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The next biosimilar wave has arrived. Now what?

In this conversation, learn about a new class of biosimilars and what this means for competition, cost and volume in the PBM market.

Hosted by Scott Draeger | August 4, 2023 | 9-minute read


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People concerned about the rising cost of prescription drugs have been waiting a long time for an alternative to many popular but expensive branded biologic medications. After many delays, a new class of biosimilars are now beginning to deliver on that promise.

To shed light on what these biosimilars mean for plan sponsors and patients, Optum Rx Senior Vice President of Clinical Consulting Scott Draeger welcomed Optum Rx Senior Vice President, Industry Relations, Jamey Millar and Optum Rx Senior Vice President, Formulary Management, Savitha Vivian for a recent episode of the Pharmacy Insights Podcast. Together they discussed the basics of biosimilars, what plan sponsors need to know about these medications and the Optum Rx strategy as the biosimilar market expands.

Listen to the full “The biosimilar wave has arrived. Now what? podcast episode or read the lightly edited excerpts of this timely conversation here.

The difference between biologics and biosimilars

Scott Draeger: Savitha, let me begin with you. Last time we spoke we did a bit of a deep dive on biosimilars. Can you briefly recap what biosimilars are and why they're so important to the future of drug affordability?

Savitha Vivian: Nice to be back, Scott. I always like to start with what's a biologic. Biologics are drugs produced by living systems or organisms and because of this, they're very large and complex molecules or a mixture of molecules. The exact structures of these molecules aren't easily identified or characterized.

A biosimilar is a highly similar product to that existing FDA-approved biologic known as that reference product. A biosimilar has no clinically meaningful differences when compared to the reference biologic, but because of the nature of what a biologic is and the complexity of it, it is not an exact replica of the innovator or reference brand. 

In contrast to that, you’ve got the non-biologic drugs. These are typically manufactured through chemical synthesis, meaning that we're combining specific chemical ingredients in an ordered process. Think of it similar to a very precise recipe. Generics of non-biologic drugs are approved by the FDA through an abbreviated new drug application, where that generic product demonstrates its' bioequivalent to the reference product. So, almost as close as possible, it’s an exact replica of that non-biologic. 

Once approved, a generic can be automatically substituted for the brand by the pharmacist at the point of sale without a call to the prescriber. In contrast, biosimilars require a specific designation as being an interchangeable biosimilar to be eligible for that substitution pathway at the pharmacy without that prescriber or physician permission. 

So, there are differences at the molecular level and how they're regulated by the FDA. However, the economics between a traditional generic and a biosimilar behave in similar fashions. As we get more biosimilars that enter the market, it increases competition leading to greater price pressures and savings for members and clients. This is what we've historically experienced with traditional medications and generics. That’s how the biosimilar market affords us a tremendous opportunity for providing quality care at lower costs, similar to what we see on the traditional side.

When we last talked, we were eagerly anticipating some of the most widely utilized specialty products in the United States today, such as Humira®, to become available as a biosimilar to really see some of these sizeable and impactful bottom-line savings that the biosimilars have potential to produce.

Creating biosimilar guiding principles

Scott: Savitha, as we sit here today, there are now multiple biosimilars for Humira available within the marketplace. How do you decide, in such a crowded market with all these different options, what your strategy is going to be? 

Savitha: At Optum, we believe that PBMs have a responsibility to create value and choice for expensive specialty drugs like Humira. So, we developed a clear set of biosimilar guiding principles and followed them to determine our Humira biosimilar strategy. This included maintaining clinical quality of care, flexibility and choice. It involved ensuring that we significantly improve our client's net cost in the category, ensure stability of supply from the selected manufacturers we evaluated, and then, importantly, minimizing patient disruption. 

Overall, we wanted to make sure that our strategy supported the advancement of the biosimilar market over time and ensures that those savings delivered through biosimilar adoptions really freed up health care spend needed for future innovation. 

Our decision was grounded by defined criteria. Like with all products, we assess the clinical attributes of the drug and also the product attributes to ensure that we maintained quality of care and provided choice for our members and providers. We evaluated manufacturer capabilities to ensure that supply was stable and that manufacturers were able to support patients in a similar manner to how the manufacturer of Humira is able to support Humira utilizers. Then, we also evaluated the competitive pricing so that we were able to get the lower net cost and net spend throughout the drug class. 

Scott: Jamey, I want to take this opportunity to bring you into the discussion. With this recent wave of biosimilars, how is Optum Rx thinking about strategy? 

Jamey Millar: Thanks, Scott. At a macro level, the core strategy was to leverage that large number of biosimilar entrants coming into the marketplace to deliver better value for clients and members. So, that really was the overall objective. But as Savitha laid out, we established right up front some clear guiding principles. So, it was the application of those to each of the options presented in the marketplace that led us to the decisions that we have made. Amjevita™, Amgen's biosimilar, was placed on our standard commercial formularies premium and select as of Feb. 1. 

