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Biosimilar sustainability—challenges and potential paths forward

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Threats to long-term biosimilar sustainability

In this discussion moderated by Sean Sullivan, Professor of Pharmacy and Public Health at the University of Washington, panelists Cate Lockhart, Executive Director of the Biologics and Biosimilars Consortium, and Sophia Humphreys, Executive Director, Pharmacy, Credena, Providence Health, offer stakeholder perspectives on biosimilar sustainability, from current threats to upcoming policy reforms that could strengthen biosimilar viability in time.

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SEAN: Hello and welcome to our discussion on biosimilar sustainability. My name is Sean Sullivan and I am Professor of Pharmacy and Public Health at the University of Washington in Seattle. Today, we plan to explore the challenges to long-term biosimilar sustainability and the potential policy reforms that can help protect the benefits of biosimilars.

While biosimilars have presented many opportunities to the healthcare system and to patients, there are key challenges to their future viability.

Multiple panels have come together, leading to the generation of at least two key pieces of work. The first, published in JMCP, called Stakeholder Perspectives on the Sustainability of the United States Biosimilars Market, and second, and more recently, Policy Proposals to Achieve Long-Term Sustainability of Infused Biosimilars in the US, produced by IQVIA. Both of these documents review stakeholder perspectives on the topic of biosimilar sustainability, both the challenges and the potential path forward.

To help me discuss this complex matter, I am joined by two leading experts in this field, Dr Sophia Humphreys and Dr Cate Lockhart. I'd first like to ask Sophia and Cate to introduce themselves. Sophia.

SOPHIA: Thank you, Dr. Sullivan. Hi, I'm Sophia Humphreys. I am the Executive Director of pharmacy for Credena Health, the specialty pharmacy branch of Providence Health system, and I'm also on clinical faculty for pharmacy school for both University of Washington and California Northern State University. I'm also a board member for Center for Biosimilars as well as the executive council for American Journal of Managed Care.

SEAN: Cate.

CATE: Thank you. I'm Cate Lockhart. I am the Chief Science Officer at the Academy of Managed Care Pharmacy. I lead the AMCP Research Institute, and I'm also the Executive Director of the Biologics and Biosimilars Collective Intelligence Consortium. Thanks so much for having me today.

SEAN: Thank you both. Today's discussion is going to focus on a few of the areas discussed in these previously mentioned publications, which I know both of you are very familiar with.

We will start by examining areas of opportunities for biosimilars along with some threats to their sustainability. We will then discuss some proposed policy reforms that are designed to potentially protect biosimilar availability, but we'll have a conversation about those, and then we'll wrap up with some final thoughts from our panelists. We all understand that biosimilars have presented many opportunities for the healthcare system and importantly for patients. Some of these key opportunities include the benefit of cost reductions, where savings that can be reinvested to expand patient access to biologics exists. Two, an increase in healthy competition and growth of a more robust supply chain, and thirdly, an increased focus on a patient-centered approach to treatment, which has aligned stakeholders in achieving better health outcomes, reducing healthcare costs, and has led to development of new biosimilars.

So with that as background, and I want to ask the first question, which is the opportunity for cost savings is obviously one of the most important benefits of biosimilars as biologics account for 10 of the highest expenditure drugs, certainly in Medicare Part B. Since 2015, biosimilars were associated with more than $23 billion in savings for the healthcare system, and biosimilars have reduced healthcare spending growth in oncology by nearly one half. Given this, what do you consider other big opportunities presented by biosimilars?

SOPHIA: That's a very good question, Doctor.

54% of all medication spend are on specialty medications, which are mostly large molecule biologics. So control the high-cost biologic medication is really the key for affordable healthcare.

By 2023, 445 billion dollars for savings were reported for both generic and biosimilars. In the past 10 years, biosimilar savings has really helped us to provide more care for our patients.

According to the Association of Access Medicine, more than 300 million patient days has been provided by biosimilars. So if we did not have biosimilars on the market, those patients would not have received these life-altering biologics.

SEAN: Sophia, thank you for that answer. Appreciate it. Cate, did you want to expand on that or talk about some other topic? What would you like to say?

CATE: Sure. I think the availability of biosimilars is definitely a benefit for patients.

