Josh Canavan, PharmD

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.


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

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.

Videos

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.

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

 focuses on the critical issue of cost-related nonadherence in biologic treatments and the role of biosimilars in delivering promised savings. Despite the FDA approving 68 biosimilars, they currently make up only 2% to 3% of the U.S. biologics market, with market share varying significantly between individual markets, ranging from 8% to 82%.

Biosimilars have, however, demonstrated significant cost savings over the past decade. According to data from the Association for Accessible Medicines (AAM), generics and biosimilars collectively saved the U.S. a total of $445 billion by the end of 2023. Biosimilars alone accounted for $12.4 billion in savings in 2023, bringing total savings to $36 billion since their introduction in 2015. Despite these savings, barriers remain, as many biologics set to lose patent exclusivity in the coming years lack biosimilars in development. Addressing cost-related nonadherence and leveraging artificial intelligence (AI) to streamline prescribing processes and increase biosimilar utilization are key topics of discussion.

Josh Canavan, head of pharmacy at RazorMetrics, provides insights into why, despite the substantial savings biosimilars offer, they still represent only 23% of the overall biologics market. The conversation explores how AI-powered tools are assisting physicians in transitioning to biosimilars, enabling patients to access life-saving treatments at a fraction of the cost. As the 10th anniversary of the first biosimilar approval is observed, the discussion highlights the importance of automation, policy reforms, and increased adoption to bridge the affordability gap and expand patient access to these critical treatments.

To learn more about the 10th anniversary of the first FDA biosimilar approval and current insights into the biosimilar industry, 

To learn more about how much biosimilars have saved so far, 

To read more about Josh's views on the pharmaceutical landscape in 2025, 

Podcasts

Despite saving billions, biosimilars still account for only a small share of the biologics market—what's standing in the way of broader adoption and how can artificial intelligence (AI) help change that?

How AI Can Help Address Cost-Related Nonadherence to Biologic, Biosimilar Treatment

Josh Canavan, PharmD.

In an interview with Josh Canavan, PharmD, head of pharmacy at RazorMetrics, he discussed the role of pharmacy benefit managers (PBMs) in the biosimilar landscape. He emphasized the importance of PBMs in the development and approval process of biosimilars, and how they are responsible for ensuring that these medications are safe and effective.


Canavan also highlighted the importance of PBMs in educating patients and providers about biosimilars.

This transcript may be lightly edited for clarity. 

Do you have a preferred recommendation when you are suggestion education models for physicians and pharmacists?

The FDA has done a great job of providing education, and people typically trust that 

] also give specific links to clinical trials comparing biosimilars with biologics. There's a lot of data out there, so if you link directly to that clinical trial, specifically for a pharmacist or for a physician, they can see it in its original form basically, not something that we've created or something we've tailored. They can see the data. They can see all the endpoints that are there.

Multiple pieces of information help like the FDA website, clinical trials, and then we have our own section where we break it down a little bit simpler for patients or someone who's just not familiar with it quite yet.

What do you wish more people understood about the role PBMs play in the biosimilar space?

I think one of the things that maybe gets overlooked with PBMs is the amount of research they do before they put a medication onto their formulary. They typically have their own clinical teams, pharmacists, physicians, who are looking at all of these medications. They do research, they read the clinical trials like we've talked about, they look at comparative studies between biosimilars and biologics.

There's a lot of thought and detail that goes into it before it makes it on to their formulary. Once a PBM has added something to the formulary, they're very confident about its efficacy, its availability, how it's going to be received in the market.

I think that might be overlooked, the overall amount of time and effort that PBMs put into creating formularies, updating them, and making sure everything is correct for their members.

Josh Canavan, PharmD, head of pharmacy at RazorMetrics, recommends key educational resources for biosimilars, and emphasizes the extensive research conducted before pharmacy benefit managers (PBMs) add medications, including biosimilars, to their formularies.

Josh Canavan, PharmD

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

How AI Can Help Address Cost-Related Nonadherence to Biologic, Biosimilar Treatment

Understanding Biosimilars Through Education and PBM Formulary Perspective