Understanding the Value of Biosimilars

Show Notes

Today, spending on biologic drugs makes up 43% of total drug spending. This is a growing area of new innovation for a multitude of therapeutic areas, and also an area of growing cost. To increase the use of biosimilars, strategies must be implemented to focus on biologics and drive cost-savings. To share these strategies, host JC Scott is joined by two members of Prime Therapeutics, Dr. Joseph Leach, Prime Senior Vice President and Chief Medical Officer, along with Jarrod Henshaw, Prime Senior Vice President and Innovation & Supply Chain Officer. Prime Therapeutics recently announced a major program addressing the increased use of biosimilars. Jarrod explains the differences between traditional drugs vs. biologics and generics drugs vs. biosimilars. Jarrod and Dr. Leach discuss what it means for biosimilars to be interchangeable, how they confront fears and misperceptions on biosimilars, what roles PBMs must play to drive the cost-savings from adoption of biosimilars, and how policies and incentives can encourage the use of biosimilars.

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J.C. Scott (00:08):
Welcome to the Pharmacy Benefit, a podcast that highlights the role of PBMs in serving millions of patients and consumers throughout the country. I'm J.C. Scott. On today's program, we're going to talk about biosimilars, which play an increasingly important role in curbing the growth of prescription drug costs. Today, spending on biologic drugs makes up about 43% of total drug spending. This is a growing area of new innovation for a multitude of therapeutic areas, and also an area of growing cost.

J.C. Scott (00:37):
Just a few years ago, many people were concerned that biosimilars would never provide enough competition to make a dent in the biologic market. But it feels like we may be arriving at an inflection point, with growth in the use of biosimilars overall and FDA approval, just a few weeks ago, of the first interchangeable biosimilar insulin. We also see many players in the PBM marketplace, designing strategies to focus on biologics and leverage the increasing number of biosimilars to drive cost savings and that's what we want to talk about today.

J.C. Scott (01:06):
Joining me are two members of the team at Prime Therapeutics, a company that recently announced a major program addressing biosimilars. Dr. Joe Leach is Prime's Senior Vice President and Chief Medical Officer. In his role, Dr. Leach brings to bear clinical leadership and expertise to inform and influence Prime's specialty and total drug management capabilities. Dr. Leach joined Prime with more than 20 years of experience as a clinician, researcher, and healthcare leader. For the past decade, he has been a hematologist and medical oncologist, and he continues to see patients.

J.C. Scott (01:37):
Jarrod Henshaw is Prime's Senior Vice President and Chief Innovation and Supply Chain Officer. In this role, Jarrod helps lead Primes trade relations with manufacturers and shapes the company's efforts on network management, pharmacy audits, and fraud, waste, and abuse. Prior to joining Prime, he held leadership roles at several top companies over the last two decades, including positions such as Chief Innovation Officer, Executive Vice President of Supply Chain, and Chief Legal Officer. Dr. Leach, Jarrod, thank you both very much for being here.

Jarrod Henshaw (02:06):
Thanks for having us on J.C.

J.C. Scott (02:08):
And Jarrod, maybe I'll start with you just to do a little bit of a level set for the uninitiated among our listeners, as well as for me, who might be unfamiliar. Can you walk through the difference between a traditional drug and a biologic and a generic and a biosimilar?

Jarrod Henshaw (02:22):
Yeah. I'm happy to do that. A traditional drug, it is different than a biologic, and the way I think about it is, your traditional drug is, you have small molecule drugs that are processed to the synthesis of various chemicals, whereas, the biologics, are manufactured with DNA from living organisms. And so obviously, the biologics are much more complicated, large molecule type drugs, and that's very relevant when you get to this topic we're discussing today because generics for traditional drugs, they're virtually identical. And so they can be substituted by pharmacists and they enter the supply chain and our health care system in a much different way than biosimilars.

Jarrod Henshaw (03:04):
In contrast with the biosimilars, they're not identical to the referenced product biologic, the pathway under the FDA standards, is that there has to be no clinically, meaningful difference. And so that obviously, we're going to get into this, that creates different challenges with adoption of a biosimilar, the rate of adoption. And so those sorts of things really have led to a slower uptake of biosimilars, but those are really the meaningful differences.

