Adoption of fast-growing biosimilars segment essential

Given the spending growth projections for biologics, successful managed care organizations must find a way to ensure appropriate adoption of biosimilars, according to a study published in Health Affairs’ February issue.

Benjamin P. Falit, MD, JD, of the Harvard Radiation Oncology Program, Brigham and Women's Hospital, Boston, and co-authors compared the legislative framework governing generic medications to that regulating biosimilars.

Biologics are the fastest-growing sector of the US pharmaceutical market and have yet to face real competition from biosimilars, in part, because weak statutory incentives-such as the absence of market exclusivity for the first biosimilar approved-create barriers to market entry, according to the authors.

The abbreviated FDA approval pathway for biosimilars, created by the Biologics Price Competition and Innovation Act (BPCIA) in 2010, may be less attractive to manufacturers of follow-on biologics than the abbreviated new drug application is for generic manufacturers because of Congress’s decision to include weaker statutory incentives for development in the BPCIA than those built into the Hatch-Waxman Act, according to Dr Falit.

Dr Falit

“The lack of robust competition among biologics and their follow-on agents will require health plans and pharmacy benefit managers to implement both traditional and novel management strategies that are designed to ensure swift but appropriate adoption of biosimilars, while concurrently maximizing price concessions from manufacturers,” Dr Falit said.

The authors outline the mechanisms by which payers and pharmacy benefit managers have generated savings by promoting Hatch-Waxman generics, explore whether such strategies are likely to be successful in the biosimilar marketplace, and identify several novel strategies that are unique to biosimilars, including potential adjustment of provider incentives for physician-administered products.

“Adoption of biosimilars is likely to be slower and with fewer price concessions than what has been seen with Hatch-Waxman generics, but there is much that payers and pharmacy benefit managers can do to maximize savings while ensuring safe, high-quality care,” Dr Falit said.

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“Unlike the situation with Hatch-Waxman generics, successful uptake of biosimilars is dependent on managing the medical benefit, in addition to the pharmacy benefit, since so many biologics are bought and billed by physicians,” he said.

“Congress attempted to give medical providers equal incentives to prescribe an innovator product and its biosimilar by setting Medicare’s reimbursement for follow-on biologics at their average sales price plus a fixed percentage of the reference product’s average sales price,” Dr Falit continued.

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The study authors demonstrated that this is likely to be an insufficient incentive for physicians to prescribe the biosimilar because the payment system is based on an average sales price that is 6 months old, Dr Falit explained.

“This 6-month lag favors drugs with a falling acquisition cost to physicians, which is likely to be the case for the reference product after the biosimilar’s launch,” he said.