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Inside Health Policy – McClellan: Biosimilar Price Cut Significant; FDA, CMS Could Spur Bigger Cuts

Inside Health Policy – McClellan: Biosimilar Price Cut Significant; FDA, CMS Could Spur Bigger Cuts

Mark McClellan, director of Duke’s health policy center and former head of FDA and CMS, said the 15 percent price cut for Pfizer’s biosimilar of Johnson & Johnson’s Remicade is significant and cautioned the United States might not see as sizable drops in price for biosimilars as for generic drugs. But McClellan, in an interview with Inside Health Policy, also emphasized the country is in the early stages of biosimilar adoption, with uptake and prices likely to be influenced by real-world evidence and future CMS and FDA policies.

McClellan’s remarks align with a new white paper published by Duke and Friends of Cancer Research, which names further FDA guidance, stakeholder education, building up postmarket surveillance infrastructure, and developing PBM and payment reform strategies as four steps that will help shape the biosimilar market.

“Some of the early evidence in the U.S. and evidence in Europe suggest that there are some very important differences from the small molecule generic competition and switching that has occurred with prices … on the order of 15 to 20 percent lower, rather than 80 percent lower as in generic markets — very big shifts having occurred in generic markets, maybe less so in some of the biosimilar markets. On the other hand, 15 to 20 percent of a very large number, a very large price, is still a big number,” said McClellan, director of the Duke-Margolis Center for Health Policy, at a Friends of Cancer Research and Duke-Margolis biosimilar briefing Tuesday (Oct. 18).

McClellan told IHP there is a need for greater real-world evidence to guide when substitution can work, show how biosimilars preform in patients starting therapy anew, determine confidence levels and ultimately drive the price.

“Those factors over time may lead to more or less confidence in the patient and provider community and that too will be an important determinative on [price],” McClellan told IHP.

When asked what steps FDA could take to influence the price of biosimilars, McClellan suggested setting guidelines on labeling changes, finalizing guidance on interchangeability and working with other agencies to develop better evidence on actual market use of biosimilars,

Tuesday’s white paper also states that FDA guidance will influence payer’s confidence in covering biosimilars.

“FDA has issued a number of guidance documents related to biosimilar development and approval to date, but there are still several outstanding questions that could impact payer decision-making and ultimately, biosimilar uptake and access,” states the paper.

“The final FDA positions on these issues might affect payer’s decisions to shift patients from one biologic to another (singly or in multiple indecencies). It is unclear what standard payers will use to asses whether it is safe to transition patients from an originator biologic to a biosimilar. The standards that payers set will also have broad implications for provider and patient trust and could affect confidence in switching to a biosimilar,” the paper adds.

Following the announcement of Pfizer’s Remicade biosimilar, Johnson & Johnson seized on the lack of clarity regarding interchangeability, by slamming the biosimilar for not being interchangeable.
“It is important to note that the infliximab biosimilar is not approved for interchangeability, which is a higher FDA standard,” wrote J&J.

However, FDA’s biologics head disputed Tuesday the view that interchangeability is a higher standard than biosimilarity.

“[B]iosimilarity is part of the definition of interchangeability, so we don’t like to refer to it as a higher standard because that has sort of negative connotations that biosimilarity would be a lesser standard, and it’s not,” said Leah Christl, associate director for therapeutic biologics and lead of the Therapeutic Biologics and Biosimilars staff in the Office of New Drugs.

However, Christl maintained there would likely be a larger data requirement when the interoperability guidance is released.

“There probably will be an additional data ask to evaluate that concept of alternating or switching to support the concept of a pharmacy-level substitution,” added Christl.

Christl maintained additional education is needed for prescribes to understand biosimilars and make clinical decisions on when to substitute a biosimilar for a biologic.