There's been a study in Europe that showed with the introduction of a biosimilar or multiple biosimilars, the overall use of a molecule, whether it was the reference product or biosimilars, increased, which suggests that either more patients are getting access to a treatment that they maybe didn't have before with these expensive biologics, or perhaps they're receiving treatment with the biologics sooner in their disease course. Either way, this is a benefit to the patients. One challenge, though, is there are concerns about supply chain issues. And we've already seen some stress on the supply chain of biosimilars in Europe, and that's bound to carry over into the United States at some point. And so having enough producers of biosimilars is essential in maintaining the biosimilar market, because without the producers, we don't have biosimilars.

So making sure we connect all of these dots is so essential for the health of the biosimilar market, which is so pivotal for the health of the US healthcare system.

SEAN: The benefits to the healthcare system and patients that we just discussed with a healthy and viable biosimilars market are important to protect. But there are some threats that are looming. One of the key threats to sustainability is the volatility that we see in pricing. Many biosimilars are experiencing quarter-on-quarter declines and the current ASP-based reimbursement results in a cycle of continuous ASP erosion. So from your perspective, what are these threats and other threats to long-term biosimilar sustainability? Shall we start with you, Sophia?

SOPHIA: Sure. Thank you. So from a provider's point of view, the perverse economic incentives really bothers us. For example, when we have a biosimilar that when we have a reference product that starts, say, from the ASP of 3,000, right? And first, the manufacturers have to give the payers and PBMs a great portion of rebate, some of them exceeding 50%. So then that reduce the potential ASP to about 1,500, right? And then they have to give certain amount of discount to the providers to get onto our formulary. Say, for example, you give us a 500 discount. And then there's other discount, for example, for the distributors and for patient assistant programs and so forth. So by the end, the ASP could be dropping from 3,000 to 900. So that means that if the potential reimbursement for the healthcare providers is based on the ASP, then I could face a challenge that, for example, if my acquisition cost is above the potential reimbursement, the $900, I will be under the water. So I will have a negative net cost recovery. I will be actually encouraged to use a higher cost product to maintain the health of our health systems uh formulary, financial health. So that really brings a dent to the eagerness of health system to adopt lower cost biosimilars. The fact is when we meet our biosimilar focus group meet every quarter to assess the ASP we actually have to review which ones have positive NCR, which one has negative NCR. And if you are a for-profit healthcare system, you might even look at your reimbursement and then to choose even use a reference product if the reimbursement is much higher. And of course, payer coverage is another issue.

So a lot of these issues compounded to the challenge to biosimilar sustainability.

SEAN: Yeah. Thank you for that, Sophia. I just want to mention that you mentioned during your response the acronym NCR. And by that, you mean net cost recovery, right?

SOPHIA: Yes.

SEAN: Yeah. Just so that listeners are familiar with that term. So Cate, so Sophia mentioned these really perverse reimbursement dynamics and the disincentive to use biosimilar products with the dynamic nature of price changes that she talked about. Did you want to say anything more about that? I mean, because there's a lot to talk about here with this topic.

CATE: There really is.

I think it's very complex and in some cases, complex in a way that becomes a barrier, that becomes uh prohibitive. So touching on the rebate conversation, one of the big challenges is the lack of transparency. And this is I think a problem for all of healthcare in the US, not just biosimilars. But it's unique with biosimilars because there's been a study that showed just changing the rebate by 10% or less by an originator company effectively blocked all biosimilars entry to that market. So it doesn't take much to completely remove the ability for a biosimilar to have any market access simply by the rebate and the contracting structure. So I think we need to pay some attention to that.

SEAN: Yeah. Thank you I'm noting that in some research that I've read that suggests that the average market share for biosimilars is sort of around 20%, which means that the potential to realize significant savings is muted because of the dynamics that you all are talking about here. And so we're talking about protecting patients financially, giving health systems more resources to invest in other things, and these financial disincentives really are, as you say, presenting a significant barrier to biosimilar access. In light of these threats, I'm wondering if you can make some comment on what the likely impact might be on the future biosimilar pipeline. What signals are being sent to the biosimilars industry by these threats, these barriers, these things that you've all talked about? Who would like to take that?

