News & Insights
Check out EpiphanyRx’s latest Fast Five Series post!
Got 5 minutes (or less)?
We’re sharing 5 quick industry insights about pharmacy benefits.
In this Fast Five, we revisit biosimilars – still a hot industry topic. We explore biosimilar pricing and the incentives motivating drug manufacturers and pharmacy benefit managers (PBMs). We discuss formulary decisions including placement of biosimilars and removal of brand Humira®.
To help us break down this complicated topic, we consulted our clinical expert, Janelle Sheen, Senior Director of Clinical Strategy.
Read Time: < 5 minutes
1. Why is the industry still buzzing about biosimilars?
When AbbVie’s legal protections were lifted and patent litigations subsided in 2023, biosimilars for Humira could finally be launched, providing long-awaited competition in the market. However, it isn’t just the entrance of these biosimilars or even the number of products that’s sparking interest.
First, Humira is the best-selling drug in the world; therefore, a way to manage its cost initially created big industry buzz. Now there are different pricing strategies in play by drug manufacturers for their biosimilar products which has kept us buzzing:
- Some of these products have list prices slightly lower than Humira’s list price.
- Some products have list price discounts significantly lower than Humira’s list price.
- There are both high- and low-list price versions from several drug manufacturers.
Moreover, there is a clear impact of these pricing strategies on plans and their members. Buzzzzzz.
2. Why would a manufacturer launch a high- and low-price version of the same product? What’s the impact?
The two-price strategy highlights how complex drug pricing is in the United States. One of the key reasons for this strategy is rebates. Rebates play a role in the drug manufacturer’s pricing strategy.
For example, there will be higher rebates attached to the higher list price product. The manufacturer wants to incentivize PBMs, some of which keep a portion of the rebates, to put those products on their formulary as “preferred”. Placement and preferred status on the formulary boosts medication usage (and profits), sometimes at the expense of the clients and members who need them.
3. Are all PBMs rebate-focused and therefore preferring higher cost products on their formularies?
No. A transparent and pass-through PBM who passes through 100% of rebates has no incentive to prefer the higher cost version. In fact, a PBM with their clients’ and members’ best interests in mind will make decisions based on the lowest net cost, not just rebates. Net cost is the cost after pharmacy discounts, rebates, and copay assistance.
The PBM will also evaluate other criteria for biosimilars hitting the market, such as:
- Programs: Does the new biosimilar have any financial programs to help members? Are they comparable to the brand?
- Pipeline Forecast: Will this be the only biosimilar? How many other biosimilar manufacturers are seeking approval? What is their anticipated entry to market?
We encourage employers and their advisors to evaluate the decisions their PBM is making closely and consider moving to a pass-through option without misaligned incentives.
4. What is an example of a member- and plan- centric PBM formulary approach and strategy?
The PBM will place several biosimilars on their standard formulary/formularies. This means the PBM supports the availability of biosimilars in the market which offers price competition that can make medications more affordable.
Adding them to the formulary also means there is ample data showing these products are equally efficacious to the brand and safe to use. The drugs have been thoroughly reviewed and vetted by the PBM’s Pharmacy & Therapeutics (P&T) Committee and subsequently, prescribers are comfortable recommending them to their patients.
A member-centric PBM and specialty pharmacy will help provide guidance and support during this change. For example, when transitioning from Humira to a biosimilar alternative, members should expect the following services (best practices) from their PBM and specialty pharmacy:
- Letters informing them of the change and the alternatives
- Transition phone calls with education and support
- Guidance on obtaining new prescription(s)
- Close monitoring during the transition
Clinical support and discussions are also key. A PBM with a hands-on approach will offer clinical insights before, during, and after drug transitions.
5. How does the removal of brand Humira from the formulary affect members and plans? What do members need to do to switch from Humira to a biosimilar?
The removal of Humira from the formulary will encourage members to transition to a lower priced biosimilar therapy. This enables clients and members to access cost savings over the brand product. Behind the scenes, the upfront cost savings that result from these changes will offset any rebates not realized for the plan.
Generally, when any brand medication is removed from the formulary, there will be generic and/or biosimilar options to take its place. In this case, members will need a new biosimilar prescription to move from Humira. From our experience, prescribers are very comfortable supporting this change and writing the new prescription.
The most important outcome? Clients will achieve savings which can contribute to lower premiums and overall health care costs – a win-win approach.
PBMs like EpiphanyRx, and our parent company, Navitus, are committed to making medications more affordable for the people who need them. The formulary decisions we make are aligned to this mission.
We welcome you to reach out to learn more about EpiphanyRx. Contact Jonathan Har-Even, VP of Sales, at jonathan.har-even@epiphanyrx.com or request a proposal by contacting rfp@epiphanyrx.com.
Janelle Sheen, PharmD, Senior Director of Clinical Strategy at EpiphanyRx has over 20 years of industry experience. Her background includes extensive work in utilization management strategies with specialty medications in both commercial and government pharmacy and medical benefits.