JAMA Article: Obstacles to the Adoption of Biosimilars for Chronic Diseases

Generic drugs currently account for 88% of all U.S. prescriptions, yielding 10-year cost savings in excess of $1.5 trillion.  There is some optimism that biosimilars will offer a similar low-cost therapeutic alternative to branded biologics.  However, the Journal of the American Medical Association (JAMA) has recently published an article discussing the difficulties in the U.S. market of adopting biosimilars in the same way that generics have been widely adopted, and how that might impact expected cost savings.

First, the article points out that generic small molecules benefit from the current automatic substitution laws that either require or allow a pharmacist to substitute a generic unless a physician has specifically prohibited the substitution. This automatic substitution allows generic manufacturers to save on marketing costs.  However, because of the greater variation between biologics and their biosimilars, there are no automatic substitution laws for biosimilars and therefore no anticipated “automatic” market growth for biosimilars—which will require a separate prescription.

Second, the article notes that once a small molecule goes generic, payers will often exclude the more expensive brand drugs from formularies.  However, thus far, payers have been reluctant to use formulary utilization management strategies to promote the use of biosimilars for chronic disease treatment. For instance, infliximab (Remicade), a branded biologic used for the treatment of inflammatory conditions, has not been excluded from any large 2017 formularies despite the FDA approval of a biosimilar at a 15% discount to the wholesale acquisition cost of the brand.

Third, the article analyzes the current healthcare system in the U.S., which allows a branded biologic to incentivize for payers to remain with more expensive branded biologics by offering rebates up to 50% of the drug’s purchase price.  If a less expensive biosimilar were to come on the market and a payer were to add the biosimilar to its formulary, the brand company could spring a so-called “rebate trap,” where a branded biologic can withdraw its rebate, effectively doubling the price of the branded drug.  In such a case, the payer would need to convert most, if not all, of its patients to the biosimilar to make up for the increase in cost.  This might not be feasible, particularly for patients with chronic diseases who are stable on a branded therapy and thus unlikely to switch.

The article proposes several solutions to the problems set forth above.  First, if a biosimilar is considered “interchangeable” rather than simply “biosimilar,” it might be easier to convert patients to the interchangeable drug.  However, to date, only 21 states have passed laws allowing substitution by a pharmacist based on interchangeability.  Second, following Europe’s lead, if treatment guidelines from physician organizations recommend biosimilars as first-line agents, the uptake of noninterchangeable biosimilars can be facilitated.  Finally, legislators could demand greater transparency on how rebates influence therapeutic choice for patients.  This could lessen the impact of “rebate traps” by improving understanding of how rebate dynamics influence drug choice.

Read the full article by following the link above.