CATE: There's a lot of concern among biosimilar manufacturers in trying to understand are they going to have a viable product? Can they stay in business? Can they keep producing biosimilars? And we've seen obviously the whole point of biosimilars is to bring market competition that brings the pricing down, which is obviously working. But the race to the bottom is not the solution here because that doesn't become a viable market. And I think one thing that I'd like to just throw in here as an incentive that I think is either underused or not used at all is the patient. Patients are rarely seeing any direct impact of the cost savings of biosimilars. There was one study in in Canada, in British Columbia, where they actually did track the money. And they deliberately took the savings that they achieved from using biosimilars and funneled it into other clinical programs in their hospital. So then the patients were directly benefiting. But until we do that, if the patient doesn't see a change in their copay or some other kind of benefit, then they aren't going to be a very loud voice in this. But as soon as you make this financially impactful for a patient, they will all be demanding it. And then all of a sudden, we see a lot of really fast change.

SEAN: Yeah, thank you for that. Sophia, you wanted to comment.

SOPHIA: Yes. At the end of 2023, out of all 10 biosimilars of adalimumab, we got only 3% adoption. So if our manufacturers do not see sufficient market share, or, like Cate just mentioned, if patients do not have motivation to move to biosimilars, and providers do not see incentives to adopt biosimilars, and when we see market share lagging, we will see that those R&D dollars are not reinvested, or recruited, then we are going to see a lot less manufacturers getting into the biosimilar industry. In fact, 86% of all biologics that's eligible for competition have no biosimilars in the R&D pipeline. That really concerns us because this would push us back into the monopoly that reference product has been enjoying, that would actually cost us to have even more price increases and more cost for these biologics, which will reduce in the long run the patient’s access to these biologics. According to IQVIA's most recent study, of 26 high-sale products that are set to lose exclusivity in Europe, almost one in three or 27% does not yet have a biosimilar candidate in the pipeline. So we really wanted to see some policy changes. We would like to see a regulatory environment that is more friendly to biosimilar developers so that we can see a more robust biosimilar pipeline.

SEAN: Thank you for that. There's some stark data that you just presented about the percentage of already available reference products that don't have any biosimilar development in the pipeline. That's a that's a scary number for health plans who are looking for some financial relief with biosimilars. You also mentioned sort of the regulatory and legal structures here. Can either one of you comment on some of the challenges that exist on either the regulatory side or the legal side, and pretty soon here, we're going to have a conversation about potential policy reforms, but it would be good to sort of set that up a little bit here if you could comment on the regulatory barriers and some of the legal barriers.

CATE: Sure, I can start. First, a disclaimer. I am not a lawyer, and I don't pretend to be one, and I'm not directly a regulator, and I don't pretend to be one, but I am involved in all of those things just by the nature of being involved so heavily in biosimilars. And the legal challenges are certainly a large barrier.

I think it's important to really understand that any delay in making these products available becomes a barrier. And it's kind of undermining some of the point of biosimilars.

SEAN: Thank you for that, Cate. Sophia, did you want to comment?

SOPHIA: Yeah, so I can't say enough of the patent war. And, some of these biologics has more than 100 patents that you have to fight through. And in addition to that, I think a lot of the approval processes FDA had in place may, uh, or can be simplified.

SEAN: Thanks for joining this discussion. In the next episode, we’ll continue our conversation with Cate and Sophia on biosimilar sustainability, specifically on proposed policy changes that could help break down some of the barriers standing in the way of more widespread biosimilar adoption.

Legal Disclaimer: Please note that the statements, views and opinions expressed in these podcasts are those of the presenters themselves, and are not endorsed by, nor necessarily reflecting the views of Pfizer Oncology or those of their respective employers. This podcast is intended to be heard within the context of its original location online. Pfizer is not responsible for content if heard elsewhere.

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Potential policy changes and the expected impact on all stakeholders

In this discussion moderated by Sean Sullivan, Professor of Pharmacy and Public Health at the University of Washington, panelists Cate Lockhart, Executive Director of the Biologics and Biosimilars Consortium, and Sophia Humphreys, Executive Director, Pharmacy, Credena, Providence Health, offer stakeholder perspectives on biosimilar sustainability, from current threats to upcoming policy reforms that could strengthen biosimilar viability in time.

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SEAN: Hello and welcome back to our discussion on biosimilar sustainability. My name is Sean Sullivan and I’ll be moderating this discussion as we talk about proposed policy reforms and their impact. I’m here with a policy expert, Cate Lockhart, who leads the AMCP Research Institute, and is also the Executive Director of the Biologics and Biosimilars Collective Intelligence Consortium. You’ll also hear the perspective of a formulary decision maker, Dr. Sophia Humphreys, who directs Formulary Management and Pharmacy Clinical Programs.

