Sophia Z. Humphreys, PharmD, MHA, is the director of System Pharmacy Clinical Services for Providence St. Joseph Health (PSJH), a multistate hospital system based in Renton, Washington. She has nearly 20 years of specialized experience in the pharmaceutical industry and is an expert in pharmacy regulatory compliance, US Pharmacopeia General Chapter <797>/<800> pharmacy regulations, clinical education, long-term care pharmacy service, and pharmaceutical waste management. She has a strong background in strategic planning and project management. Prior to her current position, she served as the PSJH drug information manager.

Sophia Z. Humphreys, PharmD, MHA

COVID-19 caused an overwhelming global health crisis. Worldwide, more than 176 million people were infected, and 38 million deaths were 

 by June 15, 2021. The United States had over 33 million confirmed cases and more than 600,000 deaths.

The pandemic was also devastating to global economic activity. COVID-19 caused an estimated economic loss of more than 

. In the United States, the gross domestic product (GDP) 

. The strain on health care was extraordinary.

COVID-19 caused 2 primary economic setbacks to the health care system in the United States. First, health care entities suffered reduced revenue and declines in volume. These were caused by the cancellation or postponement of elective procedures and outpatient visits, along with lower emergency department (ED) utilization. From January 2020 to January 2021, 

 Operating room utilization was reduced 16.6%. Overall adjusted discharges decreased by 17.6%. 

Second, the cost of care increased significantly due to increased labor, higher use of personal protective equipment, and medication utilization associated with the care of patients with COVID-19. Medication cost was affected more than other elements of the health care spend. For example, the average drug cost for each discharged patient* increased approximately 29%. However, the total expense for each discharged patient increased 19.6% (from February 2020 to February 2021). Clearly, there was a substantial increase in drug spend.

Midsize hospitals (200-299 beds) were hit the hardest. They saw an average increase in drug spend of 44.4%. These changes all negatively affected the health care industry’s financial performance. The March 2021 

 showed a 36% overall reduction of operating margin from February 2020 to February 2021.

Biosimilars Can Reduce Costs and Maintain High Quality Care

American health care systems large and small are actively seeking ways to increase revenue and decrease costs while providing appropriate care for patients with or without COVID-19. Many front-line clinicians have begun exploring new ways to reduce costs while maintaining the quality of patient care.

In recent years, most of the drug cost increases in the United States were due to large- molecule biologic medications. New specialty medications are among the primary drivers of the increase in overall drug costs. Most of these high-cost specialty medications are large-molecule biologic medications. In 2019, approximately $211 billion was spent on biologics, which was about 

There are generic products for small molecule chemical medications, but none for biologic medications, hereafter called reference products. Increasingly, there are biosimilars becoming available. These medications are highly similar in efficacy, safety, and immunogenicity to the reference products, but cost significantly less. This creates more competition in the biologic medication market. The combination of lower cost biosimilars and pressure on originators to reduce the prices of the reference products may help reduce overall costs of biologic medications writ large and 

reduce health care system financial burden

A strategic, comprehensive, and multidisciplinary medication utilization management program can enhance company-wide acceptance of biosimilars, decrease biologic medication costs, simplify workflow, and improve overall financial sustainability.

Since the first biosimilar product approval in 2015, a growing number of biosimilars have been approved by the FDA. In the past 2 years, significantly greater interest in biosimilars has been observed. This is partially driven by the increasing market share of biosimilar medications. According to Fortune Business Insights, the biosimilar market size will increase from $436 million in 2018 to $17 billion in 2026. The FDA strongly supports biosimilar adoption. There are now 29 biosimilar medications approved for use, replacing 9 original reference products (aside from insulin products). IQVIA has estimated savings in excess of 

 associated with the use of biosimilars over the next 10 years.

Challenges to Biosimilar Adoption in the United States

There are multiple challenges for biosimilar adoption in the United States. A pharmacist may not switch from the original reference product to a biosimilar product without the prescribing physician’s authorization. The only exception to this rule would occur if the biosimilar medication were interchangeable with the original reference product. Currently, there are no biosimilars approved by the FDA that are interchangeable with original reference products.

Another challenge to biosimilar adoption is that a biosimilar cannot be approved by the FDA until 12 years after the licensure of the original reference product, to allow the innovator company a fair opportunity for financial return. Sponsors of biosimilars need to do a patent landscape assessment and consider the risks of patent litigation. As a result, many FDA-approved biosimilars have a delayed launch date. Of the 29 noninsulin biosimilars the FDA has approved in the past 5 years, only 

Other factors hindering biosimilar adoption include physician and patient acceptance, third party payer preferences, and creative contracting by the original reference product manufacturers.