“To your point about how would a physician know sort of what to do with that biosimilar, I think that’s that education piece to understand what a biosimilar is — that it has the same safety and efficacy profile as the reference product for the labeled conditions of use, and I think that’s a very fundamental understanding,” said Christl. “You have to understand that before you can even contemplate interchangeability.”

Participants at the Tuesday briefing echoed McClellan’s warnings that biosimilar prices are not likely to reach generic market lows.

“I think where we are headed … from a payer perspective is: ‘How are these going to be brought to market and what is that savings going to be?'” said Jeff Eichholz, senior director of formulary solutions at Express Scripts. “[W]e are looking for a 20 to 40 percent [price cut], these are not going to be generic-type discounts, not going to be generic-type products — really looking at these as competing brands, but overall when you get competition you do see prices drop.”

However, Christl underscored that the intent of the Biologics Price Competition and Innovation Act was to decrease cost of biological medications.

“We always talk about the BPCI Act but we forget sort of what it stands for,” said Christl. “It’s Biologics Price Competition and Innovation Act. So the intent of this is to improve access, hopefully at lower cost. This concept of an abbreviated approval pathway is intended to decrease development cost and then be able to have that decrease in development cost come into the marketplace, not just through competition, but that folks who are making those products can offer those products at a lower cost because their development costs were less. That’s the intent of this legislation and hopefully we will see that come to fruition in the market place.”

McClellan told IHP that CMS policies will have an impact on biosimilar pricing, highlighting a recently finalized Medicare Part B rule where an originator biologic will receive its own HCPCS billing code, while biosimilars will be grouped under a single code. The former CMS head also said Part D plan requirements could play a role in biosimilar utilization and cost.

“The Medicare payment policies for biosimilar drugs will make a difference,” McClellan told IHP.

Tuesday’s white paper recognizes that while the CMS Part B rule was intended to spur competition, it could incentivize prescribing a more expensive biologic, over a biosimilar.

“Though this policy is in intended to spur price competition between biosimilar manufacturers, there are ongoing questions about how it may affect prescriber behavior and the potential downstream consequences for biosimilar market entry,” states the paper. “While the payment rule provides a higher percentage mark-up for selecting biosimilars, in some cases the absolute dollar margins may still be higher for the reference product, giving providers a financial incentive to select the more expensive products. The separate (and potentially higher) payment for the reference product provides a stronger incentive for providers to prescribe it than if all products were grouped in the same payment code.”

Additionally, the authors argue that grouped coding could disincentive competition among biosimilar makers and could drive them out of the market.

“On the other hand, grouping all biosimilars together under a single billing code may discourage manufacturers from competing based on the relative value of their products (such as the quality, safety, or effectiveness of the products for certain types of patients). Grouped coding may also discourage manufacturers from remaining in this nascent market long-term, thus limiting competition and potential savings of biosimilars,” the authors write.

Tuesday’s white paper also highlights a need for real world-evidence and holds up pragmatic clinical trials, adaptive clinical trials, observational studies, and meta-analyses as potential sources of information on long-term outcomes and comparative effectiveness.

The paper cautions against the using electronic health record data for postmarket evidence generation and instead points to databases of claims data, such as FDA’s Sentinel System, PCORnet, and the Medical Device Epidemiology Network, as a promising options.

“[R]egistries are complex and expensive to establish and maintain, particularly for a large cohort of patients,” states the paper. “They also do not typically contain data on control groups of similar patients who do not receive the medication, and thus are not able to address questions of comparative safety or effectiveness … By contrast, large databases draw from routinely collected claims and clinical data, which reduces the burden on the health system and in some cases can be used to identify control groups of patients for comparative purposes. Using these databases to evaluate biosimilars and their outcomes depends on the ability to distinguish biosimilars from each other and from their reference product in the data.”

McClellan raised concern that grouped coding will also have an impact on the reporting of real-world evidence and capturing what biosimilars are used in practice.

“Grouping biosimilars into the same payment category by CMS could get in the way of [incentivizing] reliable reporting,” said McClellan.…