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Researchers: France could teach the US lessons in biosimilar pricing

Posted 20 August 2021 | By Jeff Craven 

Researchers: France could teach the US lessons in biosimilar pricing

The US should look to the French healthcare system for lessons in reducing biosimilar pricing, according to a recent paper published in Health Affairs.
 
James C. Robinson, of the Division of Health Policy and Management, School of Public Health at the University of California Berkeley, and colleagues said the US “lacks consistent incentives for physicians to prescribe low-price biosimilars and for manufacturers to compete using price reductions” and that the slow uptake of biosimilars here has impacted the market globally. (RELATED: Insurance, physician barriers impede wider adoption of biosimilars, Regulatory Focus 12 April 2021).
 
Unlike the US situation, in France’s single payer system, drug pricing determination is handled by the centralized Comité Economique des Produits de Santé (CEPS) in conjunction with other governmental entities through a scheme that sets a national tariff for each new therapeutic. However, negotiations for drug adoption and final pricing are decentralized and occur between the manufacturer and the hospital or hospital-purchasing group, Robinson and colleagues explained. The nationally set tariff is paid to hospitals and clinics, rather than to the drug manufacturers.
 
“If you look at single payer systems such as France, but also Britain, you see that they’ve passed down the single payer incentives down to either regions—they have regional budgets—or they have hospital budgets, all to create incentives at the grassroots for economizing choices,” Robinson said on “A Health Podyssey,” a Health Affairs podcast. “Yet the centralized governmental system plays a very positive role in standardizing that and giving incentives for that too, and for the savings ultimately to flow back to the public. So, I say that single payer works best when it’s got elements of this market and decentralized system.”
 
Rather than use the central pricing authority the government has to set prices for biologics, the market entry of biosimilars has given the French healthcare system an opportunity to reduce tariffs for biologics and let the market compete. In this scenario, the national tariffs for biologics and biosimilars are the same, and CEPS reviews negotiated prices by hospitals, making changes to the national tariffs as cost savings are achieved.
 
“The launch of new biosimilars influences the tariffs of the reference biologics in different ways depending on whether the drugs are administered by a hospital-based or a community-based physician,” Robinson and colleague explained. “The difference derives from the assumption that hospitals have the ability to negotiate prices with drug manufacturers, and thereby derive information on reservation prices, but community-based physicians do not.”
 
Robinson and colleagues found this trend in national tariff data was true for three biologics in France—Remicade, Enbrel, and Humira. In a review, the authors found “robust competition among biosimilars as well as between biosimilars and their reference biologics” in the French healthcare system once 11 biosimilars for these biologics entered the market, with biosimilars comprising 75% of the hospital ambulatory market by 2019. “These changes in market shares occurred against a backdrop of overall growth in hospital ambulatory utilization but a reduction in spending due to the shift from higher-price biologics to lower-price biosimilars,” the authors said.
 
During the Health Affairs podcast, Robinson elaborated how a converse solution using a decentralized system with a governmental overlay might work. “The best example is Germany: they have a multi-payer private health insurance system with about one hundred sickness funds, all of which are private not-for-profit entities which are competing with each other,” he explained. “But they have a very strong regulatory frame risk adjustment, and they do centralized pricing negotiations for drugs in a variety of other ways. They have a much more efficiently functioning system than does the US, which we’ve tilted way down the market, orienting with an insufficient amount of governmental support.”
 
“Health policy debates in the US often portray a choice between decentralized market mechanisms and centralized regulatory mechanisms. This study suggests, however, that market and regulatory strategies can be complements rather than substitutes,” Robinson and colleagues concluded in the paper.
 
Cost of drug utilization management
 
In the US, rising list prices for drug combined with a drug utilization management system consisting of formulary restrictions, prior authorization, step edits, and navigation of insurance is leading to further price increases and additional restrictions, Robinson and colleagues argued in a second paper recently published in Health Affairs. The authors conservatively estimated that $93.3 billion is spent each year “administering, countering, navigating, and enduring drug utilization management.”
 
While the system works, “the problem is, is that creates these huge transactions costs on doctors. The administrative hassle is unbelievable,” Robinson said on the Health Affairs podcast. “On patients, there’s a lot of failures of adherence due to cost sharing and prior auth[orization]. We are shifting onto the sickest people in the population the burden of trying to control healthcare costs.”
 
Describing the situation as a “marketplace war,” the authors called for “thoughtful moderation” among stakeholders. A systematic review is needed to determine how drug utilization management impacts economic burden and, whether a value-based price for value-based access system could reduce costs, they said.
 
“I'm not saying we should get rid of utilization management and get rid of cost sharing and be done. That would lead to a spike in spending. I think I'm in favor of a quid pro quo that the pharmaceutical manufacturers need to reduce their prices,” Robinson said in the podcast. “But also access barriers should come down … we'll charge less, but then we trust the doctors, and we want to encourage the patients to take these medications if it’s appropriate.”
 
Health Affairs Robinson et al.
Health Affairs Howell et al

 

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