I want to turn now to a conversation with the two of you about potential policy reforms. There are these issues you've described that pose threats to the sustainability of this market. And we think that policies must change to be able to address biosimilars' appropriate place within the healthcare system. Some of the potential policy-related solutions were discussed in the recent JMCP paper and the recent IQVIA report, which I know the two of you are very familiar with. And the proposed solutions have various impacts on the different stakeholders, the provider stakeholders, patients, payers, and even the manufacturer. So let's start, if we can, by talking about provider-related policies. A key challenge of long-term sustainability stems from the ASP reimbursement system. With the current reimbursement for qualifying biosimilars now pegged at ASP plus 8% for a temporary period, which came from the 2022 Inflation Reduction Act, how might enhancing the reimbursement percentage help with reimbursement issues? For example, would it be useful for that percentage to go up higher? And what might be the expected outcome of increasing that reimbursement percentage? Are there any unexpected outcomes that might result as a consequence? Now, I know we're talking about this in sort of theory, but you two are experts. And so, I'd love to hear what you have to say about this. So who would like to start? How about you, Cate?

CATE: One of the challenges that I have with ASP is that it is somewhat of an artificial number because of the lack of transparency.

So we don't know how much of a rebate is part of a contract. We don't know what somebody is paying. So fixing a reimbursement upon this sort of an artificial number becomes challenging. It was a good step in the right direction to increase that from ASP plus six to ASP plus eight as an attempt to incentivize providers because we know that providers are hesitant if they don't know that they're going to be reimbursed adequately.

It's a step, but I think it doesn't necessarily solve the whole problem based on the ASP itself as a measure.

SEAN: Thank you, Cate. Sophia, I'm sure you have a perspective on this.

SOPHIA: Thank you. So, October 1st, 2022, we started to see that the biosimilars whose acquisition cost is lower than its reference product are enjoying ASP plus 8% of the reference products pricing. So that did increase the reimbursement a little bit better. And because it's the 8% of the reference product, so if that percentage goes up that will increase the reimbursement of the biosimilars. And in the meantime, if the biosimilar product price remains relatively low, we will see a better adoption rate, depending on how much more percentage that increase would be, right? If we have a significant amount of increase, that would allow the providers to see a positive net cost recovery, that would be something that we will welcome. However, in the meantime, majority of the ASP now are calculated based on the net cost, which means that you have to use the original WAC price minus the rebate, which is a big portion of the ASP calculation, and the minus any other discount that's in cuts into it. So there has to be a balance to be measured between the ASP itself and the percentage increase. So it is a option, but to see it to be fruitful, to really encourage biosimilar adoption, we'll have to wait and see how the numbers play out.

SEAN: Thank you. I want to turn to that recently published IQVIA report. In that report, it concluded that implementing a provider reimbursement floor may be a viable approach to addressing these challenges posed by ASP-based reimbursement. Can you react to that? Tell me how you think that would work and if it's truly a viable option. What do you think?

CATE:  I think it's an interesting idea. I think there's some potential pitfalls to that. The biggest is how do you establish what that floor is? What is the fair price given that we don't know what anybody actually pays for drug products? And so what is a reasonable floor for that? But then, you know, you run the risk of having it turn into like a rent-controlled apartment that does like in the short term, that makes great sense. Is that really contributing to sustainability? If we can figure out a way to make that really take hold and make it so that it does, in fact, incentivize providers and other kinds of prescribers and pharmacists and payers, especially, to want to use biosimilars, great. I can see payers pushing back on that, saying, again, is this sort of an arbitrary threshold that we're establishing based upon what.

SEAN: I know, Sophia, you had commented about providers and your IDN not wanting to do things where you were underwater. Does this proposal in the IQVIA paper help at all?

SOPHIA: For me, from a provider point of view, I would love it, giving me a reimbursement floor, for example, my $3,000 drug, your floor is $1,000, at least I have a clarity of which product I can target and what contract I'm seeking, right?

