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

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.

Transcript

Narration: 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?

Canavan: 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.

O’Dell: 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.