Washington, DC—On March 7, 2018, FDA Commissioner Scott Gottlieb, MD, delivered a speech to attendees of the America’s Health Insurance Plans National Health Policy Conference that called out pharmacy benefit managers (PBMs) for their role in disincentivizing biosimilar development, and urged insurers to use their power to enable market competition.
Although the FDA does not have a hand in the regulation of drug prices, the safeguarding of access to medications is a crucial factor in the agency’s goal to foster and protect public health. Because the FDA is dedicated to ensuring that the new biosimilar pathway works, the agency monitors market practices that can potentially hinder the incentives manufacturers need to invest in biosimilar development.
“The public health benefits of a robust, competitive market for biosimilars are impossible for us to ignore,” Dr Gottlieb asserted.
“In competitive insurance markets, savings from the competition between branded drugs, generics, biologics, and biosimilars should be passed along to patients, employers, and payers. Or it can be redirected towards the coverage of new generations of innovative products that improve outcomes,” he continued, expressing his concern with the way the markets are functioning at the present time.
Currently, consolidated firms (eg, PBMs), together with payers, are using savings they accrue from market competition to divide monopoly rents with large manufacturers instead of passing the savings on to patients and employers. These arrangements, Dr Gottlieb explained, result in increased drug costs and lead to high out-of-pocket costs for patients. They also discourage competition, including the development of new biosimilars.
“The idea is to enable more competition, and lower cost options for patients, once exclusivity has lapsed on the reference drug,” he said.
Although the FDA has approved 9 biosimilars, ongoing litigation, among other factors, has delayed marketing of all but 3 of these biosimilar drugs.
“When biosimilars launch, their initial discount is typically on the order of 15% or 20%. And unless the plan can switch all their patients over to the biosimilar, the cost of the lost rebates on the patients who remain on the original biologic won’t be offset by the value of the discount on the biosimilar,” Dr Gottlieb explained.
PBMs are thus significantly incentivized to hinder biosimilar uptake because it will keep the proverbial river of large rebate payments flowing.
To counter such blockades and improve competition, the FDA, along with Alex Azar II, Secretary of Health & Human Services, are currently drafting policies that will help patients access biosimilars. The agency is also doing its part to encourage biosimilar development by providing manufacturers with resources and tools, and by supporting targeted clinical trials.
“The FDA will do its part by laying out an efficient path for showing how biosimilar products can demonstrate interchangeability with their branded counterparts. But we can solve only one part of this equation,” Dr Gottlieb said.
He urged conference attendees to assist these efforts by reducing administrative barriers to biosimilar use, making biosimilars the default recommendation for newly diagnosed patients, and educating clinicians on the safety and significance of biosimilars, among other actions.
Describing our current era as one of medical innovation, Dr Gottlieb compared the potential effects of our medical revolution with those of antibiotics when they were first introduced in the middle of the 20th century.
Patients will be unable to benefit from these innovations, however, unless patient-centered reforms are supported by all members of the drug supply chain.
“We’ll know that we’ve been successful when there’s a biosimilar market that can sustain multiple competing biosimilar and biologic options,” he concluded.