So, that would give everybody a more clear view of how we can position ourselves. In my opinion, it's a more reasonable calculation than to add a little more percentage to the ASP plus 8, 10, 15% and also, it's a little more of like giving the payer a little bit responsibility because in the grand scheme of things, payers gets majority of the benefit from the high-percentage rebates. So, by setting the floor for reimbursement, we put it back on the payers. If you have enjoyed a high percentage of rebate, you should be reimbursing the healthcare providers a little more. But to Cate's point, the payers may not be very happy about it.

However, this is something I would have welcomed.

SEAN: That's great. So, it sounds like from a provider perspective, having this reimbursement floor would be very helpful for you and your system.

SOPHIA: Yes. It would make it more predictable.

SEAN: An alternative to the ASP floor proposal is CMS adjusting the way that ASPs are reported for biosimilars. For example, by weighting discounts for certain stakeholders less than others. How do you see a change like that if it were to occur, impacting how biosimilars are reimbursed? And do you foresee any impact to any other aspects of biosimilar utilization from a kind of a policy change like this?

SOPHIA: So from my point of view, I think this will be a really good method because as we have mentioned uh previously, majority of the discount we see that reduce ASP is from the rebate that our manufacturers are giving to the PBMs and to the payers. So if we were to calculate the ASP based solely on the discount to the providers and to the patients, then we will see a more realistic cost to the health systems and to the patients.

So by adjusting the weight, either as a percentage of the rebate or just not include the rebate, would really help us to level the play field.

SEAN: Thank you, Sophia. Yeah, Cate, what do you think about this?

CATE: Yeah, I agree. I think it does solve some of the black box problem that we have with ASPs and rebates. I think there's you know, one potential downside to this is that it does remove some level of predictability for the payers and for providers and health systems.

So I think this is actually not a bad solution. There's going to be questions about implementation and what are the weighting and what is the calculation. But if we can take a little bit of the ambiguity out of the ASP to begin with, then I think that becomes potentially a step in the right direction.

SEAN: Thank you both for that. So you know, we've just talked about a floor which would potentially encourage competition amongst biosimilar manufacturers while providing some reimbursement predictability for providers. What else can be done to help make reimbursement more stable and more predictable for providers? Let me let me start I think with you, Sophia.

SOPHIA: So I actually wanted to share example we had done at Providence. You all know about the generic drug shortage because their prices going to the bottom, we don't have enough entrance. So Providence actually joined seven other health systems funded a generic company called CivicaRx. So CivicaRx actually told us that for us to be competitive, to keep us in the market, you have to have a commitment for purchase. Say for example, we all vote to make five generics that have long-term shortage, right? In order for them to even start production, we all have to look at what we're going to need and we're all going to have to commit to certain volume. So that you have this utilization volume-based commitment to ensure that manufacturers will have sufficient market share. Can we then use that for biosimilars?

SEAN: Locking in longer-term supply really sends a positive signal to the biosimilar manufacturer about their market, not just in 6 months or a year, but beyond that. Cate, what do you think of that idea?

CATE: I think finding ways to break down the status quo for how we work with our reimbursement models is great. And I think giving the manufacturers some assurance in terms of the longer-term commitments to a product, I think that's a benefit. It's a bit of, you know, out-of-the-box thinking, but I think that's what the biosimilars field needs.

SEAN: I’d be very curious to hear what you two think about shared savings model. And for our listeners, the shared savings model is where providers that administer biosimilars would share in a proportion of the difference between the biosimilar ASP and that of its reference biologic as an additional add-on payment. So Sophia, would love to hear from you on this.

SOPHIA: Okay. I would love that idea because if we look at outcome of the oncology care model, the clinics that engaged in oncology care models all reported much lower cost of care. Granted, 75% of those clinics spend are on medications, right? So, those clinics, because they have financial incentives to use lower-cost alternatives, they actually use a lot more biosimilars. So, for example, if our providers are promised if you use more than 50% of biosimilars, your reimbursement will be at this tier, and if you use more than 85% of biosimilars, your reimbursement will be here, then you will motivate us formulary managers to really go after those biosimilars, and it will really encourage our frontline providers to use these biosimilars. Like, we in the beginning, Cate has mentioned that our providers and our patients did not see directly the savings biosimilars has generated. Now, it reminded me, when I initiated this biosimilar task force, one of our oncology provider actually did ask me, "So, my patient will ask me, 'What's in it for me?'" Right? So, if we incentivize a utilization-based, shared savings model like, oncology care model or some other model, granted, it's going to be complicated, I think it will help.

