How Videostreaming Can Affect a Mock P&T Committee Meeting

Stanton R. Mehr, President, SM Health Communications LLC

stan.mehr@smhealthcom.com

www.smhealthcom.com

We’re often asked when we conduct our mock P&T Committee meeting (P&T Insight™) whether we can videostream the session to the sponsor’s site. This is not difficult to do, technologically speaking. Since we are already recording the meeting for an audio and video file transfer to DVD, most of the equipment is already in place. However, we strongly recommend that a one-way, noninteractive videostream is the best choice.

The mock P&T Committee faculty members know they are being videotaped, and that at some point in time, the result of their efforts will be viewed by a client. Yet, the need for blinding of the sponsor is essential to guard against bias in the Committee’s decisions, which can render the result unreliable and not applicable to other health plans or systems. The effect of bias can go both ways. Individual mock P&T Committee members may have had negative interactions with a drug maker in their own past experience, and it may color their decision. On the other hand, they may have extremely good relationships with an account manager from the sponsor, and may subconsciously want to give that person’s drug a favorable decision.

When a videostream is requested (regardless of the number of locations to stream is sent to over an encrypted line), we make sure that there is no interaction between the viewers and the Committee members during the meeting. If a sponsor wishes to ask questions after the completion of the meeting, we collect them via a separate communication line, and our staff presents the questions to the P&T Insight™ Committee members.

Why take these precautions? If sponsors interact with the participants, the level of bias rises to that of an advisory board, which is not what the sponsor has paid for or desires. The feeling that the sponsor is “looking over their shoulder” can be palpable, and the discussions cannot be reliably adjusted for this effect—directly impacting the decisions made by the mock P&T Committee (encouraging them to approve or reject a new product).

Furthermore, direct participation and interaction with the sponsor can have implications for the Sunshine Act reporting. This can prevent some of our best consultants from participating in the P&T Insight™ process.

When asking for a videostream for the mock P&T Committee, consider the need to limit bias in the project. The product team will be happy you did.

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 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.

Demonstrating Specialty Pharmaceutical Value and an Opportunity to Meet the Challenge

By Stanton R. Mehr

President, SM Health Communications

stan.mehr@smhealthcom.com

www.smhealthcom.com

The extent of the problem is considerable. Even those tracking it for many years are alarmed at its size and how fast it’s growing. In 2012, only 1-2% of patients used specialty pharmaceuticals, yet they accounted for 28% of total pharmacy expenditures. By the year 2019 or 2020, specialty pharmaceuticals will account for one half of all pharmacy costs. This will be fueled by their high costs and the magnitude of the drug pipeline, pushing new drug launches every year. To add to the cost nightmare for payers, most of the specialty drugs require regular monitoring and lab testing.

            I used the term cost nightmare because it really is. But not just for payers. For patients and providers as well. Payers acknowledge that for many disorders, like rheumatoid arthritis and cancer, the specialty pharmaceuticals represent some of the most effective medications available. However, costs for these products are so radically higher than for traditional drugs, that they feel obligated to apply crude utilization management tools, like prior authorization and step therapies, to try to restrain inappropriate use. The problem is, in doing so, they are viewed by patients as preventing access to necessary treatments for serious disorders, even if that is not the case. Furthermore, they cannot cost shift much more than is already being done.

How much can patients afford to pay? Is 20% of a therapy that costs $2,500 each month reasonable? Jan Berger, MD, JD, a well-respected editor and former medical executive, said it best: “How many times will a patient write that $500 check? Maybe for the first month. Possibly for the second month. I’d don’t see it happening in the third month.”

And providers are not immune to challenges associated with specialty drugs. The average oncology office spends hours each day working through the insurance bureaucracy of precertification, prior authorization, and step therapy call backs. They are pressured to relinquish their buy-and-bill revenue stream (if one remains) and are heeding the call of consolidation with other like-minded physicians or selling their practice to hospital systems.

As of March 31, 2014, 7 million newly insured Americans have entered the health system, and according to Express Scripts, the early returns show that a greater proportion than expected are utilizing specialty drugs. The system cannot sustain these costs for very long.

All of these stakeholders are turning to the manufacturers. The spotlight on them has brightened recently because of the attention paid to outsized prices for the medications they are introducing. Gliead’s oral hepatitis C medication, at a retail price of $84,000 per course of treatment, or $1,000 a pill, helped set the fuse. Assuming that over the course of time, Sovaldi is found to actually save money by avoiding other treatments like liver transplant, there is still no explanation of how patients will afford the co-insurance upfront. For the patient and provider, the least cost-effective medication is the one that is never taken. That may not be the case for the payer.

