Biosimilars: Avoiding a Potential Disaster

It feels like every time I start writing about PBM contracts I’m trying to explain the plot line to inception.?The complexity breeds opportunity for profits for some and losses for others.?And those in the “know” will always find themselves on the winning side of the equation.?Nowhere is this dynamic more evident than in the patent expiration of Humira – the worlds #1 selling drug of all time.?I have been ranting and raving about getting biosimilars included in your contract guarantees for almost 3 years now.?The date has finally arrived and much to my disappointment, most contracts today do not include biosimilars in their rebate guarantees. ?But, in fairness, the complex launch of Amjevita means that rebate guarantees on biosimilars is contingent on your formulary.?The multi price point launch of Amjevita has led to a need for consultants to forge into uncharted territory.?To help your clients navigate this complexity you need to understand biosimilar adoption and interchangeability, how Medi-Span codes and contract terms can combine to impact net price and the details of the Amjevita launch.

Biosimilar Interchangeability and Patient Adoption

When a biologic drug comes off patent it’s not a generic, it’s a biosimilar.?The molecular size of a biologic drug is almost 1,000X the size of a chemical drug – making it much harder to mirror identically and manufacture.?These challenges are why the FDA does not treat biosimilars the same as normal generic medications.?There are two different designations of a biosimilar – interchangeable and non-interchangeable.?An interchangeable biosimilar designation means that a manufacturer has gone through the process of proving that the drug is comparably effective to its reference product.?This is typically, but not necessarily, done through switching studies where patients switch between the biosimilar and the reference product.??The results must show no decrease in effectiveness or in safety.

If a product is designated interchangeable, a pharmacist can switch to a biosimilar without engaging with the provider – much like what happens with standard generics to date.?Without an interchangeable designation the pharmacist must engage with the provider to approve the switch.?This leads to a very important question:?What do providers think of non-interchangeable biosimilars?

The answer, unfortunately, is not much.?Providers have no incentive to see financial improvements for plans – they are solely focused on patient health.?To a provider the risks are unnecessary – in a 2019 survey over 65% of providers expressed concerns regarding nonmedical switching to biosimilars.?For Humira’s category in particular (TNF Inhibitors) providers are far more likely to use a biosimilar for treatment na?ve patients than for those who are doing well on Humira (73% vs 35%).?

The other factor that will impede biosimilar adoption is narrow labeling.?Amjevita, for example, covers most of the indications for Humira, but not all of them.?And hence, even if a PBM wanted to wholesale switch, it would not be able to as Amjevita is not FDA approved to treat several indications for which Humira is approved.??

What you should expect, based on these surveys, is to see a gradual migration over time of newly diagnosed patients starting on biosimilars while those doing well on a reference product may only switch if there is a significant patient incentive, plan requirement or biologic fatigue that requires switching.

How Medi-Span Classifies Amjevita and How that Impacts Your Contract

Most people don’t get in the weeds on how their contract defines a drug.?But it is critically important to know several facts about a newly launched drug:

1.??????Is it a Specialty Medication?

2.??????Is it a brand or generic medication?

3.??????Does it fall into an exclusion category?

Specialty Designation.

Most biosimilars will be found on a PBM’s specialty list.?This isn’t a requirement, but due to temperature controls, special handling and other factors this is what will most likely happen.?Regardless, you should always use a client specific/bid specific specialty list when evaluating a PBM contract.?You will need to know this when it comes to the PBM you are working with and how they are defining Amjevita and other biosimilars.

Is it a Brand or a Generic??

In Medi-Span data, which is the largest publisher of AWP data and what we use at Ringmaster Technology, there are two important codes – the Multi-Source Code (M, O, N or Y) and the Name Type (G, T or B) Code which combined are what most use to determine brand and generic.?There can be some disagreements on this but for the most part MT, NT, OT are brand drugs while all others are generics.?Spare yourself the pain of memorizing that and just know that you can create an agreed upon definition of what is a brand and what is a generic by using medi-span Multi-Source and Name Type codes.?Amjevita’s code is NT, so it will process as a brand drug under most PBM’s. This is particularly important for rebate purposes as brand medications typically qualify for minimum rebate guarantees. Unless...

Does it fall into an exclusion category?

This is the most important element of dealing with biosimilars. Some contracts exclude biosimilars from the aforementioned guarantees (both rebates and discounts).?And what is the definition of a biosimilar in your contract?? Typically there isn’t a concrete, auditable definition in a contract. This leaves the door open for arbitrary definitions or PBM specific “biosimilar” lists which will never end up in a clients best interest.? That is one of the key reasons I strongly recommend pushing back against a PBM on biosimilar exclusions.?

Understanding Amjevita’s Price Points

Amjevita launched at multiple price points.?A high list price/high rebate price point and a low list price drug point.?We will never know what the rebate is exactly, and there is no barrier to a PBM negotiating a rebate on any list price of the product.?But PBM’s are caught in a dilemma, they have multi-year contractual obligations to pay high rebates that they have been receiving on Humira to their clients.?In order to meet those contractual guarantees they need to continue to receive high rebates.?If they switch to a low net cost drug, they will be instantly underwater – in particular because of Humira.?

This dilemma is likely the reason Amjevita created these multiple price points – the industry couldn’t handle the transition and would have had to maintain Humira and use Amjevita as competition to increase rebates.??In order to get any market share, Amjevita needed to “play the game”.? And as the first to market the only way they could do that was to play “both” games with the multiple price point strategy.?

The AWP for Amjevita varies from $3,894 - $9,865 per fill.?This is in juxtaposition to the AWP of $5,968 - $7,286 for Humira.?If you are on the high end, you should expect large rebates back from the plan.?If you are on the low end, you should expect limited discounts and rebates.?

The contractual trick here is that all of these NDC’s process as a brand.?That means that a PBM may not pay a rebate if they are on the lower list price medication or they could have a much lower overall guarantee.?If they are using the higher list price medication they should pay a rebate and if they don't, their guarantees should be much higher.?You absolutely need to know what their approach is. Because you will need to account for this in your evaluation.

Most Plans Will Prefer Humira

Most plans are going to continue to prefer Humira.?There are a number of reasons for this.?The first is the patient adoption dynamic.?Humira will still be a top selling drug for several more years and providers will be reluctant to migrate patients that are receiving effective treatment. ?The second is that Abbvie is bundling Skyrizi and Rinvoq along with Humira for rebate purposes.?As many patients are migrating to Skyrizi and Rinvoq because they are both therapeutically superior and more convenient than Humira (a brilliant marketing scheme by Abbvie to pre-emptively migrate their patients to these newer protected drugs is also a key reason) – the overall impact on the plan will drive PBM’s to maintain Humira as the preferred drug on the formulary. Even with this - Abbvie expects a 37% decrease in revenue on Humira due to both lower sales numbers and a lower selling point/greater rebate offer.

Some closing thoughts and recommendations:

1.??????You should know what every PBM you work with is doing for Amjevita (which NDC are they preferring, high cost/high rebate or low cost/low rebate?).

2.??????If a PBM is using high cost/high rebate then your contract should include biosimilars in the rebate guarantee.

3.??????If a PBM is not using high cost/high rebate then your contract can exclude biosimilars from rebate guarantees but it should INCLUDE them for discount guarantees.

4. If you are comparing two PBM's with different price point strategies to one another you will need to provide a decrement to the analysis.

4.??????Is the plan preferring Humira or moving to Amjevita? – I expect everyone to maintain Humira in the near term as the preferred drug.

5. As new biosimilars come to market, you will want a separate specialty generic discount to address those that may not process as a brand drug.