Innovative Management Tools Have Spurred Biosimilar Adoption

For decades, formulary decision makers developed different methodologies for medication utilization management. These were designed to reduce drug spend and increase access to care, while maintaining the quality of patient outcomes.

The emergence of biosimilars has created new opportunities to enhance and improve these tools. A strategic, comprehensive, and multidisciplinary medication utilization management program can enhance company-wide acceptance of biosimilars, decrease biologic medication costs, simplify workflow, and improve overall financial sustainability.

A real-world example of such a program is well underway at my health care institution, Providence St Joseph Health, of Renton, Washington. In the beginning of 2019, Providence developed and implemented a new biosimilar utilization management program. This program included clinical research and pharmacoeconomic analysis of available biosimilars.

Thereafter, Providence selected a preferred biosimilar to replace each original reference product for which biosimilars were available. These preferred biosimilars were built into the Providence electronic health record system as the default product for each molecule, which streamlined workflow for physicians and nurses. These initiatives saved Providence more than $27 million in the first 2 years.

New Laws May Help Improve Biosimilar Adoption in the United States

The market share of biosimilars in the United States remains moderate. Biosimilar adoption rates vary depending on launch date, therapeutic class, and indications, among many other factors. In general, the products launched earlier tend to have higher adoption rates. For example, the first filgrastim biosimilar was launched 6 years ago. The biosimilar market share has 

However, early launch does not guarantee favorable adoption rates. The biosimilar adoption rate for infliximab remains below 10% nationwide, 6 years after first launch. This medication is primarily used for maintenance treatment. Thus, biosimilar adoption faces more provider and patient hesitancy.

Some recent launches have done well. The biosimilars for 3 curative cancer biologics, bevacizumab, rituximab, and trastuzumab, were launched in late 2019, right before the COVID-19 pandemics. The adoption rate in the United States for all 3 molecules is expected to exceed 60% in 2021.

On April 23, 2021, President Biden signed The Advancing Education on Biosimilars Act, aimed at promoting biosimilar use and reducing drug cost. The supporters of this bipartisan bill hope to increase biosimilar confidence by educating providers and patients regarding the scientific background of biosimilar efficacy and safety.

The Growing Biosimilar Pipeline Holds Potential for More Savings.

The biosimilar pipeline is growing. Fifty-one percent of all reference biologic medications will face biosimilar competition in the next 5 to 10 years. There are currently more than 100 biosimilars, in various stages of development, seeking to replace 22 expensive, original reference products.These new biosimilars will generate even more savings for the health care industry. With interchangeable biosimilars on the horizon, there is considerable potential for biosimilars to reduce drug costs and enhance a financial recovery for health care. Indeed, IQVIA has estimated that biosimilars may generate over 

The rise in biosimilars is providing an exciting opportunity to improve health care sustainability. Innovative medication utilization management programs, with a biosimilar medication focus, can help health care organizations improve patient access to large molecule biologics, maintain high quality patient outcomes, and accelerate post-COVID-19 financial recovery.

*The figures cited for discharged patients are based on the adjusted discharge, a calculation health care systems use to incorporate both inpatient and outpatient revenue in the evaluation of financial performance to gain an understanding of the productivity of the entire organization.

Articles

Sophia Z. Humphreys, PharmD, MHA, explains how biosimilar utilization management can enable health care institutions to put COVID-19–related financial wreckage behind them.

Opinion: Biosimilars Can Aid in Post–COVID-19 Health Care Financial Recovery

American healthcare spending reached $3.65 trillion in 2018. Of that, $344.5 billion was spent on prescription medications, a 30% increase compared with 2013. This was largely due to significant drug price increases over the past 5 years. Notably, the price of brand-name medications increased 60% on average, while the price of generic medications decreased. According to the IQVIA Institute for Human Data Science, new specialty medications are among the primary drivers for this increase in overall drug costs. The majority of these high-cost specialty medications are large-molecule biologic medications. There are generic alternatives for small-molecule chemical medications, but not for biologic medications. However, there are biosimilar medications that compete with these high-cost reference compounds.

Providence St. Joseph Health (PSJH) is the third largest nonprofit healthcare system in the country, with 51 hospitals and over 800 clinics. The PSJH system pharmacy division developed a medication utilization management (MUM) program that promotes biosimilar acceptance, supports contracting negotiation, streamlines physician workflows, simplifies pharmacy operations, and improves performance evaluations. This program saved PSJH nearly $10 million in biologic medication spending in 2019. This article shares the details of PSJH’s real world success in promoting biosimilar uptake.

