Federal Perspective on the Biosimilar Influence on Drug Costs

A much-awaited talk at the 2017 AAM Biosimilars Council Conference, held in Washington DC, was by Andrew Slavitt, senior advisor, Bipartisan Policy Center and former acting administrator, CMS. Providing an overview on where the healthcare reform debate is headed, Slavitt refined the discussion to focus on drug cost and indicated the potential for biosimilars to influence the rising costs of drug products.

Acknowledging the 2 press conferences that were being held by senators on the same day, where the lawmakers were to unveil new healthcare reform proposals, Slavitt predicted, “To my mind, every 10 years or so, we are due for another healthcare debate in this country. If you go back as far as Medicare and Medicaid, Medicare Advantage, Medicare Part D, Obamacare, and then of course the current battle…this could be another battle of sorts in 10 years.”

Slavitt went on to take stock of what the Affordable Care Act (ACA) accomplished, including reducing the uninsured rate, investing in healthcare cost and quality of care, and ensuring healthcare insurance for all American citizens, independent of their health or financial status. He acknowledged that the ACA did not get it all right in terms of fixing problems, including affordability of healthcare, which encompasses the absence of competition in the insurance marketplace in several states.

Slavitt said that every American should have access to affordable care, preventing healthcare-associated bankruptcy. Ensuring this can be sustained and achieved by 2020, the current focus should be:

• Bipartisan legislation with complete support from 60-70% of the American public. This requires a discussion of the kitchen-table issues, he said, and an understanding of the tradeoffs faced by American families.
• Implementing some of these ideas in the states over the next few years
• Addressing cost and affordability of healthcare
• Unlocking the innovation potential in the country in the right way

The healthcare challenge in our country, Slavitt explained, “is not the 50-year old jogger with mobile monitoring devices. The challenge is the woman who lives 2 bus stops away from a dialysis center and who may be in renal failure if she misses one of the connections.” Social determinants of health, which are outside of healthcare control, need to be addressed, he said, adding that we need to move innovation away from gadgets like Fitbit and refocus on some of these social issues.

Moving the discussion toward drug costs, he said that this problem is not forthcoming; it’s a problem we face today. “We cannot talk about affordability of healthcare in exchanges without getting into the underlying root cause.” Narrating his experiences of heading CMS, he said that, when he would talk to heads of healthcare systems or the pharmaceutical industry about keeping down or regulating the cost of care, the feedback would be:

• Don’t look at me, look at them (plans, pharmacy benefit managers)
• Don’t worry about the price, nobody pays it all anyway: lack of transparency is a problem
• You have to spend money to make money: but this can be balanced off with real-world evidence and assigning “value” to the outcome with a specific treatment
• Innovation costs money, but is price the tradeoff to make when choosing between innovation and improvements? If other industries continue to provide innovation at lower costs, why not healthcare?

“This is where biosimilars come in,” Slavitt said. He made note of changes being made by FDA Commissioner Scott Gottlieb, MD, to improve competition in the marketplace.

He reiterated his faith in competition, innovation, value-based ideas, and the ability for CMS to negotiate drug prices. Going back to the single-payer proposition, which is being presented by Senator Bernie Sanders (I-Vermont), he said there are provisions in his bill and opportunities that are relative to generic drugs and biosimilars.

He closed by saying that the affordability questions will be ever-present, and that biosimilars and generic drugs may have a significant role to play in being part of the solution. “Being there and part of the solution while key legislations are being drafted or as people are focused on policy issues is a great place to be.”