In any case, the burden of proof will be on the manufacturer to demonstrate value (not incremental value but real, significant value for the money paid). For the manufacturer of specialty drugs, that generally means one of two approaches: (1) Finding a subgroup of patients in whom real, or at least optimal, improvement is seen, which implies biomarker identification and patient testing and (2) proving that the downstream benefits of the specialty product exceed its costs. As we’ve already discussed, the downstream benefits need to be astounding to convince payers. For example, if Sovaldi cost $8,000 for a course of treatment, no one would question its value in therapy and perhaps even when it should be used. Even at that price, some patients may balk at a $1,600 out-of-pocket price tag.

However, manufacturers need to pay for clinical trial development and consider the number of patients who may benefit from a specialty drug (and calculate a tidy profit for the shareholders). The question of patient affordability will eventually enter into the equation, because it certainly is not yet present. Yet, physicians in several specialties are acknowledging that the question of affordability has entered the doctor’s office, and with a drug formulary, this can dictate which treatments are prescribed.

The manufacturers have avoided another approach that helps payers cope with the large price tag of specialty products: Outcomes- or risk-based contracting. This “putting your money where your mouth is” approach attacks the challenge head on. If the drug works, based on contractually agreed upon markers of improvement, the manufacturer is paid full price (and perhaps can justify a higher price than originally considered attainable). If the drug does not achieve this outcome, it is free of charge. There might be some middle ground as well, depending on the disorder treated (e.g., partial payment for a degree of function or improvement). Agreeing on outcomes measures, the amount of administrative work needed by payers to measure outcomes, and the ability to employ better therapy decision making models are the devilish details that must be mentioned.

For the payer, this is value. For the manufacturer, it enforces a focus on the right patient for their specialty agent. For the health system, it helps control an unsustainable cost trend.

Questions:

1. How do you define a specialty medication? What are its characteristics?

2. Do you believe we're approaching a reckoning, where the cost of these agents will be unsustainable?

3. How does your organization try to ensure the value it receives from a hepatitis C drug like Sovaldi?

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. For more information, please visit www.smhealthcom.com or contact Stanton R. Mehr, President, at stan.mehr@smhealthcom.com.  

Social Context and Payer Market Research

Stanton R. Mehr, President, SM Health Communications LLC

stan.mehr@smhealthcom.com

www.smhealthcom.com

Market research organizations, which I’ll call MROs, try very hard to evolve their craft according to current trends and the shifting tides of popular technology. Traditional in-depth telephone interviews are highly effective and, armed with a honed set of screening questions, can be the best method of meeting the sponsor’s objectives. Effective? Yes. Sexy? No way. Surveys enhanced by Web distribution and on-line responses (think Survey Monkey^®) still are commonly used and extremely cost effective. But this doesn’t tap into the nature of today’s popular media.

Recently there have been concerning revelations about the data being collected on browsers like Google and sites like Facebook to create a profile of the viewer, with an eye towards customizing the advertising they see. The collection of data for external uses, such as that publicized on the March 10th broadcast of CBS’s 60 Minutes, may finally tamp down the fires of social media market research. Much of this market research is based around singular data points (e.g., a person “liking” a particular service, or posting about their experience at a particular resort or hotel).  These data points can help profile the person and, if large and consistent enough in their personal network, a group. This is the essence of social media. It can be very useful in marketing health care products to specific consumers, like proton pump inhibitors to those searching for information on acid reflux.

If you join a special interest group on the Web, such as a patient-support group for (fill in just about any disorder), you can bet the pharmaceutical companies and their market researchers are crawling over the site, collecting information about what you like, what you don’t, and every bit of demographic data they can extract from your participation. These folks are self-selected for this specific interest, and obtaining market research on these like-minded group members can be a very effective endeavor., If the MRO formulates and conducts the research well, it collects not only singular data points from singular individuals, but also data and social context to the market research results. That’s what old-style, one-way mirror focus groups have always sought to achieve.

Let’s take this consumer-based approach and apply it to health executives. If there were on-line community sites in which health plan executives (payers) joined voluntarily and where they discussed frequently a range of topics in conversational style, this community engagement might just put a market research project into overdrive. The group think, coupled with individual responses, on qualitative topics may yield fascinating insights and do it in a very cost-effective environment.

The resulting lengthy discussion, filled with nuance, agreement, disagreement, and insight, can be a challenge for most. The trick is the ability to tease out the social context as well as the top-line responses so as to yield more informed payer market research, but using “sexy” social media so many clients crave today. 

Questions:

1. Does your MRO have a vehicle for payer interest groups to freely discuss matters of importance to them?

2. Can the MRO use this type of social media to report the social context in which responses are made?

3. What is your greatest challenge in meeting social media-related research requests by your executives?

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. For more information, please visit www.smhealthcom.com or contact Stanton R. Mehr, President, at stan.mehr@smhealthcom.com.