SEAN: That's great, Sophia. Thanks for that. Cate, what's your, uh, what's your view of this shared savings model?

CATE: I really like. It's a way to provide some direct engagement and responsibility for administering healthcare, with all players involved. I think taking it one step further is the patient piece of this story that I mentioned earlier that if the savings or the benefits or the incentive is not trickling down to the patient, we're missing an opportunity for really shifting the market.

SEAN: Might be interesting to run a little experiment, you know, with, some groups to try the shared savings model and see if it works.

Let me now, turn to a different stakeholder, which is the payer. We're continuing our conversation about potential policy options. What are the current contracting practices that are impacting sustainability today, and what facets of contracting do you think need to be addressed?

CATE: As I've said before, transparency, transparency, transparency. This is a big challenge when there is no transparency around what is in the contract. So, I think having a little bit more clarity around the negotiation taking place so that we can really understand what is the price, what are the cost savings, and to whom; I think that's a really important conversation to have, when we're talking about policy for payers, as I said before, payers are a lot more prominent part of the conversation in biosimilars now because reimbursement is so key. People, providers, patients even are more and more comfortable with the science behind a biosimilar, that yes, they are in fact similar with no clinically meaningful difference in safety, effectiveness, and potency, et cetera. But reimbursement is the next frontier of potentially moving the needle.

SEAN: So, this conversation about payers as a stakeholder sort of relates a little bit to the conversation we just had about shared savings model. So, what are the sort of implications on payers with this shared savings model idea?

SOPHIA: I think in my mind, a payer would have to answer to who's buying the plan, right?

That would be the employers. So, if we have a contract that's incorporating lower cost of totality of the care, instead of just specifically to a product, for example, this goes back to management of population health. When I have a group of patients who is spending a lot of healthcare money with high occurrence of ER visits, readmissions, and disease exacerbations. As an employer, I will be willing to pay for high cost biologics to keep them healthy and help manage their disease states well. But if a payer would come to me and offer, hey, I have a high quality, low cost biosimilars to these patients, expensive biologics, would reduce your per member per month significantly. Would you be willing to sign with me so that I can manage all your patients more cost effectively? So this is a long shot. But in my mind, that will actually benefit the payers a lot more than just giving them 50 percent reduction. A rebate of a reference product, which is a single product. So when we approach payers, I don't want us to approach payers just to say that you need to not take rebates, and you need to share your rebates with the rest of us. Which would be great, but if you were a payer, would you be willing to do that? And within our complicated U. S. health system, the payers need to answer to someone, too. That would be the employers. The employers have two goals. One is to keep their PMPM low so that it's affordable for themselves as well as for their employees. Two, to keep their employees healthy and provide the care that they need. So if we can join force, when we build these contracts to make sure that we take care of our patients with the lowest cost medication and make sure the payers would have sufficient contracts from the employers and also the employers has enough benefit from the plan. I think that'll be a win, win, win situation.

SEAN: That's great. I want to ask the two of you a bit about the feasibility of this. You know, do you see this model as a realistic solution for reimbursement issues? And what are your thoughts about implementation? CMS's interest or not in something like this? Do you have any insight on that?

SOPHIA: ArchMED has done a really bold plan this year. They did biosimilar only. Um, I've seen their CEO post their numbers on LinkedIn multiple times. They have dropped their p. m. p. m. by a great deal by using all available biosimilars. So it's doable, but it really the whole society to be invested in. You can't only have health systems to go approach payers, and you can't only have manufacturers to approach health systems or the payers.

But in the meantime, your health systems also have your own plans, right? I always say that because I sit both on our system PNT as well as our health plan PNT I negotiate with myself, right? But that's when you really see how the numbers play out when we are sitting at the system PNT. We're looking at our acquisition costs. We're looking at our reimbursement. And when we go to our plan PNT, we're looking at our PMPM costs. We're looking at our patient, um, admission rates, our medical qualities. So those two arms needs to work like what we do at Sutter together and make decisions together that would make it, everyone's life, a lot easier. That will make that whole contracting negotiation process a lot more streamlined.

SEAN: Thank you, Sophia. Cate, do you want to add anything here?