J.C. Scott (03:35):
And let's get Dr. Leach in on the conversation too, to talk about that, what you just said, Jarrod, the meaningfully clinically difference. Right? So Dr. Leach, and I'm going to call you Dr. Leach. We were chatting a little bit ago and I was explaining that my dad was a doctor, as well. And growing up when my friends would come to visit us, if they called him Mr. Scott, he would always say he was Dr. Scott because he had worked his way through school, on an Air Force scholarship, he was very proud of the MD. So I always have to call my doctors, doctor. So Dr. Leach, can you talk a little bit about what it means for a biosimilar to be considered interchangeable and why that's important?

Dr. Leach (04:12):
Yeah, I'd be happy to. The biosimilars, they are different than generics. And I think it's been a challenge for us to get to a point where docs are frankly, comfortable with the idea that they can be used and we're going to use the term, interchangeable, and talk about how that's different, but interchangeably. Generics literally, have the same name as the originator drug, just the generic name, whereas, biologics are actually different drugs that have been designed to be biologically equivalent. So biosimilars are different than generics in that, they can't be auto substituted. And so for a biosimilar to be utilized, it requires a doctor to prescribe that drug specifically, whereas, if you prescribe Prilosec, the pharmacist can substitute Omeprolaze. And so that's one way that they're different.

Dr. Leach (05:02):
So interchangeability really brings biosimilars to the playing field that we think of in generics, in that the pharmacist can, if the doc prescribes the originator, in this case, Lantus, without the providers' input, freely substitute the interchangeable biosimilar, in this case, the recently approved drug Semglee, without input from the doc. And that's a very important difference and really gets us to the point where biosimilars are functionally the same as generics in the way that we think about them and the way that pharmacists are able to substitute them without direction from the doc. So, this is a very big deal and important as we think about how we're really going to improve uptake, this type of drug.

J.C. Scott (05:46):
That helps clarify things a lot for me. So I think about my generic experience because I have been taking Lipitor for a number of years and then one day, lo and behold, when I received my prescription, it was just Atorvastatin, it was the generic instead. And there wasn't really a lot of discussion around that. I didn't blink an eye because I'm so comfortable in this space with the idea that that generic is going to work just as well for me. But that's what you're talking about really is, trying to get to that same state of play for biologics and biosimilars?

Dr. Leach (06:15):
Exactly. And that's where the approval of this first interchangeable really does get as to exactly the experience you just described. Where if your doctor had prescribed Lantus, you could have gone to the pharmacy and that pharmacist could auto substitute Semglee instead without input from the doc. And so I think this is going to raise lots of questions. One of them is going to be, what is the comfort level of providers going to be with that substitution? When a lot of them, frankly, just are not familiar with this whole concept of biosimilarity.

J.C. Scott (06:46):
Yeah. And for our listeners, just to clarify, as I mentioned in the introduction, Semglee is this first interchangeable insulin that was just approved a few weeks ago by the FDA, which a lot of people are looking at as a game-changer for reasons that Jarrod and Dr. Leach are discussing. But one more question, Dr. Leech, as we're on this topic, given your experience as a physician, how do you think about the physician prescribing trends and how that uptake is going to occur out there in the real world?

Dr. Leach (07:13):
I'm a medical oncologist and so my field really has been most heavily impacted because many of these expensive biologics are utilized in oncology and that's where many of these biosimilars have been developed. In fact, that's where most of them currently reside. And when these first started coming out, I got to tell you, there was a lot of discomfort with the idea of substituting a drug that we weren't familiar with, based on the type of evidence we weren't familiar with, drugs that literally cure cancer, drugs like Herceptin, Rituximab, very important biologics.

Dr. Leach (07:48):
But as we've had more time, and I think as docs have gotten more comfortable with this concept, these drugs really are interchangeable. They haven't met the FDA definition of interchangeability, but in clinical practice, we really have gotten to the point where we consider them, not only do we consider them interchangeable, but in my practice, we actually auto substitute them just like your pharmacist could. So if I, in my practice, prescribed Herceptin for a patient, our pharmacy will auto substitute a biosimilar for it.