You noted the July additions. In July, we have added Boehringer Ingelheim's Cyltezo®, their biosimilar to Humira, as well as Sandoz's Hyrimoz® branded biosimilar to formularies, both premium and select in our commercial standard formularies. With that, we have the first available biosimilar in the marketplace with Amjevita, we have the first interchangeable designated biosimilar in the market with Cyltezo, and among the first high-concentration formulations of branded Humira that we wanted replicate in the biosimilar offering of Sandoz. 

Again, we have the first available, first interchangeable, and among the first high-concentration formulations in the Sandoz product. So, we feel we've satisfied the guiding principles with this optionality that we've provided to prescribers, to clients, and to members.

High and low wholesale acquisition costs

Scott: When that first biosimilar for Humira hit, the manufacturer came to the market with a high-wholesale acquisition cost version and a low-wholesale acquisition cost version. In the industry, we often use the acronym WAC to describe the wholesale acquisition cost.  

Two-part question here for you, Jamey. First, why would manufacturers come to market with a high-WAC and a low-WAC versions? Second, can you tell us how Optum Rx chose to manage these from a formulary perspective and why we did that? 

Jamey: Yeah, great question. It's not an unprecedented move from manufacturers. For those that remember the introduction of Semglee®, a biosimilar to the basal insulin product, Lantus®, the manufacturer introduced both a high-WAC and a relatively low-WAC version of the product. Obviously, you see now in Amgen and Sandoz as well as several other players using a dual-pricing strategy.  

Why do they do this? First, it's important to underscore that manufacturers alone determine the list price strategies for their products. In this case, those companies have decided that there is enough diversity of clients in the United States that’s there is a plurality of need. Therefore, they are bifurcating that need into customers or clients that want a high relative list price with a discount to the reference product and rebates to get to a competitive net price, versus those wanting a low list alternative in the absence of rebates or with minimal rebates still being net price competitive. I think that speaks to the plurality of benefit designs and client interests.  

Certainly, across our client population, there are those that want that high relative list and the rebate value because they've built it into their budgets and forecasts. There are others maybe in predominantly high deductible plans, plans with predominant co-insurance, where they want the lowest list price available to them. Our choice, the second part of your question, how have we responded to manufacture pricing decisions, our response has been to enable choice, flexibility, and optionality. It's one of our key guiding principles.  

PBMs are often criticized for dictating choice to their clients and members. We didn't want to do that. We wanted to offer choice, flexibility, optionality to our clients. With these agents that have the high and low list price products, we are placing both on formulary in a similar position to each other and to the reference product Humira. This enables clients to choose. They can cover one or the other, or they could cover both the high list and the low list.

Biosimilar competition, volume and prices

Scott: As Savitha mentioned earlier, with the advent of these biosimilars for Humira hitting the market, we are likely to see an exertion of downward price pressure within that therapeutic class. Jamey, can you talk a little bit about the impact we've seen on Humira spend overall and how you anticipate it impacting cost trend in the autoimmune class?

Jamey: I look at this in a couple different perspectives, Scott. One is for autoimmune and Humira specifically with the biosimilars, but then just the broader impact of this biosimilar introduction. Just to take a step back, Humira was the single largest pharmaceutical product in the history of the industry, 20 years roughly on the market without any competition in the form of biosimilars. A lot of these biosimilars that are launching now have had FDA approval since 2017, 2018. They've been unable to launch due to patent litigation and legal settlements with the branded manufacturer, AbbVie.

That’s why the market has anticipated some relief to the autoimmune and specifically the Humira cost trend for so long. I often ask manufacturers to imagine if every drug they had or were introducing was met at the same time by 7 to 10 competitive products that are essentially clinically identical. What would that mean for price competition? You could just see their jaws drop. So, that's exactly what we have here. We've now got multiple biosimilar competitors coming to the market, putting pressure on what has been an unpressured brand for 20 years. Previously, with branded Humira you saw roughly an 7% annual list price increases every year, and obviously dominant market share.

In terms of client cost trend, the first thing that we've delivered and are really pleased about is better value on branded Humira. The presence of biosimilar competitors allowed us to leverage our strengths with AbbVie for better value on the brand. Then, we leverage the fact that there could be up to 10 biosimilars for Humira. You can see how that created competition right away. All of those biosimilar manufacturers, are asking themselves whether they want to be on the inside looking out or the outside looking in? That drove competitive pressures in the marketplace and enabled attractive pricing from the three biosimilar companies for the products that we have added to formulary.

