Senior vice president, market solutions at Turquoise Health

Chris O'Dell

Overcoming Patient Education Gaps, Biosimilar Financial Hurdles in Focus With Canavan & O’Dell

Josh Canavan, PharmD, head of pharmacy at RazorMetrics, and Chris O'Dell, senior vice president of market solutions at Turquoise Health, discuss how the health care system must overcome patient education gaps and address perverse financial incentives within contract structures that currently favor higher priced reference products in an interview with The Center for Biosimilars

Canavan highlights patient and provider education as the primary challenge and opportunity. He emphasizes pharmacists' crucial role in educating patients about biosimilars, navigating prior authorizations, and providing essential feedback to address barriers.


O'Dell focuses on perverse financial incentives within the current market structure as a significant impediment. He explains that contract structures, particularly those where entities profit from higher drug prices, discourage biosimilar adoption. 

This transcript was lightly edited for clarity; narration and captions were generated by AI.

The adoption of biosimilars within the health care system faces significant challenges. These include overcoming gaps in patient and provider understanding, as well as addressing existing financial structures that may inadvertently favor more expensive reference products.

From your perspective, what are the most significant factors influencing the adoption of biosimilars in the current health care landscape, and where do you see the greatest opportunities or challenges for improving their uptake?

It's education. The recurring theme here is education, and pharmacists are a huge touch point with patients at the pharmacy counter. One of the things that being a pharmacist helps with is acknowledging that the patient may have some issues with this. It may be a different medication than they're used to taking. They may not even know what a biosimilar is, and trying to talk about that before explaining what it is, or having any baseline education around that, is a problem. The pharmacist really alleviating some of those issues that the patient may have is going to be huge with biosimilars.

Another thing we see is prior authorizations. Even with biosimilars, sometimes those require prior authorizations from the PBM. It is explaining to the patient why that's taking place, why it's happening, even with the biosimilar, making sure that they know they will be able to get their medication, even if there is a slight delay in it.

Also, pharmacists are great with the feedback loop. When we talk to pharmacists at Razor, we ask a lot of questions about what they're seeing at the pharmacy, how things are working, and problems they're facing. They relay those to us, and then we can help break down those barriers again, helping the patient get the medication. There's a lot of empathy there with pharmacists. They want the patient to have the medication as soon as possible. We want the same thing. How can we work together with that feedback loop to make sure that happens?

Let's take 2 different contract structures, one that is paying you some markup on the drug and one that is paying you at a set fee schedule. In one system's case, or in one PBM's case, the system actually makes more when you increase the price of the product. In the other one, the end system, let's call this the payer in this example, actually has to pay less when they decrease the price of the product.


When you look at a reference price, you have to say by dropping ASP [average sales price] way, way, way, way down, so you've rebated the system heavily, tried to promote "Hey, I will give you the kitchen sink if you just use my biosimilar relative to the other product". If they don't make more money on that, meaning you drive the ASP down, and they're getting paid at some variation of ASP, then it's all for naught. The market's not working well because as the price goes down, the end entity who's prescribing it is making less and less margin than they were on the reference product.


That has probably hindered adoption of biosimilars relative to what we would expect because if it were cheaper and just as clinically efficacious, meaning that the patient got it for cheaper, the payer paid less, and the manufacturer could still make a margin on it, then we would see much broader adoption. I think there are a lot of perverse incentives, things like rebates, maybe when you get paid relative to the sticker price, which is WAC [wholesale acquisition cost], then your margins are much better, that have allowed the reference product to stay bolstered and commonly used relative to the biosimilar.

Videos

Josh Canavan, PharmD, RazorMetrics, and Chris O'Dell, Turquoise Health, explain that widespread biosimilar adoption requires addressing patient and provider education gaps through pharmacists and rectifying perverse financial incentives within health care contract structures. 

Expert Insights on Overcoming Patient Education Gaps, Biosimilar Financial Hurdles

Josh Canavan, PharmD, RazorMetrics, and Chris O'Dell, Turquoise Health.