Dr. Leach (08:17):
So it has really been a journey. It requires lots of education that we've had to get to our docs to overcome misperceptions about what biosimilarity means. And overcoming the fear that their patient who has been doing well on a drug like Rituximab is going to have a worse clinical outcome by switching and that's really important because if the docs don't believe in it, then the patients aren't going to either. And so we have really come to a point where we really do fully accept that these drugs are, in our practice at least, interchangeable.

J.C. Scott (08:50):
So Jarrod, let's talk about what that all means for the marketplace because what Dr. Leach is describing, is the designation of interchangeability for this first insulin is a bit of a game-changer out there. Physicians are already getting more comfortable in doing these switches by prescription. So hopefully, that means more uptake. So as you look at the marketplace, the idea from a cost side is that increasing competition is going to help us to bring down costs. What do you see as the state of biosimilars in the American market today and how that compares, maybe to Europe, where I understand they've been a little bit ahead of the curve from us on adoption?

Jarrod Henshaw (09:24):
Yeah. So Europe is ahead of us. They have a lot more buyers somewhere out in the marketplace. I think there was earlier acceptance in contrast to what Dr. Leach was saying. I think it took a while for the physicians in this country to really accept what biosimilars are and the benefit. There has been over the past few years, growth in this space and it's been on the medical benefit and primarily in oncology, with that degree of acceptance. And there's enough competition out entering these key classes around oncology and a few others, where you're starting to see very meaningful price savings.

Jarrod Henshaw (10:00):
And so what you're seeing happen at the health plan level is really a push to get increased adoption of biosimilars. And as you imagine, there are all sorts of strategies being deployed to do that and currently, the physicians really are the gatekeeper because of that lack of interchangeability for most of those drugs. What's really exciting about the trajectory of this, is as you look at the pipeline of biosimilars coming, it's pretty explosive, in terms of the projected savings. Some are projecting over the next three to five years, between $100 and $200 billion in savings to the US healthcare system and that's very significant.

Jarrod Henshaw (10:37):
And really importantly, in 2023, you're seeing biosimilars enter for auto-immune, the largest drug class in the world, and that's on the pharmacy benefits. So I think it's going to be a paradigm shift finally, for the US healthcare system with biosimilars. And I think you'll see a lot of experimentation about how to actually get that uptake very quickly and do it in a very efficient way. I think it'll take a while for the price savings to get to the point of true generics, if they ever get there, I don't know if the deflation really gets to that point. But there's still a lot of room to drive that savings down over the next five years.

J.C. Scott (11:14):
Jarrod, it's like you're anticipating the next question that popped into my head, which is, can we anticipate that we're going to get to that same level of savings, that we've all learned to expect in the generic marketplace?

Jarrod Henshaw (11:25):
If you read the literature and talk to the experts around the country, I think the consensus is probably not to that degree of deflation. I mean, if you look at where generics have gone into the deeply discounted, 90% off or more, and the lack of interchangeability is really seen as an inhibitor to that because you don't have that free substitution with the pharmacist. Now, to the extent we start seeing more of these interchangeable products, maybe, because I think then, you see the situations more similar to the traditional generics. But that being said, there's still tremendous movement to drive the prices much steeper than where they're at today. And as more competition enters, you'll just naturally see that.

J.C. Scott (12:07):
So, let's pivot a little bit and I'd welcome both of you commenting on this. You alluded to this Jarrod, that some of this is on the medical side, some of it is on the pharmacy side. What role can PBMs really play here, in particular, given that a lot of this activity is on the medical side? So maybe to talk a little bit just generally, about how PBMs can help drive some of the cost savings that we're all hoping are going to manifest from the more adoption of biosimilars? And talk a little bit as well about the program that you all have launched at Prime, the MedDrive program, and what's going on with that?