That gives you a sense of the cost-per-unit relief that we expect. Now, the key thing that we haven't seen yet, that we hope builds momentum now with more on the market, is price times volume equals that net cost trend. We've delivered on the pricing, I believe, but to date, the adoption of the biosimilar to Humira in the form of Amjevita has really been underwhelming. So, we hope that more prescribers start to write for Cyltezo, for Hyrimoz, for Amjevita, and we start to see volume build because the volume component is the only way we're going to get cost relief.

The second way I think about this is because the autoimmune category historically has been one of the biggest drivers of trend, getting relief in this category frees up scarce health care resources for the next wave of innovation. We're seeing it with GLP-1s in weight loss, in Alzheimer's drugs. There are unmet needs in other categories, and right now, it really puts pressure on affordability. So, delivering cost relief in this autoimmune category, and specifically with Humira, frees up dollars that can be used for other innovations. That’s really important.

Scott: Jamey, let me just ask you to expand a little bit on what you said. You mentioned that the volume in terms of the uptake of the Amjevita, the Humira biosimilar, has been relatively low across the marketplace. What do you attribute that to and are you surprised?

Jamey: I think most analysts, most forecasters in this category expected a slow transition to the biosimilars. So, I don't think it's unexpected. That’s why our choice was to maintain branded Humira on formulary and add up to three biosimilars in a parity position. Humira as a brand is a very sticky brand. There's a lot of brand loyalists, both from a prescriber and a patient perspective.

Some of the non-clinically relevant features of the early biosimilar entrants weren't exactly the same as the brand and I think that may have given some prescribers pause. I think having multiple biosims on the market now, with multiple companies behind their promotion and building awareness, will help build more momentum and move more and more new and potentially existing patients on Humira over to the biosimilar alternatives. 

Scott: Cost is just really one consideration when we look at this overall class. Savitha, from the plan sponsor perspective, what else should they bear in mind as they consider their options?  

Savitha: A great question, and I think Jamey hit the nail on the head when he was discussing utilization and volume. How do we determine what is important in making sure that biosimilars get the uptake in utilization that will deliver on the cost savings that we all are expecting from this market event? 

With regards to the biosimilar options, in addition to cost, the product attributes or features are an important consideration. This includes the device features, the concentration of the drug, whether the product contains citrate or not. These attributes don't impact the efficacy or the clinical viability of the product, but they can potentially be reasons for member disruption or impacts to continuity of care. 

This can be mitigated with the availability of biosimilars that most closely resemble Humira in terms of product features. There are also manufacturer and pharmacy patient support programs to continue to encourage utilization and adherence to these drugs. With our decision to add Cyltezo and Hyrimoz, we are now offering products that have the high concentration. This is the primary utilization in Humira. Up to about 80% of current Humira utilizers are on high concentration. So, making a high concentration product available on the formulary creates that pathway to transition to the biosimilar with minimal disruption. 

Another thing that plan sponsors should consider is prescriber habits or provider habits and their comfort level with biosimilars. This is a critical barrier to adoption. There's been an increase in prescriber education, which has led to confidence through experience in using biosimilars in new to therapy patients.  

However, we still see some hesitations in switching patients who are stable on an existing therapy. This really comes to fruition in complex disease states like rheumatoid arthritis. So, what we need is data that shows no additional risk when switching therapies in these stable patients, especially in these hard-to-control chronic conditions. That's really what's needed to boost confidence.  

I think our choice in adding Cyltezo to our formulary helps alleviate these concerns by providing the first interchangeable biosimilar. Interchangeability is designated when the manufacturer conducts additional switch studies showing no changes in clinical efficacy. So, I think addressing both member concerns and provider concerns should be top of mind as plan sponsors are considering their options.

What to expect in 2024 and beyond for biosimilars

Scott: Lastly, Jamey, let's look ahead. If 2023 is a big year for biosimilar options for Humira, what can we expect in 2024 and beyond? 

Jamey: Well, first of all, I would underscore that even though we've named the two additional biosimilars to formulary in July, this is not a static environment. It's very dynamic. We'll continue to monitor the marketplace, the uptake, the barriers to broader biosimilar adoption. 

I'll also say that maybe this will prompt another podcast down the road, Scott. But we still have some strategic maneuvers that we have built in terms of optionality. So, more to come there. We'll monitor the marketplace in 2024 and look to update our strategy accordingly.  

I think what's exciting though is that this really is the first of several pharmacy benefit biosimilar introductions in the US. With Stelara® being probably our second largest, certainly, top five products in terms of spend across our formulary, it will face a biosimilar competition. I think we've developed a template or a roadmap for biosimilars that we can use for future launches. We are already gearing up for the next one coming right down the road. So, I look forward to that.  

Scott: Jamey, given the interest in biosimilars, we're likely going to take you up on that offer for another podcast. So, thank you. Jamey and Savitha, what fantastic insights. I greatly appreciate your time today.

Hear the conversation: The biosimilar wave has arrived. Now what?

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