For the past few years, health plans have been trying to figure out the best strategies for using biosimilars to help lower how much is spent on specialty drugs and improve member health outcomes.
To understand how biosimilars can do this, we need to understand what a biosimilar is.
What Are Biosimilars?
Biosimilars are less expensive versions of biologic drugs that have been prescribed for years. So what are biologics? Biologics are treatments made from material that comes from cells of living organisms, including humans, animals, bacteria, and yeast. Biologics are used to treat a broad range of conditions, like rheumatoid arthritis, anemia, and cancer.
In terms of safety and effectiveness, biosimilars have no clinically significant differences from their reference biologics (called reference products). The U.S. Food and Drug Administration (FDA) requires that all biosimilars meet the same rigorous standards as the reference product to be approved for use.
To date, the FDA has approved 30 biosimilars, but only 22 can be prescribed. The remaining eight are tied up in the courts over patent litigation. The 22 biosimilars represent eight reference products: Avastin®, Epogen®, Herceptin®, Lucentis®, Neulasta®, Neupogen®, Remicade®, and Rituxan®. These drugs treat rheumatoid arthritis, Crohn’s disease, age-related macular degeneration of the eye, neutropenia (low white blood cell count), anemia, and certain types of cancer.
How Do Health Plans Use Biosimilars?
Since biosimilars cost less than reference products, it would make sense for health plans to give biosimilars preferred coverage, as they do with many generic drugs compared to brand-name drugs. But that’s not what we’re seeing in the industry.
A 2020 Tufts University study of the nation’s 17 largest health plans shows varying strategies for managing biosimilars. Biosimilars were only given preferred status 14 percent of the time. Reference products were given preferred status 33 percent of the time. Nearly 53 percent of the time, health plans covered a combination of reference products and biosimilars.
It seems health plans haven’t found a one-size-fits-all strategy for managing biosimilars. This may be due to many factors, including the price-setting strategies used by the drug manufacturers.
In some drug categories, reference product manufacturers lower their drug costs to try to compete with biosimilars. Health plans and members benefit from this competition because it reduces overall drug costs.
Other reference product manufacturers keep their prices intact, betting that brand loyalty to the established reference product will outweigh the value of a lower-cost, upstart biosimilar — particularly for patients who have lifelong, chronic conditions that have been well-controlled with reference products.
Our Strategies for Managing Biosimilars
At Independence Blue Cross, we customize biosimilar strategies based on the condition that each drug treats. In addition, we look at:
- Total cost of treatment
- Whether a drug is used to treat an acute (short-term) or chronic (long-term) condition
- How many members are using the drug
- What impact any changes will have on our members’ continuity of care
For some conditions, it makes financial and clinical sense to prefer the biosimilar, but for other conditions, it may not.
The Bottom Line: We’re Still Learning
Doctors, patients, and health plans are still learning how to best use biosimilars to reduce costs for all involved.
Biosimilar manufacturers are making good on their promise of providing lower-cost treatment options for patients. In some drug categories, we are seeing expanded lower-cost options, as reference product manufacturers are lowering their costs to compete with biosimilars.
Over the next few years, the FDA is expected to approve several new biosimilars in a variety of drug categories. We’ll use the factors listed above to develop customized strategies for each biosimilar.
Independence Blue Cross will continue to watch the biosimilar market and pipeline, with an eye on how biosimilars and reference products can optimize cost-savings and improve member health outcomes.