Jarrod Henshaw (12:39):
Because most of these drugs are on the medical side, I think that it's not been an area that PBMs have really been as involved as they could be. And that's something that we think needs to change and that's why we launched MedDrive. We've not had an opportunity to control cost in this area of innovation. I mean, let's not forget these are very meaningful drugs and have really improved people's quality and length of life, but the cost has been out of control. So, we finally have an opportunity to meaningfully impact that drug spend without negatively impacting clinical outcomes. And so we're positioned a little bit differently because of our integration with our Blues plans. Right?

Jarrod Henshaw (13:20):
And so we are able to both access all the pharmacy data, but also all of the medical data and leverage the size of our collective Blues plans, to drive policies that will favor biosimilars. And so it starts with our putting a stake in the sand, where we really do think, again, there's the FDA definition of interchangeability and then the clinical definition of interchangeability. And we do think biosimilars meet the clinical definition of interchangeability. So if originators' approved for an indication, we think that it is efficacious and safe to use that biosim.

Jarrod Henshaw (13:56):
And so putting a stake in the sand about where we believe these drugs can safely and effectively be used and then getting our plans to align around those medical policies, to really favor the use of these less expensive and equally effective drugs. The other role that's important for PBMs to play along with our plans, is we need to engage with the providers, provide education, help them understand why it's in their patient's best interest to use these drugs, to help drive down their costs. And again, reassure them that they are not sacrificing anything at all, in terms of clinical efficacy.

J.C. Scott (14:34):
And talk a little bit more if you would, Dr. Leach, about that last piece, because that's immediately what leaped to mind, given what you said earlier in our conversation about reluctance by doctors, here in the United States, to make these changes. What does it mean to do that outreach and education in practical terms?

Dr. Leach (14:50):
It's going to have to be multiple channels. Right? And so it can be as simple as sending out flyers and emails, sort of a low touch approach. And certainly, we're going to do that and partnering with our Blues plans in developing literature and understanding what the best outreaches are to reach their providers. Sometimes it's got to be high touch. And so one of the things that we've done is, really get down to understand for their important providers, who is already using biosims? And many of them are, so we're seeing in pockets, extensive use of biosims, but some just aren't and those are probably going to require more direct outreaches, more of a high touch approach. And so it's going to require both of those strategies to really help docs understand why it is in their and their patients' best interests, to use these drugs.

J.C. Scott (15:37):
And from a timeline perspective, you've rolled this out this year. Right? When do you start seeing this making a meaningful difference for the system, for your plan clients? How does this rollout continue?

Jarrod Henshaw (15:48):
The short answer is, we're seeing very meaningful differences. Now we launched MedDrive, informally back in March. We've seen tremendous uptake from our plans. And as Dr. Leach mentioned, a couple of really important pieces of MedDrive, one is, we want to really put our Blue Cross Blue Shield plans with best positioned for higher adoption of biosimilars because of just the economic benefits of that. And along with the PCs, Dr. Leach mentioned, we have a very impactful piece of the program where we're able to, because of our size, get even better economics from the pharmaceutical manufacturers that we deliver to the Blue plans.

Jarrod Henshaw (16:29):
And that provides us with additional incentive to make sure their policies are really incenting, they use of biosimilars appropriately with the physicians. And so we've seen tremendous uptick in those preferred biosim strategies. I think the second piece of this, which is the provider alignment, I think it's going to take longer. Certainly, there is that acceptance of the biosimilars, Dr. Leach mentioned by and large out there. But first to be successful with this program, and I think we will, it's really how we actually align the health plans interests with the provider to manage that patient, manage the spend appropriately, aligned risks around that.

Jarrod Henshaw (17:09):
And that's a big theme in oncology in general, as we all know, with the federal government, with their risk program. And so that's a little longer journey for us, but we think we're very well-positioned to do that. Because our plans, when we do business, they're very interested in creating that alignment within their health systems because they understand that's ultimately how they're going to manage these very expensive classes like oncology.

J.C. Scott (17:34):
So you at Prime are innovating, you're taking a forward-leaning approach here. Your plans are getting on the same page with you, you're taking those steps/ but if we pull back out to the macro level, what else needs to happen? Just writ large, whether it's in the marketplace or we talk a lot on this podcast about public policy and the public policy space, to really help take that next step, to unleashing the promise of biosimilars for patients and for costs?

