New Research Paper Demonstrates Declining Biosimilars
Prices and Increasing Health Plan Coverage
(Washington, D.C.) — Pharmacy benefit managers, PBMs, support the proliferation and use of biosimilars. A robust biosimilar market will increase competition for biologic drugs and provide added choice and flexibility for health plan sponsors, allowing PBMs to leverage competition more effectively to further reduce drug costs.
Today, the Pharmaceutical Care Management Association (PCMA) is releasing policy recommendations that will help unlock the potential of biosimilars in the United States. If adopted, PCMA’s policy recommendations would increase patient access to biosimilars, accelerate biosimilar adoption, reduce barriers created by the current system too often taken advantage of by drug manufacturers, and enable PBMs to negotiate for more affordable biologic medicines.
“PBMs are strong proponents of a functioning biosimilar market and are committed to removing barriers to patient and provider uptake. Bringing more biosimilars to market, over time, will allow PBMs to more effectively leverage competition to reduce drug costs for health plan sponsors and patients,” said PCMA President and CEO JC Scott. “More competition for biologic drugs will provide added choice and flexibility for health plan sponsors, while also considering physician and patient choice. Simply put, a more competitive marketplace for biologic medications will mean lower overall prescription drug costs and better health outcomes.”
View PCMA’s Website on Biosimilars: PBMs Support and Encourage Biosimilar Competition
A new paper, “Improvements in Medical Benefit Coverage of Biosimilars,” released today by PCMA and authored by economist Alex Brill and health policy expert Christy Robinson demonstrates that once biosimilars reach the market, prices decline and coverage increases.
“Average biosimilar prices are lower than the price of their reference biologics and decline faster over time. These price declines occur concurrently with improvements in coverage. In 2021, 78 percent of the biosimilars analyzed were preferentially covered compared to their reference product,” said report co-author Alex Brill.
New Policy Recommendations to Further Encourage Biosimilars
PBMs are advocating for policy changes that will put an end to brand manufacturers’ tactics and increase biosimilar uptake. The policy recommendations to reduce barriers to biosimilar adoption include:
- Removing the “interchangeability designation” on biosimilars, which is a barrier to biosimilar uptake because it causes unnecessary confusion related to just how “similar” biosimilars are to their branded reference biologic. A biosimilar is just as similar to a reference biologic as two separate batches of reference biologics are to one another. This designation does not exist in other countries, and the confusion it creates is a barrier to adoption of highly effective, lower cost alternatives.
- Enabling plan flexibility. To lower the cost of drugs quicker, as new biosimilars are released, PCMA recommends that the Centers for Medicare & Medicaid Services allow plans the flexibility to make midyear changes to formularies, replacing reference products with biosimilars not designated as interchangeable, without the need for additional permissions and notifications.
- Prohibiting anticompetitive practices that unnecessarily extend branded biologic monopolies. Product hopping occurs when a brand manufacturer makes marginal changes to a product and moves customers from one branded drug to a remarkably similar branded drug with a longer patent life to extend market exclusivity. Patent thickets are a group of overlapping patents, added deliberately over time and used to delay competition far beyond policymakers’ intent.
- Ending drug companies’ “pay for delay” agreements. Monetary agreements that drug companies make with biosimilar manufacturers that involve paying biosimilar manufacturers large amounts to keep their safe and effective alternatives to brand medication off the market for long time periods are anticompetitive and prevent price-lowering competition.
- Revising the innovator biologic exclusivity to seven years. Shortening the exclusivity period for biologics may allow competitors to enter the market sooner. Research shows that prices substantially decrease – not with the first biosimilar to enter the market as with a generic but instead with the second or third. The industry needs more incentive for biosimilars to provide cost-saving competition.
PCMA is the national association representing America’s pharmacy benefit managers (PBMs). PBMs administer prescription drug plans for more than 266 million Americans who have health insurance from a variety of sponsors including: commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program (FEHBP), state government employee plans, Medicaid plans, and others.