Americans spend the most money on prescription drugs compared to every other country in the world. Perhaps of more significance is that the cost of the same medication is, on average, 2.5 times higher in the United States than in other high-income countries.[1]
One area of pharmacy is growing more rapidly than others: Specialty Pharmacy. Specialty medications are drugs that may require special attention by healthcare practitioners, require special storage, administration, or monitoring, and are generally higher in cost. Between 2016 and 2021, the United States’ total pharmacy spend on specialty medications increased by 42.5%, a $90 billion increase. However, the quantity of specialty prescriptions dispensed in that time period increased by only 0.5%.[1] The number of utilizers is not significantly increasing, but the cost of these specialty medications is.
The majority of specialty drugs are considered biologic medications. In contrast to small molecule medicines (which tend to be thought of as ‘conventional’ medications), biologic medications are produced by copying specially engineered living cells. Biologic medications treat a wide range of diseases, and many more of them are being developed around the world. The biologic market segment was valued to be $264 billion in 2021 and has been projected to reach almost $597 billion by 2029.[2]
The growing value of this segment is due largely to the cost of these medications. The majority of specialty biologic medications are available as one brand only. As there is no competition, manufacturers have free reign when setting the cost of the drug. Relief from high prices as a result of the lack of competition occurs when the original manufacturer’s patent on their product expires.
This is where small molecule and biologic medications differ. When a drug manufacturer’s patent on their conventional small molecule medication expires, other manufacturers are permitted to produce that same small molecule. The new copies of that small molecule drug are called generics. When a biologic medication’s patent expires, manufacturers are permitted to make copies of the original product as well. However, due to the complexity of biologic medications, these “‘copies”’ are called biosimilars.
Biosimilars offer a chance for payors to regain control of pharmacy spend by introducing competition into the market. The excitement around biosimilars was raised to a new level this week with the release of YUSIMRY™. YUSIMRY™ is a branded version of adalimumab, a biologic drug originally sold under the brand Humira™.
Humira has the highest revenue ever of any drug in the world, bringing in almost $21 billion in 2021 alone for its manufacturer, AbbVie. Humira is responsible for over half of AbbVie’s revenue. Any competition to AbbVie’s blockbuster drug would cost AbbVie billions of dollars.[3]
To protect their finances, drug manufacturers like AbbVie have been aggressive in lobbying the government in an effort to control what would qualify as an acceptable alternative (aka biosimilar). Inflating the significance of small differences in the manufacturing process and molecular structure has slowed the introduction of competitors. These claims were made in the name of patient safety and medication efficacy, but are actually thinly- veiled efforts to maintain their monopoly and pad their bottom line.
The high prices of Humira and other biologic medications have strained pharmacy budgets across the country. This, combined with manufacturers’ efforts to convince regulators that there are no true alternatives, is creating a buzz of excitement around biosimilar medications coming to market. Every week there is a new webinar or article featuring an industry expert who promises to disclose which product(s) will offer the best opportunity to reduce the burden of covering these very effective and highly-demanded therapies. As I have listened to the many experts, one message seems to emerge every time.
“There is opportunity, but we have to wait and see.”
The industry experts are correct in that we do not know what the pricing of the biosimilar medications will be. However, waiting is not the wisest path in this scenario. We’ve seen Big Pharma’s efforts to reduce competition and retain their revenue sources before. THIS IS NOT OUR FIRST RODEO! There are things we can do today!
First, develop a strategy. Payors and PBMs have been navigating generic and therapeutic substitutions for a very long time. Biosimilars should be treated as any other therapy when it comes to implementing utilization management (UM) strategies.
Our primary focus must always be the patient. Patients should have access to safe and effective treatment options. The UM strategy should promote appropriate use within accepted standards of care, based on published guidelines from national organizations. Araya’s overarching goal is to reduce variation from those standards, which we believe will result in cost-effective and appropriate care for our clients and their members.
The strategy should not accommodate efforts by the manufacturer to maintain market dominance and exclusivity. Manipulation of available dosage forms, selective indications, vague marketing messages, and interchangeable status around virtually identical active ingredients must not influence how a payor determines the best therapy to treat a patient’s condition.
The strategy must also consider the lowest net cost. This is not simply the lowest net cost of a single product but the lowest net cost to treat the condition. It should consider the common financial factors such as ingredient cost, rebates, and assistance programs. It should also consider less common factors such as alternate supply chains, alternate dosing options, off-label usage, and therapeutic substitution.
Second, determine if you have a partner who is willing to implement such a strategy and go that extra mile for your benefit. Incentives between the payor and the PBM must be aligned. PBMs who own the delivery system may be reluctant to move patients to less expensive options or to utilize alternative distribution channels. PBMs who are generating revenue through rebates may delay adoption of non-rebatable therapies or delay Preferred Drug List changes to non-preferred products. If your PBM is tied to any one product or pharmacy, your options and potential opportunities to reduce costs are extremely limited.
PBMs have many tools to influence utilization. The tools have been proven effective time and again. The tools are so effective that drug manufacturers have developed an equal number of strategies and practices to subvert PBM efforts. An aggressive, payor conscious, patient-centric approach is necessary. To achieve the best results, you must partner with a PBM who is free of conflicts and nimble enough to pivot as new opportunities become available.
References
- Mulcahy, A.W., Whaley, C., Tebeka, M.G., Schwam, D., Edenfield, N., and Becerra-Ornelas, A.U. “International Prescription Drug Price Comparisons: Current Empirical Estimates and Comparisons with Previous Studies,” RAND Research Report RR-2956-ASPEC, 2021. Available at: https://aspe.hhs.gov/sites/default/files/documents/ca08ebf0d93dbc0faf270f35bbecf28b/international-prescription-drugprice-comparisons.pdf.
- Biologics Market to Experience Substantial Growth of USD 596.65 Billion by 2029, Size, Share, Trends, Key Drivers, Growth and Opportunity Analysis. Data Bridge Market Research. January 16, 2023
- Jason B. Gibbons, PhD, Micaela Laber, MPH, MBA. Humira: The First $20 Billion Drug. The American Journal of Managed Care. February 2023. Volume 29 Issue 2
- https://aspe.hhs.gov/sites/default/files/documents/88c547c976e915fc31fe2c6903ac0bc9/sdp-trends-prescription-drug-spending.pdf
