January 10, 2023

Biosimilars Poised to Deliver Savings to Pharmacy Benefits

Consulting Pharmacy

3 min read

Biosimilars Poised to Deliver Savings to Pharmacy Benefits

Overview

One of the biggest challenges facing plan sponsors today is managing the growth of specialty drug spend. Specialty drugs are high-cost prescription medications that treat complex or rare conditions such as rheumatoid arthritis, multiple sclerosis, hemophilia, and cancer. According to Asembia's 2022 Summit Specialty Pharmacy Industry Update specialty drug spend now makes up over 50% of total pharmacy spend. Given the strong pipeline of new specialty medications anticipated in the coming years, we expect specialty drug spend will continue to increase. However, some relief is in sight as a result of upcoming launches of biosimilar products.

The U.S. government passed the Biologics Price Competition and Innovation Act in 2010 which created the first pathway for biosimilar approvals. At that time industry experts expected biosimilars to serve as a long-term specialty drug cost mitigation solution. After over a decade, this expectation may in fact come to fruition. The use of biosimilars can expand options, enhance affordability, and even increase access to therapies. According to IPD Analytics’ Biosimilar Pipeline Report, biosimilars are projected to produce $100 billion in savings for the U.S. health care system over the next five years.

2023 is expected to be a breakthrough year in the pharmaceutical industry with the anticipated launch of one or more biosimilars for several of the most commonly prescribed specialty drugs on the market. For example, Humira® has been the top-selling drug in the United States for years and will see competition for the first time in 2023 following a patent settlement. A total of eight FDA-approved Humira® biosimilars are already cleared for a 2023 release in the U.S. with the majority of the launches expected in July of 2023. These events will mark the most significant loss of exclusivity in the history of pharmaceuticals.

What are Biosimilars?

A biosimilar drug is designed very much like a reference (i.e., originator) drug that has already been approved by the Food and Drug Administration (FDA). Specialty drugs are often biologics, drugs composed of complex molecular structures that are derived from living organisms. Unlike molecular comparisons of brand and generic drugs, the complex structure of a biological drug limits the ability of a manufacturer to produce an exact copy of the molecule. Clinical trials must demonstrate a biosimilar drug is as effective and as safe as the originator drug in order to gain FDA approval.

Expanding Availability and Possibility

While biosimilars hold great promise to mitigate specialty drug costs, the marketplace for them has been confusing and unclear. To date, the embrace of biosimilars has been slower than expected. A few key factors are anticipated to increase biosimilar uptake for launches in the coming years:

Specialty drug benefit coverage. Past biosimilar launches have primarily been for clinician-administered drugs which are typically covered under the medical benefit where it is more difficult to influence prescribing. The upcoming launches include self-administered drugs that are covered under pharmacy benefit plans which allow for Pharmacy Benefit Managers (PBMs) to drive utilization to lowest net-cost products through effective formulary management strategies.
Biosimilar interchangeability status. Interchangeability status will significantly influence the uptake of biosimilars coming to market. The interchangeability status allows the dispensing pharmacist to substitute a biosimilar for a brand reference product – much like generics are substituted for brand drugs. Most biosimilars on the market today do not have interchangeability status. More manufacturers are seeking interchangeable status from the FDA for this reason.

Creating Significant Savings

After a slow start, the era of biosimilars has finally arrived, creating an opportunity for savings and improved patient affordability that will significantly improve the PBMs outlook in the years ahead. Attention should be focused on how these savings are transferred from the PBMs and medical carriers to their plan sponsors and associated members.

Learn more about Risk Strategies Pharmacy Consulting here.

The contents of this article are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.