Industry Voices—Leveraging biosimilars for lower specialty drug costs

The much-awaited launch of the first biosimilars for several market leading drugs, including Humira, which has been a blockbuster drug for nearly twenty years, is just around the corner. And as these biosimilars come to market, one of the key considerations for payers is how they may help lower ever-increasing specialty costs.

Biosimilar drugs are alternatives to the U.S. Food and Drug Administration-approved reference biologics with no clinically meaningful differences in safety and effectiveness. However, biosimilars are not considered true generics because unlike traditional drugs, biologics are not synthetically derived but are derived from organic sources, so there are differences between the reference brand biologic and its biosimilars.

Since the first biosimilar was approved in 2015, the FDA has approved another 35, of which 21 have launched. However, we are on the cusp of a significant market shift. In addition to Humira, biosimilar launches are expected for several other reference biologics including one for Stelara projected for 2023, and Keytruda and Enbrel for 2029.

Several of the biosimilars are in the autoimmune therapy class, which alone accounted for nearly half of specialty utilization last year. Data from IQVIA project that these new biosimilars will have a $75 billion impact on top specialty branded products by the end of this decade.

However, it is important to note that while the competition generated by these new launches can help lower payer costs—depending on pricing and available discounts—biosimilars may not necessarily be the lowest cost option in all therapeutic categories.

There are other considerations that may affect the savings potential from a biosimilar launch including the reliability of supply, experience of the manufacturer, patient or provider adoption and the need to ensure a smooth transition for members who have previously relied on a reference biologic. In addition, since all biosimilars are not considered interchangeable—a designation that requires meeting additional conditions—these products may not be eligible for direct substitution.  

A targeted approach informed by ongoing marketplace monitoring, and which utilizes key pharmacy benefit management strategies including formulary and utilization management, will ultimately maximize the competition generated by biosimilars in key therapy classes to help lower specialty spend.

CVS Caremark, CVS Health’s PBM, was among the first to include biosimilars into its formulary decisions. As available biosimilar options expand, maximizing potential savings will require a careful evaluation of market dynamics and pricing and a drug-by-drug approach. For instance, CVS Caremark has adopted a “lowest net cost” approach.

This means that we may prefer the biosimilar, reference biologic, or take a parity approach—whichever supports the goal of achieving lowest net cost. As part of this strategy, so far, we have preferred biosimilars in four of the five therapy classes where they are available. With this formulary design, we have been able to achieve more than 94% use of biosimilars for categories in which they are the preferred alternative.

The launch of biosimilars to reference biologic Remicade (infliximab), which is approved to treat a range of autoimmune conditions including rheumatoid arthritis, Crohn’s disease and ulcerative colitis, is a good example of the power of competition in lowering overall costs. According to the Centers for Medicare & Medicaid Services, the average sale price for infliximab when it first came to market in 2018 was $810. Biosimilars Inflectra and Renflexis were introduced at $712 and $664, respectively. Today, all three are priced below $400—with Remicade, the lowest at $347, as of January 2022, the preferred product in our template pharmacy benefit formularies.

We take advantage of such pricing competition within a therapeutic class generated by the launch of biosimilars to help drive to lowest net cost through our formulary placement strategies.

The era of biosimilars is here. And while they are not a magic cure for high and increasing specialty drug costs, they do create new opportunities for delivering lower costs by maximizing competition. PBMs like CVS Caremark have a deep understanding of the pharmaceutical landscape and can negotiate discounts from manufacturers, minimize waste and ensure appropriate utilization to help payers and their plan members get the most value from biosimilars without ever sacrificing clinical quality or outcomes.

Josh Fredell is vice president and head of PBM and specialty product innovation at CVS Health.