CATE: Sure. I think there's, this concept really brings ownership in across the board here and I can see it's reminiscent of value-based contracting, for example, that a lot of payers are actually quite in favor of because it does end up being to their benefit, but it does come with an additional risk. It's much more of a broad risk-sharing scenario that makes sense, but I think there might be some hesitancy around that just because our healthcare system isn't as cohesive as that in most settings. I think there will be some openness. This is going back to some of the creativity that we're seeing here with some opportunity to get people to think a little bit differently and maybe engage in a little bit of a different way.

SEAN: Thanks for joining this conversation. Sophia and Cate had some great insights on several areas where policy reform can make a difference in the long-term sustainability of biosimilars. In the next episode, we’ll wrap up this discussion with the need for collaboration; and how policy reform can only be effective when it accounts for the needs of all stakeholders–from healthcare systems, payers, biosimilar manufacturers to patients.

Legal Disclaimer: Please note that the statements, views and opinions expressed in these podcasts are those of the presenters themselves, and are not endorsed by, nor necessarily reflecting the views of Pfizer Oncology or their respective employers. This podcast is intended to be heard within the context of its original location online. Pfizer is not responsible for content if heard elsewhere.

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Strengthening biosimilar viability for the future

In this discussion moderated by Sean Sullivan, Professor of Pharmacy and Public Health at the University of Washington, panelists Cate Lockhart, Executive Director of the Biologics and Biosimilars Consortium, and Sophia Humphreys, Executive Director, Pharmacy, Credena, Providence Health, offer stakeholder perspectives on biosimilar sustainability, from current threats to upcoming policy reforms that could strengthen biosimilar viability in time.

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SEAN: Hello and welcome back to the final part of our discussion on biosimilar sustainability. I’m Sean Sullivan, and with me here today are Dr. Sophia Humphreys, a formulary decision maker who leads Pharmacy Clinical Programs for Sutter Health, and a policy decision maker, Dr. Cate Lockhart, Executive Director of the Biologics and Biosimilars Collective Intelligence Consortium. In the previous episode we talked about some of the proposed policy options. Let’s pick up from where we left off on how we can strengthen biosimilar viability for the future with the participation of all stakeholders.

Let’s turn our attention to the policy efforts related to some of the legal and regulatory barriers that might help address some of the concerns you all raised earlier in this discussion. Are there any policies that have been introduced to address the biosimilar market in a positive way that you'd like to talk about and what sort of impacts can some of this proposed legislation have on the strength of biosimilar viability?

CATE: I'll start with that one.

SEAN: Cate, please.

CATE: Um, so the concept of interchangeability is unique to the United States and it's purely a statutory rule that requires some extra information to give a designation of a biosimilar that's already been approved as a biosimilar to be interchangeable, which just means the pharmacist can substitute without previously, um, corresponding with the prescriber as we do with our generic drugs. Well, in early 2013, the European Medicines Agency came out with a statement that said any product that is approved as a biosimilar is automatically assumed to be interchangeable with the reference product and with any other biosimilar to the same reference product. Scientifically, this makes perfect sense. What we're seeing now, I'm pleased to learn that there is, uh, legislation in front of Congress that approaches this similarly as the EMA such that any the US policy or the US legislation says that any product that is approved as a biosimilar is assumed to be interchangeable with the reference product. Now, what they're missing is the and any other biosimilar to the same reference product in this legislation. But since it will in fact take an act of Congress to remove the interchangeability designation in the US, I think this is a really positive step forward.

SEAN: This is Senate Bill 2305 you're referring to, is that right?

CATE: Yes, it's the Biosimilar Red Tape Elimination Act.

SEAN: Oh, creative name. Indeed.

Yeah. Um so Sophia, how about you? Anything you would suggest in terms of addressing some of these legal and regulatory barriers?

SOPHIA: Well, I really like CMS's new policy for the contracting year for 2025. This is really for Part D, right? They allow all biosimilars to be substituted as formulary maintenance changes, which means what happened with Adalimumab biosimilar in the middle of 2023 will not happen. So if you have a biosimilar coming in the middle of the year, you will be able to consider it as a formulary maintenance changes. And also the new interchangeable biologics can be just substituted immediately. This would help us to increase availability of biosimilar to our patients.

SEAN: I'd also like to ask the two of you about any implications of the Inflation Reduction Act on the biosimilars market. There is, you know, a number of provisions in the law and some details in CMS's guidance relating to biosimilars. And I know this could be a huge conversation, but maybe just sort of some brief comments here. So, Sophia, let me start with you. What's your view on the implications to the biosimilars marketplace of the IRA?

