How Will Drug Supply Chain Issues Affect Biosimilar Adoption?

The Association for Accessible Medicine’s (AAM's) Access! 2019 Annual Meeting, held February 4-6, 2019 in New Orleans, Louisiana, drew stakeholders from all over the pharmaceutical industry, as well as the political arena.

After his welcome address, Chip Davis, JD, president and chief executive officer (CEO) of AAM, introduced a panel titled “Today’s Drug Supply Chain—Are You at the Table or on the Menu?” which began a discussion around drug pricing and the consolidation in the marketplace.

Moderator Adam Fein, PhD, president of Pembroke Consulting, opened up with the question, “Why are we having shortages of drugs that are clearly in demand?”

One panelist took the question a step further. “This isn’t a new problem…unfortunately it’s a pervasive issue. It’s a typical supply chain disruption that then causes a quality problem. However, what we see as a more complex problem is market deterioration where critical drug prices are being beaten up to a point where there’s a cost issue to manufacture these drugs,” said Michael Moloney, senior vice president of integrated pharmacy at Premier, Inc.

In this regard, many panelists echoed the need for greater transparency across the supply chain. “From manufacturer down to the hospitals acquiring the product, there’s a need for greater transparency. This greater transparency could then help to inform what fair and sustainable pricing looks like,” said Heather Wall, chief commercial officer of Civica Rx.

The issue of sustainable pricing is one that has hit both ends of the spectrum. “Sometimes prices are too high, and sometimes they’re too low. We want them to be just right, the goldilocks strategy,” said Fein.

Matthew Reilly, partner at Kirkland and Ellis, LLP, and who previously working at the Federal Trade Commission (FTC), offered his opinion of the drug pricing issue. “The FTC has been very active in this space to make sure that there’s good access to generic drugs. We look at pay-for-delay agreements to make sure that generics [and biosimilars] make it to market. Most people that follow the FTC would say that they’re friends of the generic market…but prices being too low is not something that we used to discuss.”

Although pay-for-delay agreements are not the only tactic to have successfully kept biosimilars from entering the market, certain rebate deals entered into by payers and branded drug manufacturers have provided incentives to keep biosimilars off formularies and out of the hands of patients. Fein gauged the panel’s opinion of rebates and how they’re being addressed in the market. “It’s been argued that there’s been a rebate wall created that slows the generic and biosimilar market. Last week, HHS proposed a rule to do away with them. Have you seen or experienced the rebate wall and how has that effected your decision for what products to use and buy?”

Wall noted that Civica does not offer rebates. “For Civica, we don’t offer rebates because it limits transparency. I’ve seen through hospital perspectives that there can be potentially perverse perceptions. For Civica we’re choosing not to offer a rebate model so that it’s a single price point for all. Our goal is to be fully transparent for our hospital system.”

While Moloney’s company does offer a rebate model, he emphasized that Premier believes in the potential of the biosimilar market. “We’re very much trying to accelerate the adoption of biosimilars in this country, we feel it’s very important. We saw the first wave hit over the past couple of years, and the adoption was lower than everyone expected," likely because the innovator took much of the market.

To counter this situation, Reilly supported speaking with and encouraging the FTC to take action. “If you go to the FTC with specific points and examples and explain not just that this is hurting your business and prices, which is valid, but that you could be helping patients save money if innovator companies stopped these so-called shenanigans, that would hold a lot more weight.”