Payers Began Shifting Reimbursement Strategies for Biosimilars Last Year, PBM Report Says

Last year, more payers began to significantly adjust their reimbursement strategies for biosimilars, according to pharmacy benefit manager (PBM) Magellan Rx Management. In its 9th annual Medical Pharmacy Trend report, the PBM division of Magellan Health, Inc. discussed key findings about these low-volume, high-cost specialty pharmaceuticals administered through the medical benefit.

Both the number and cost of these drugs are rising, the report noted, with novel oncology therapies and immunotherapy treatments continuing to fuel per-member-per-month (PMPM) spend.

After oncology, biologic drugs for the autoimmune disorders (BDAIDs) category in total accounted for 18% of PMPM, or $5.29. The highest spend BDAID category, Crohn disease and ulcerative colitis, accounted for $3.01 PMPM, or 10% on its own.

Looking ahead, by 2022, the number of billion-dollar drugs will rise by 26% from 34 drugs in 2017 to 43 drugs in 2022. In the autoimmune category specifically, PMPM drug costs are expected to increase 90% from $1.40 to $2.66.

Reimbursement Trends

In 2018, 34% of commercial and 43% of Medicare lives were covered under plans in which biosimilars were reimbursed using a Medicare model—wholesale acquisition cost (WAC) plus 6%, then average sales price (ASP) plus 6% of reference product.

By contrast, in 2017 most commercial plans used an ASP-plus model.

Most payers (64%) indicated that the pricing of biosimilars had the most impact on their reimbursement decisions, while 33% felt that provider willingness to switch to the biosimilar over the reference product was the next most impactful when considering a strategy.

Close to half of payers (49%) preferred biosimilars over the reference product. However, on average, they needed the cost savings to be at least 28% in order to switch from the brand-name to the biosimilar.

Step Therapy Trends

Step therapy also became more prominent in 2018, when more than half of payers (51%) required patients to use a biosimilar product first before using its reference. Notably, in Europe, this practice that contradicts medical guidance, since the biosimilar and the reference product are therapeutically the same; the European League Against Rheumatism’s recommendation is that switching to another drug altogether in case of treatment failure is more appropriate.

Of those payers not yet using step therapy, 36% were planning to do so, while 41% were not planning to implement such a strategy. Most payers (73%) indicated a significant cost differential of between 25% and 50% would be needed to implement step therapy, and about half would implement a step if there were an FDA designation of interchangeability.

The United States is still awaiting guidance on demonstrating interchangeability, which is one of the 11 points included in the Biosimilar Action Plan released by the FDA last year. In other reports, most payers have indicated that interchangeability is a critical factor in helping to drive adoption of biosimilars.