Decision Making on Specialty Pharmaceuticals: P&T Committee, Technology Assessment Committee, or Something New?

Stanton R. Mehr, President, SM Health Communications LLC

stan.mehr@smhealthcom.com

www.smhealthcom.com

We have all seen the trend data. The situation is likely to become more complicated, not less so, in the coming years. The annual report by CVS Caremark anticipated that by 2015, specialty drugs will account for 27% of the prescription spend, and that annual growth in the spend can be as high as 22% for 2013, matching the figures for the past few years.¹ The data from Express Scripts shows that although the trend for the major traditional product categories was only 0.1% in 2011, the trend for the specialty pharmaceutical category (e.g., anti-inflammatories, multiple sclerosis, cancer, HIV, etc.) was 17.1%.² Ample evidence now exists that the specialty pharmacy utilization and cost growth will continue in the healthy double-digit range, for at least the next few years. It will be fueled not only by the large number of specialty products in the later stages of clinical development, but other factors as well, including slowly evolving expertise (and commitment) by payers to control access to these products.

A few years ago, I worked on an annual publication sponsored by Bristol-Myers Squibb.³ Similar to other trend reports, we surveyed payers (including corporate employers) to determine how they were reacting to several trends in the industry. We asked them about how they managed specialty pharmaceuticals (in 2008) and what changes they intended to make in 2009 and beyond. Back in 2008, 40% of those surveyed indicated that they already shifted any injectable/infused agents from the medical to the pharmacy benefit, and an additional 16% planned to do so in 2009. At that time, 51% said that by 2008, they had already assigned injectable agents to specialty pharmacy management and an additional 14% said they would do so in 2009.³ It is clear that many health plans and insurers have turned to pharmacy benefit management to manage the growth of the specialty pharmacy category. However, many of these injectable/infusible products would traditionally be part of the medical, not pharmacy, benefit. In some large plans, drugs covered by the medical benefit are evaluated by a dedicated technology assessment committee (or rely on other independent resources, such as private consultants or a national technology assessment body, like Blue Cross and Blue Shield’s). If pharmacy coverage decisions are made by the Pharmacy & Therapeutics (P&T) Committee, does this mean that this body is the de facto tech assessment committee in most plans? This seemed to be the case in the last decade, particularly when it came to certain devices and diagnostics.⁴ Or will technology assessment committees, when available, decide on pharmacy benefit coverage for these specialty pharmaceuticals? The move to pharmacy benefit management of specialty products clouds the discussion considerably.

It would also help if a universal definition of specialty pharmaceuticals was well accepted, based on cost, distribution, storage, and/or route of administration. I’m showing my age here, but I clearly recall when the term specialty pharmaceuticals generally referred to blood products only, which were almost universally covered through the medical benefit. Fast forward to the 1999 introduction of TNF inhibitors and then similar other office-administered and self-injectable products. By 2013, we’ve added oral agents into the specialty mix.

Today, are payers equipped to determine whether a specialty medication offers real value (or even a reasonable value proposition)? And yet another critical question for payers: In light of recent trends, should the coverage decision making body be removed from the shackles of pharmacy or medical benefit classifications altogether? This infers that a merged group of coverage decision makers, with a composition distinct from that of a traditional P&T Committee or technology assessment committee, may contribute further to the discussion.

            Clearly, the P&T Committee backbone of pharmacy decision making in managed care is being tested. In recent years, the need for device (specifically drug-delivery systems) and diagnostic coverage decisions is weighing it down. A new evolutionary step may be needed to help payers meet the challenges of specialty pharmacy products.

 (Note: This blog was first published in January 2013 for the Health Payer Council [www.healthpayercouncil.com]).

REFERENCES

1. 2011 Insights: Changing Rules Changing Roles. Scottsdale, AZ, CVS Caremark, 2011.

2. 2011 Drug Trend Report. St. Louis, MO: Express Scripts, April 2012.

3. 2009 Biotechnology Monitor & Survey. Princeton, NJ: Bristol-Myers Squibb, March 2009.

4. Mehr SR: The evolutionary role of the pharmacy and therapeutics committee in

technology assessment. Manag Care Interface 2006;19(1):42-45.

Questions:

1. Does your P&T Committee or Medical Technology Assessment Committee decide whether to cover specialty pharmaceuticals?

2. If a unique body were assigned to making specialty pharmacy coverage decisions, how would its composition differ from that of today’s P&T Committee?