Josh Canavan, PharmD, head of pharmacy at RazorMetrics, and Chris O'Dell, senior vice president of market solutions at Turquoise Health, discussed key misconceptions about pharmacy benefit manager (PBM) impact on biosimilar adoption and evolving industry dynamics in an interview with The Center for Biosimilars

Canavan outlined major trends impacting PBMs, including a significant move towards transparency, driven by new legislation and demands from health plans and members for clear savings and passed-on benefits. He also emphasized a growing focus on value-based care, shifting PBMs from a sole focus on the bottom line to prioritizing patient outcomes, quality of care, and preventative measures.


O'Dell highlighted a major misconception regarding cheaper biosimilars that are believed to automatically translate to lower reimbursement and overall costs. He explained that hospitals and pharmacies often receive similar reimbursement for biosimilars as for brand-name drugs, leading to "spread pricing" where PBMs acquire drugs for less but charge employers/insurers similarly, thus not passing on the full savings.


The intricate world of pharmacy benefit managers, or PBMs, play a pivotal role in the health care ecosystem, influencing everything from drug pricing to patient access. Despite their widespread impact, a clear understanding of their functions and effects remains elusive for many.

What are the most significant misconceptions or information gaps regarding PBM impact on biosimilar adoption, and how do you foresee these dynamics evolving alongside the major trends impacting PBMs in the coming year?

I think the first one that will be the biggest trend is around transparency. We've already seen a lot of transparency, PBMs start to develop, and with the PBM Transparency Act, which passes on certain medication savings, it prohibits unfair practices, and can now be enforced by the FTC [Federal Trade Commission], PBMs are definitely trending more towards transparent practices. The health plans want to see what the actual savings are from the PBM, and then members want to know that the PBM is working for them. They also want to see those savings get passed on as well.


The second trend is around value-based care. Right now, there's a focus on quality of care, and there's a growing focus on the total outcomes for the patient, more than simply the bottom line. It also focuses on provider performance, best practices, evidence-based medicine, and there's also a focus on patient experience. With value-based care, you have care coordinators that work with patients, there's a focus on preventative medicine, and then it also tries to remove barriers around transportation. Then, it looks a lot at patient goals, and so PBMs are really starting to look at value-based care more, instead of just the bottom line.


Then, the next trend I think we'll see is around reducing prescription cost. Right now, there's a big focus on specialty GLP-1s [glucagon-like peptide-1], those are expensive medications. PBMs are trying to control them with prior authorizations and step therapy. I think we'll start to see more around lower-cost alternatives and decreasing poor outcomes, specifically around polypharmacy.


The biggest misconception around biosimilar adoption is that just because a drug is cheaper or produced for cheaper or costs less, that it means it's reimbursed less. There are many examples where the biosimilar might be acquired for significantly less, but whether it be payment from the insurance to the hospital or payment to the pharmacy, the reimbursement is not much less than what it would be for the brand-name drug.


This whole promise that these would drive down cost is a little bit of a misconception so far, because hospitals are often getting paid the same amount. On the PBM side, this is called spread pricing, which is when, effectively, the amount that they're paying to the pharmacy is a lot less than what they're acquiring it for. In essence, it costs the same to the employer or the insurer. I think that's probably the biggest misconception, that these will be cheaper, they'll drive down costs, and we just haven't seen that yet.

Josh Canavan, PharmD, RazorMetrics, and Chris O'Dell, Turquoise Health, explain the misconception that cheaper biosimilars automatically lead to lower costs due to pharmacy benefit manager (PBM) spread pricing, while also highlighting major PBM trends toward increased transparency, value-based care, and efforts to reduce prescription costs.

Chris O'Dell

Expert Insights on Overcoming Patient Education Gaps, Biosimilar Financial Hurdles

Biosimilar Misconceptions, PBM Transparency, and Value-Based Care: Insights From Canavan & O'Dell