New net-cost reimbursement models may stimulate U.S. biosimilar uptake

As more biosimilars get approved and launched in the U.S.,?payers are making key decisions ?about their coverage and formulary positioning. Recently, this includes Humira-, Stelara- and Remicade-referenced products.

Historically, in the U.S., biosimilars have often failed to gain much traction owing to a Byzantine system of pricing and reimbursement which involves? opaque rebate schemes. Here, higher list-priced drugs often carry with them higher rebates, which can mean that pharmacy benefit managers may favor originator products such as Humira.

As an illustration of this, according to a federal government Medicare Payment Advisory Commission report,?more than 40% of Medicare beneficiaries ?still have no access through their insurance to Humira-referenced biosimilars, despite several products having discounts of over 80% compared to the original Humira.?

But novel approaches to pricing and reimbursement could change formulary decision-making significantly, establishing the basis for more use of outcomes-based decisions. CostVantage, for example, is a new cost-based pharmacy reimbursement approach that all PBMs will eventually be required to use if they contract with CVS retail pharmacies, the largest pharmacy in the nation.?

The?CostVantage ?model stipulates that prescription drug reimbursement will be based on net acquisition cost, a set mark-up and a fee that reflects the value of pharmacy services. CVS Pharmacy plans to launch CVS CostVantage with PBMs for their commercial payers in 2025.

Such net-cost reimbursement systems tend to stimulate the uptake of lower cost (and more cost-effective) biosimilars. We find evidence of this in Europe where cost-effective biosimilars generally have fairly rapid entry which then quickly displaces the market share of originator products. By the last quarter of 2019, within one year of Humira-referenced biosimilar entry into the European market, an average of?35% of patients across Europe had already switched ?to a biosimilar; in the U.K, the figure was?63% ?which was achieved just six months after biosimilars were allowed to compete; in Denmark, with its winner-takes-all tender, the number was?80% ?and was attained within three months of being on the market. Meanwhile, in the U.S., after 15 months of being on the market, Humira-referenced biosimilars have only achieved?2% market share .

The new net-cost model of reimbursement in the U.S. will likely lead to greater adoption of biosimilars, at least in the large CVS segment of the market.?Lyfegen can navigate the different ways in which payers and drug makers are negotiating contracts for biosimilars.?In addition, Lyfegen can help address the concerns payers may have about high-priced specialty drugs, such as originator biologics and biosimilars. In the Lyfegen Agreements Library you can find the right model to use as a reference during pricing and reimbursement negotiations, which in turn will increase the chances of success.