Insurers need to do their part to help encourage biosimilar competition to bring down the rising prices of biologics, FDA Commissioner Scott Gottlieb told the America’s Health Insurance Plans’ (AHIP) National Health Policy Conference in Washington, DC, on Wednesday.
Gottlieb detailed the problems associated with the slow uptake of biosimilars in the US, telling AHIP: “Payors are going to have to decide what they want: The short-term profit goose that comes with the rebates, or in the long run, a system that functions better for patients, providers, and those who pay for care … Do they want to continue to benefit from monopoly rents today, or help generate a vibrant biosimilar market that can help reset biologic pricing – and drug pricing more generally - through competition.”
He also explained how biosimilar developers, which include large biopharma companies like Pfizer and Amgen, as well as smaller companies like Oncobiologics, have brought nine biosimilars to market but only launched three in the US
. He said others might be discouraged by how “the system is rigged against them” and decide not to invest further in this space.
“Here’s the rub. When biosimilars launch, their initial discount is typically on the order of 15% or 20%. And unless the plan can switch all their patients over to the biosimilar, the cost of the lost rebates on the patients who remain on the original biologic won’t be offset by value of the discount on the biosimilar, and the smaller number of patients who are started on it,” he said, according to a transcript of the speech.
“Biologic sponsors don’t have to do much more than hold these rebates hostage – or even simply lower the WAC [wholesale acquisition cost] price of the reference product to meet that of the biosimilar entrant – to make the economics of market entry highly unattractive,” he said.
Still, he noted that as of January, 60 biosimilars were enrolled in the FDA’s biosimilar development program, and FDA has received meeting requests to discuss the development of biosimilars for 27 different reference biologics.
But payors, Gottlieb said, can “lead the way in formulary design by making biosimilars the default option for newly diagnosed patients. They can share the savings with patients, maybe by waiving co-insurance.
“Or they can reduce administrative barriers when patients and providers use biosimilars, like lifting prior authorization requirements imposed on physicians. FDA has a strong interest in seeing the biosimilar market grow. But some of that is going to be up to the choices you all make,” he said.
The Pharmaceutical Care Management Association (PCMA, the national association for pharmacy benefit managers, fired back at Gottlieb in a comment released after the speech: "It’s unfair to blame payers – who pay 2/3 the cost of drug benefits – for seeking the lowest costs in a marketplace where they have no control over the prices drugmakers set, how quickly FDA approves biosimilars, or when FDA will finalize workable interchangeability guidelines to increase uptake of biosimiliars."
LDTs and NGS in Tuesday’s Speech
The speech delivered Wednesday followed a speech Gottlieb gave on Tuesday to the American Clinical Laboratory Association annual meeting, in which he discussed the regulation of lab developed tests (LDTs) and next generation sequencing (NGS).
On the LDT front, he highlighted the qualification of the New York State Department of Health as a third-party reviewer, meaning that labs whose tests have been approved by the department “do not need to submit separate applications to FDA. Instead, they can choose to request that their NY state application, and the state’s review memorandum and recommendation be shared with FDA for possible 510(k) clearance.”
On the NGS front, he said FDA is developing “several policies designed specifically to improve the development and review of advanced NGS technologies. To take one example, we recently provided public information describing the three-tiered approach that FDA is taking to our review of NGS oncopanel tests in order to minimize the burden on developers.”
Final guidance on FDA’s more flexible regulatory approach to all NGS tests is coming, he added, noting the agency is also “looking into new, innovative approaches to demonstrating analytical and clinical validity.”
March 7: America’s Health Insurance Plans’ (AHIP) National Health Policy Conference
“Capturing the Benefits of Competition for Patients”
March 6: American Clinical Laboratory Association annual meeting