Are Employers Embracing the Future or Being Left Behind?
Precision medicine, that is customizing a treatment for a particular patient, is where medical treatment is headed. As the market shifts, more biosimilars will be available, those are medicines that are highly similar to a previously approved biologic, a drug made from proteins or pieces of proteins that are made in a living system, such as yeast, bacteria, or animal cells, but not identical to it.
It is estimated that $500 billion is spent annually on prescription drugs, more per person than any other country in the world. The use of biosimilars could provide substantial savings, an estimated $38 billion to $124 billion from 2021 to 2025, but that would require more adoption, price competition, and volume share. Biosimilars are currently available in more than 100 countries outside the US and there are more than 60 biosimilars available in the European Union, while the FDA has approved 34. In addition, biosimilar adoption has been relatively slow in the US due to patent litigation, competition from brand biologics, formulary placements, and drug coverage and payment policies.
Despite the considerable cost savings that can result from biosimilars, they are on average 30% cheaper than their brand competitors, many employers are still using a pharmacy model, “pills in a bottle” over “cells in a bag.” To help address that issue, more than 60 employers of varying sizes across the country participated in a series of roundtable discussions on the topic of biosimilars, including several members of the Washington Health Alliance. In a survey, nearly 50% of the participants indicated that they had 10,000 or more covered lives and for more than 60% of them, drug spend accounted for 20% or more of their total healthcare spend.
For employers interested in adopting more biosimilars, these five action steps are recommended:
- Plan Design—Amend coverage and communications to prioritize biosimilars and cover biomarker testing; implement an overall plan design that minimizes member disruption; limit any changes or grandfathering for current members’ treatment cycle.
- Formulary Design—Insist on total transparency on formulary placement and specifically the economics of biosimilars; consider custom formulary design and targeted utilization management.
- Drug Pricing & Rebates—Focus on low net cost while also considering the impact of gross costs on employer cost sharing; understand how rebates impact overall drug pricing.
- Drug Availability—Ensure coverage of high-value biosimilars at an appropriate tier level as lack of coverage can stagnate the market over time; incent use of all of biosimilars in the same drug class over the reference product.
- Site of Care & Drug Administration—Focus on the impact of site-of-care on cost of delivery; consider a preferred/tiered site of care policy.
Employers have an important role to play regarding biosimilars, including advocating for them with their health plans and pharmacy benefit managers, and communicating with their work force and members through company benefit packages and online education. More biosimilar use will reduce overall health care spending and for employees, it can lower out-of-pocket costs and monthly premiums.
The report, “Improving Drug Management: Employer Strategies on Biosimilars,” provides more information and employer action steps. Support for the biosimilar roundtable was made possible by the National Alliance of Healthcare Purchaser Coalitions.