SOPHIA: So I lovingly call IRA a double-edged sword when it comes to biosimilar. On one hand, it did increase the reimbursement. Now that biosimilars are reimbursed ASP plus 8% of the reference product. However, it also allow, um, biologics price negotiation at 11 years after approval, which means biosimilars will not be marketed because the patent expires 12 years. So I wondered if that would discourage biosimilars coming into the market because if every product of a single molecule is reimbursed based on the ASP and the when that particular biologic enter into negotiation the year before patent expiration, the ASP drops. And that means the potential of recovering R&D for a biosimilar product would drop as well. So that might hinder or, um, might not encourage more biosimilars entering into the market. What do you think?

CATE: I think the impact on biosimilars is still TBD. Um, I think it's a complex law, complex set of rules that everybody in the stakeholder continuum, honestly, is still trying to navigate. And so I think there's there's a lot of nuances in in there that are still yet to be realized. And so I think it's I it's it's my big non-committal– I don't know what's going to happen with this yet. Um, I'm glad that they at least brought attention to biosimilars. That was a step in the right direction, but whether or not that's a it's a benefit or not, I'm not sure.

SEAN: It’s also worth noting that the IRA exempts from negotiation biologic products with a high likelihood of biosimilar entry within 2 years of the reference product being selected for negotiation. Therefore, a multi-source marketplace may have greater net benefits to both reference products and biosimilar manufacturers.

And with a shift from the prevailing loss of exclusivity market strategy, we might potentially see new approaches that lead to more expeditious biosimilar entry.

So for my final question for the two of you, thinking back to the two reports that we've been talking about throughout this podcast, the IQVIA report and the JMCP paper, they both mentioned that policy reform, for it to be effective, must account for the needs of all stakeholders, not just a single stakeholder. Healthcare systems, payers, CMS, biosimilar manufacturers, and very importantly, patients. Why is this so important for sustainability of this market?

CATE: Well, I think this is true of any healthcare intervention or healthcare product in the US that it's not a silo. Each step along the stakeholder continuum is really tied to the one before it and the one after it. And so I think that it’s essential that there's some unity in terms of promoting biosimilars or at least being all behind the same processes in terms of advancing healthcare for the patients. Ultimately, it's all about the patients. But I think it takes all of the steps along the way, especially in the US healthcare system that's very complex, that it takes everybody working together and having some ownership in this whole story.

SOPHIA: Yeah, I couldn't agree more. We have to create a win-win-win-win situation. So first of all, patient, they should share some of the incentives with the biosimilar savings. 'Cause for now, all the savings we're reporting are healthcare savings, are plan savings. We haven't seen the out-of-pocket cost reduced, right? So they should be included. And in the meantime, we don't want our health systems to be disincentivized or discouraged by using a lower cost biosimilars, which means the current ASP-based reimbursement policy may have something lacking that we wanted to change with some of the options we have discussed. And also we wanted to assure there's a rich pipeline, a robust pipeline of biosimilars enter into the market. So that we want to really simplify the approval processes and increase or at least protect ASP so that our manufacturers have sufficient market share, have sufficient recovery of their R&D. And also we don't want to leave our payer out either. We wanted to see create some value-based contracts so that they can one, retain their patient or expand their patient footprint so that they have sufficient profit 'cause we want our payers to stay in business as well. So it's a puzzle, but it's a very exciting time. We have a lot more large molecules coming to exclusivity and coming to patent expiration. So we're hoping to see a more robust biosimilar pipeline.

SEAN: Great. Thank you both. I agree with you that this is a complex ecosystem. And it takes continued dialogue from all stakeholders' perspectives to create change in the biosimilars market that would ultimately result in a very sustainable market for all the stakeholders that are involved. I'm sure we could agree that continued dialogue is needed, both to foster greater awareness, but also to foster engagement, to align stakeholder views and continue to move forward on a path towards effective policy reforms.

SEAN: I want to thank both of you, Dr. Sophia Humphreys and Dr. Cate Lockhart, for your insights and this really great discussion. Thank you both. While there are many different avenues that we can explore to achieve biosimilar sustainability, we need to ensure that all the stakeholders are part of this conversation.

If you are interested in more information about biosimilar sustainability, please visit pfizerbiosimilars.com.

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