The brave new world of biosimilars: Top challenges for payers

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While biosimilar drugs may eventually reduce healthcare costs by offering an alternative to pricey biologics, a host of unknowns and challenges remain for payers hoping to harness this potential.

In order for biosimilars to be successful, all stakeholders--prescribers, patients, pharmacists and payers--must to be educated about the safety, efficacy and the value of these type of drugs, Mindy Prasad, a clinical pharmacist for Blue Cross Blue Shield of Michigan, said during a recent FierceLive! webinar.

“Only with complete buy-in will we actually see biosimilars being used, and hopefully helping to lower healthcare costs in the United States,” she said.

The healthcare industries in the U.S. and European Union are poised to see a number of biosimilars enter the arena as several “blockbuster” biologic drugs have recently come off patent or are about to, said Patricia Hurley, director of regulatory affairs for PPD, a contract research organization. “We will start to see a lot of these coming to market in the next five to 10 years,” she added.

In the U.S., Prasad noted, four biosimilar drugs have received approval from the Food and Drug Administration, though only one--Zarxio--has made it to market. The novelty of this market means payers and other stakeholders face plenty of uncertainties when deciding how to handle biosimilars, she said, noting four primary challenges:

Nomenclature: Biosimilars use proprietary names, which is “another indication of just how different biosimilars are from generic small-molecule drugs,” Prasad noted. The naming system can be challenging in environments that rely heavily on non-proprietary names when referring to medications, such as hospitals, and can confuse patients, because a biosimilar can seem like a completely different drug than the reference product. Such challenges, she said, require a great deal of education on the part of providers, pharmacists and patients.

FDA-granted indications: Some biosimilars share the same indications--a condition that makes a particular treatment advisable--as their reference product, but not all of them do. That situation can be a challenge, because if a reference product has more indications than a biosimilar, “payers must have a strategy to ensure that there is a treatment option available for any excluded indications,” especially if a biosimilar is the preferred or only covered drug in a coverage formulary, Prasad said. Payers might therefore consider the use of off-label biosimilars to account for such indication discrepancies.

Interchangeability: While naming issues can be confusing for prescribers and patients, there is also potential for a more serious issue when switching patients back and forth between reference products and biosimilars--adverse events. Such events, like immunogenicity reactions, must be accurately reported to the manufacturer and the FDA. Pharmacists also might struggle with interchangeability, because only 23 states and Puerto Rico have some type of regulation governing the use of biosimilars, and those laws vary considerably.

Further, if a payer prefers a biosimilar over the reference product, or even excludes the reference product from its formulary, it must decide how to handle those currently taking the reference product--for instance, by grandfathering coverage.

Pricing: Biosimilars were expected to be priced between 20 and 40 percent less than their reference products, but so far that hasn't been the case--in part because of a lack of interchangeability designations from the FDA. “In fact, there’s currently no incentive to prefer the one marketed biosimilar over its brand counterpart as far as the pricing is concerned,” Prasad said, referring to Zarxio. And when factors such as rebates are considered, the lowest net cost product may actually turn out to be the reference product instead of the biosimilar.

However, when the three other FDA-approved biosimilars enter the market, payers have other pricing options to consider, such as patient access programs offered by manufacturers. In addition, Prasad said, some plans are considering shared-savings arrangements with providers to increase uptake of biosimilars.