Jarrod Henshaw (18:01):
One that comes to mind, actually, I was reading an article this morning about it, where there's a big push now for Medicare Part B, to actually have zero copay for biosimilars, to encourage the use of biosimilars in Medicare, Part B. I think those sorts of policies are really smart because those policies will drive tremendous savings for the system. And so those types of incentives, however they can be structured by the federal government, makes sense for everyone, so I think that's an easy one.

Jarrod Henshaw (18:28):
In the commercial markets, I think that continued alignment on the medical side with the provider is critical, and ways we can constructively do that, I think that's going to be really important. For the pharmacy benefit side in 2023, that is a whole new area of opportunity. And I think that one's going to be interesting because that side of the business, you really get into the intersection of, do you basically, as a health plan, adopt a biosimilar, as your preferred drug of choice? Or do you stick with the traditional drug because you get big rebates from the brand manufacturer? And that's nothing new in the pharmacy benefit, that always exists when you see generics come out.

Jarrod Henshaw (19:11):
But that's really going to be the next big area where we see how quickly will the adoption occur? So more to come on that. But certainly, on the medical side, I think the government has a big role to play in this. And I think on the commercial side, the health plans have a great opportunity to really collaborate with the providers to accelerate the adoption.

J.C. Scott (19:31):
Dr. Leech?

Dr. Leach (19:32):
This first step towards interchangeability, I think is really important and we need more of that. Right? So we need more drugs that achieve not just biosimilar designation, but interchangeable designation. I think that that will improve the acceptance of providers and patients, that these drugs really are equivalent to a generic and overcomes some of the uncertainty about using them. We also just need more of them. Right? I mean, this is going to require market forces to have greater competition and we just need to get more of these to market.

Dr. Leach (20:04):
The other things that I think are going to be important, to Jarrod's point, is just aligning, especially on the medical side, incentives for docs and for patients. Doctors really do care what their patients are paying for these drugs, both because they understand the pressure that the high cost of health care is putting on them. And also, our patients won't take the drugs if their out-of-pocket costs are too much. And so I think that's another very important thing for us on the managed care side, to make sure that we are driving incentives to encourage patients. Things like $0 copays, to really see a difference between these biosimilars, for what the patients are paying out of pocket versus the more costly, but not more effective originator products.

J.C. Scott (20:51):
So a lot of what you're both talking about is not only the system today, but how do we play the long game in seeing there's a vision for what we could get to, if more biosimilars are approved, more are in the market, more are being utilized? And designing policies and marketplace decisions with that long-term outcome in mind, not just the annual decisions that we all make on the individual plans.

Dr. Leach (21:14):
Yeah, absolutely.

Jarrod Henshaw (21:15):
Yeah. That's absolutely critical because it's just the explosion of the biologics and the percent of spend, that's going to be for every healthcare dollar. And so you have to believe that for us to have a sustainable Medicare system, Medicaid system, we have to actually take advantage of opportunities like this, this is a great opportunity.

J.C. Scott (21:34):
Well, we're going to have to have you back on after a little bit of time has passed, to see how this is actually playing out in the real world? How the program has gone? What we're seeing out of the FDA? There's a lot to be watching here.

Dr. Leach (21:43):
Yeah, absolutely.

Jarrod Henshaw (21:45):
It will be interesting to see.

J.C. Scott (21:47):
Well, thank you both so much for making the time to join me today, I've really enjoyed the conversation.

Dr. Leach (21:51):
Appreciate it.

Jarrod Henshaw (21:52):
All right. Thanks so much, J.C.

Dr. Leach (21:53):
Thanks so much.

J.C. Scott (21:54):
And thank you to all our listeners for listening. I encourage you to subscribe to the Pharmacy Benefit and download all of our podcast episodes. You can do that on Google Podcasts, Apple Podcasts, Spotify, or wherever you find your favorite podcast. I'm J.C. Scott. Thanks for joining me.