Applying The Value Of Biosimilars To The Healthcare Industry

Innovations in technology and science are changing the way health care is delivered every day. A new Forbes article from IPM President and COO Rich Adams highlights biosimilars, a growing trend in the prescription drug market with the potential to improve outcomes and lower costs.

Thumbnail of Applying The Value Of Biosimilars To The Healthcare Industry

Applying The Value Of Biosimilars To The Healthcare Industry

Richard Adams  |  Forbes Business Council
According to the most recent data from the National Center for Health Statistics, approximately 46% of the U.S. population uses at least one prescription drug within a 30-day period. It’s also one of the costliest areas of health care: $345.7 billion was spent on prescription drugs in 2019, with that number expected to climb to a new high by 2021.

The United States is the largest pharmaceutical market in the world, generating more than 48% of total revenues worldwide in 2019. Yet households across the country are struggling to keep up with soaring health-care costs, which can reduce access to care, deplete retirement savings and even cause bankruptcy.

But this doesn’t have to be the case. New innovations in technology and science are changing the way health care is delivered every day, with advancements in treatment and prevention options helping improve outcomes while lowering costs.

I’m a COO of a pharmacy benefits manager (PBM) company, and we play a role in making available innovative options for patients that deliver high-quality care and constrain prescription drug cost growth. We look at everything from solutions for clients, new technologies and science and the potential of new drugs on the market.

Through this experience, I’ve seen firsthand the importance of leaders in health care paying attention to new trends in the space. One of these trends I think is especially important to learn about is biosimilars.

What exactly are biosimilars?

Biosimilars, medical products that are highly similar to other already approved biological medicines, provide perhaps one of the best opportunities we’ve seen in lowering drug costs. They can offer cheaper options to drugs that are traditionally more costly, with no clinically meaningful differences in safety, purity and potency.

Biosimilars first came onto the scene in 2015, when the FDA approved Sandoz’s Zarxio, a drug used in cancer patients to decrease incidences of infection while undergoing myelosuppressive chemotherapy. The hope of biosimilars shone a bright light on a potential new era of prescription drugs, one in which the cost of innovation wouldn’t get passed to consumers’ pocketbooks.

Biosimilars have been met with challenges over the past five years. While there are 28 approved FDA biosimilars available today, the response from providers, payers and other health care stakeholders has been lukewarm. Additionally, varying degrees of legal action filed against biosimilar manufacturers by innovator companies have created negative exposure and legal expenses.

However, we are now seeing positive momentum with the biosimilars market. More than half of biosimilars launched in the United States were taken to market in the past year, with three competing against anti-cancer-drug heavyweights, and a handful of big brand and generic manufacturers are now getting into the market with biosimilar programs of their own.

What does this mean for health care leaders and PBMs?

Health care leaders and PBMs should pay special attention to what happens next. The potential of biosimilars to improve outcomes and lower costs is a powerful combination. PBMs can use clinical and analytical data around both to determine which drugs to include on their formularies. And while rebate programs have been an incentive to PBMs in drug selection, efficacy and cost can be explored in tandem.

Drugs that show efficacy in improving outcomes while lowering costs are always top of mind. A good example is the drug Humira, which is most commonly prescribed for certain types of arthritis. Humira has a total global revenue of $20 billion (paywall) and typically costs $5,800 for a supply of two kits. The FDA has approved six biosimilars for Humira, the most recent approval being Hulio earlier this year.

PBMs play a crucial role in helping patients and prescribers determine the highest quality, lowest cost and most effective and safe biosimilars. Since biosimilars are lower in cost naturally, biosimilar manufacturers won’t need to set pricing high, and there won’t be the need for extensive rebate programs to make options more affordable to clients. Skeptics have long since pushed for better transparency around PBM rebates, but big manufacturers will no longer be able to use this as a scapegoat for rising drug prices.

One challenge PBMs and health care companies may face as they work to increase biosimilar adoption is health literacy. I’ve observed that part of the slow adoption of biosimilars is the general knowledge gap among health-care provides and patients alike about biosimilars. These companies can use their platforms and credibility to help educate through health-care provider and patient education programs. While fear of biosimilar’s newness may make some partners skittish about putting their own brand equity behind them, biosimilars have gone through the same process that any other drug approved by the FDA has gone through. Therefore, this validation must be part of awareness efforts messaging.

It is possible to transform the drug market to one that is a high outcome and lower cost, however, I believe all players must be willing to consider new approaches to the model. We must be driven by the potential of innovation and science. Biosimilars could change the business model of drug pricing. With affordable options that provide results, biosimilars could provide affordable options to clients and, at the end of the day, offer much-needed respite for consumers.