3. What is your greatest challenge (other than the cost trend) in terms of managing the specialty category? 

SM Health Communications provides writing, consulting, and market research services for the long-term care and payer markets. Its proprietary P&T Insight™ virtual P&T Committee program is the leading mock P&T Committee product in the field. For more information, please visit www.smhealthcom.com or contact Stanton R. Mehr, President, atstan.mehr@smhealthcom.com.

The 5 Critical Features of an Excellent Payer Market Research Network

Stanton R. Mehr, President, SM Health Communications LLC

stan.mehr@smhealthcom.com

www.smhealthcom.com

The vast majority of US pharmaceutical executives understand that managed care plans, health insurers, and pharmacy benefit managers (PBMs)—the payer market—have a dominant say over whether their products’ annual revenue will be $10 million, $100 million, $1 billion, or more. Although the market has been changing over the past few years, particularly with the introduction of new specialty biopharmaceutical products, the message remains the same: Access to managed markets and improving product reimbursement by payers are essential to maximizing product revenue in the United States.

            

With the proliferation of Sunshine Laws, which seek to make the consulting/financial relationships between the pharmaceutical industry and healthcare providers (and executives) more transparent, pharmaceutical companies have to come to rely on the services of market research providers to produce, in blinded environments, the business intelligence and marketing feedback that they desperately need to better understand payer markets. In the past, Advisory Boards were relied on heavily for this role, but Sunshine Laws have created another weighty concern for pharmaceutical company attorneys, and the very nature of how Advisory Board information can be obtained may have to undergo a revolutionary change to adapt to the new environment.

One profound result of these changes has been an abundance of managed care market research providers, each jostling for the attention of pharmaceutical product personnel and reimbursement and access units. However, the number of targeted payers—commonly medical directors and pharmacy directors within the health plans, health insurers, and PBMs—is relatively stable. The issue becomes, what are the critical success factors for gaining the best access to this limited (approximately 300) group of key decision makers?

(1) The ability to get them to answer your call.  The average age of these payer decision makers is between 40 and 65. Many have been in their present positions for more than 10 years and have established relationships with market research companies based on long-term familiarity, trust, and a well-earned confidence that their personal opinions and sensitive, corporate proprietary information will not be shared inappropriately.

            The number of these desired executives is few (compared with physicians of nearly any specialty), and they are inundated with requests to participate in market research projects. A market research provider who can get on their schedule and gasin their commitment to participate can be invaluable to obtaining the business intelligence the pharmaceutical executive needs.

(2) The size and variability of the network.  A pharmaceutical manufacturer may focus on one large segment (e.g., commercial) of the payer market, but they may need feedback regarding other significant market segments (e.g., Medicare parts B and D, Medicaid, Veterans Affairs, TriCare, long-term care). It is critical that the market research provider’s network include executives who can shed light on managed care organizations’ approaches to these varied markets and can speak to the differences that may be seen in their firms’ formularies for these separate products.

(3) Solid relationships with the consultant community. Also of importance is the market research organization’s ability to reach out on occasion to industry consultants (often former payer executives) who can provide helpful, fuller insights into what current payer executives may think about new products. This can be useful for both questionnaire development and validation of responses.

(4) A provider who understands the payer market. Many in the pharmaceutical community may believe that managed markets research is a commodity business—so many providers are available, that prices can be driven down. To some extent, this is true, but the value of a provider who truly understands the payer market becomes quickly apparent once the survey development process begins. With the knowledgeable input and understanding of not only the disease state but with an informed view of how most health plans, insurers, and PBMs will approach the area in question, much time can be saved in developing the questionnaire and this can result in briefer survey instruments and importantly, smaller honoraria or other incentives needed to convince busy executives to participate.

(5) The ability to obtain feedback through classic and innovative methods. Time is invaluable to the pharmaceutical sponsor and to the payer executives. In many cases, the sponsor requires far faster turnaround times than can be afforded through conventional survey means. This may prompt the market research organization to consider a different approach than the standard in-depth telephone interviews (which often require weeks to schedule). Innovative products are necessary to meet the needs of the pharmaceutical industry, and to fit the busy timeframes of the targeted payers. A market research organization that can provide flexible ways to obtain critical information and can make it as easy as possible for their network to participate will continue to offer the best mix of services and outcomes for the sponsor.

Every pharmaceutical manufacturer wants to know whether their pipeline product will be reimbursed on copayment tier 2 or the lowest possible specialty tier (and what it may take to get it there). For most new agents, this is the penultimate criteria for whether a US launch will be deemed a success. Getting this information before the FDA makes an approval decision is critical. Partnering with the right market research to reach the real decision-makers within the payer market can make all the difference in the world.

SM Health Communications LLC provides marketing research and specialized communications for healthcare services and pharmaceutical companies. Our comprehensive capabilities provide clients with the essential insights and competitive intelligence that are critical in today’s healthcare environment.