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HomeEconomyUtilization Management of Biosimilars – Healthcare Economist

Utilization Management of Biosimilars – Healthcare Economist

When we think of utilization management (e.g., prior authorization, step editing), we typically think of payers using these only for higher-cost branded products, including biologics. Generic drugs should have lower cost sharing and limited usage management. One question, however, is whether payers' management practices for the use of biosimilars reflect those for biologics, small molecule generics, or something in between.

A paper by Yu et al. (2023) aims to answer this question. The authors used data from the Tufts Medical Center Specialty Drug Evidence and Coverage (SPEC) database, which covers 19 commercially available biosimilars corresponding to 7 reference products. These products are used in 28 unique indications. The author found:

Health plans imposed coverage exclusions or step-down treatment restrictions on biosimilars compared with reference products in 229 decisions (19.4%).Plans more likely to limit biosimilar coverage to pediatric populations (odds ratio [OR] 11.558, 95% confidence interval [CI] 3.906–34.203), for conditions with a U.S. prevalence greater than 1,000,000 (OR 2.067, 95% CI 1.060–4.029), and if the plan did not contract with one of the three major pharmacy benefit managers (OR 1.683, 95% CI 1.129–2.507). Compared to the reference product, if the biosimilar is indicated for cancer treatment (OR 0.019, 95% CI 0.008–0.041), if the product is the first biosimilar (OR 0.225, 95% CI 0.118–0.429), if the biosimilar A biosimilar with two competitors (including reference product; OR 0.060, 95% CI 0.006–0.586) could save more than $15,000 per patient per year on list price (OR 0.171, 95) % CI 0.057–0.514 ), if the biosimilar reference product is subject to program restrictions (OR 0.065, 95% CI 0.038–0.109) or if there is no cost-effectiveness measure (OR 0.066, 95% CI 0.023–0.186).

An interesting finding is that large PBMs actually have less restrictive policies on biosimilars. Why?

… It has been argued that the bargaining power of large PBMs may be so great that biosimilar manufacturers may sometimes raise list prices and thereby receive rebates to gain a spot on the large PBM's formulary.This will result in higher sticker prices for smaller PBMs, but
The rebates are smaller due to relatively less bargaining power, in which case biosimilars give them less value.

You can read the full article here.

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