Since the first biosimilar product was approved by the FDA in 2015, increasing numbers of biosimilars have been approved each year. There were 3 approvals in 2016 and 5 in 2017. In the past 2 years, we observed significantly higher interest in biosimilars, which was accompanied by more FDA approvals: 7 in 2018 and 10 in 2019. Many more agents are in the pipeline. As of the end of 2019, the FDA had approved 26 biosimilars for 9 reference compounds. Sixteen biosimilars are now on the US market.

These biosimilars are highly similar in efficacy, safety, and immunogenicity to the reference compounds. They cost significantly less than the reference compounds. Thus, they create more competition in the biologic medication market and force the reference compound manufacturers to lower prices.

Biosimilars have been widely used in Europe since 2006. In the past 13 years, they have been used for 400 million patient days. The biosimilar products for filgrastim increased patient access in the United Kingdom by 44% between the years 2006 and 2013. IQVIA projected the European Union will see almost US $11 billion in savings on biologic medications between 2016 and 2022, contributing to the utilization of biosimilars.

Unfortunately, the biosimilar uptake in the United States has not been as robust as in Europe. One reason is that United States law regulates biosimilars and interchangeable biosimilars differently. In many states, a pharmacist may not switch a reference compound for its biosimilar product without the prescribing physician’s authorization, unless it is an interchangeable biosimilar. Currently, there are no interchangeable biosimilars approved by the FDA. The FDA finalized its guidance to the industry for interchangeable biosimilars only recently, in May of 2019, which explains why we have not seen any interchangeable biosimilars.

Biosimilars often face patent litigation. Thus, many FDA-approved products have a delayed launch date. Reference compound manufacturers also offer significant financial incentives to third-party payers in the form of a rebate, which slows down payer uptake of biosimilars. Furthermore, healthcare systems often face volume-based tier prices, rebates, and other contracting methodologies utilized by reference compound manufacturers to maintain market share. These can hinder biosimilar adoption. In addition, physicians and patients have limited experience with biosimilars. Their slow acceptance can be another hindering factor for biosimilar uptake.

Healthcare system pharmacy leadership teams should establish various policies, procedures, and MUM programs to reduce cost without sacrificing the quality of patient care. The emergence of biosimilars has introduced new challenges and opportunities. The following discussion outlines strategies for successful utilization management of biosimilars.

Employing Japanese Principles to Increase Savings

The design of the PSJH MUM program was based on Toyota’s kaizen principle. We aimed at reducing variation, increasing efficiency, and standardizing practice. In order to achieve that, we built tools in the electronic health record (EHR) system (PSJH’s EHR system is Epic) to guide the physicians to preferred biosimilars. The EHR-guided prescribing streamlined physician and pharmacist workflow, simplified the biosimilar ordering process, and improved efficiency. However, we used a different EHR model for outpatient infusion centers. This used the PSJH-preferred product as the default biosimilar, but outpatient physicians were still allowed the freedom to prescribe reference compounds or different biosimilars, if the patient’s payer preferred them.

PSJH implemented 4 biosimilar-focused MUM initiatives in 2019. These initiatives reduced spending on high-cost biologic medications that had biosimilars in the US market. Three of the initiatives led to significantly lower outlay for the reference compounds, and the remaining initiative for a single reference compound had a less-meaningful spending reduction (Figures 1-4). All of these results were achieved by using Epic-guided prescribing to lower cost via the use of equally efficacious biosimilars instead of more expensive reference compounds. The following graphs summarize the correlation between the changes of biologic medication spending and the Epic-guided prescribing go-live date, which is marked “Epic” in the figures below. All medication spending is displayed in thousands of dollars. In some cases, declines in the use of reference biologics began prior to the initiation of the Epic system, although pronounced declines generally followed Epic implementation.

Figure 1. Spending Decline for Pegfilgrastim Reference Biologic (Neulasta & Neulasta Onpro)

Figure 2. Spending for Infliximab Reference Biologic (Remicade)

Figure 3. Spending Decline for Epoetin Alfa Reference Biologic (Procrit/Epogen)

Figure 4. Spending Decline for Filgrastim Reference Biologic (Neupogen)

It is important to closely monitor the biologic medication pipeline, evaluate relevant clinical data, and develop an expedited formulary review and approval process. The formulary status of all biosimilar products for the reference compounds should be approved, before products launch. In this way, multiple biosimilars will be on the formulary. This can enhance the negotiation power of contracting teams and improve the ability of healthcare systems to choose biologics on the basis of cost, other things being equal.

Healthcare systems should also build tools in their EHR systems to guide physician prescribing of the preferred biosimilars. EHR-guided prescribing streamlines physician and pharmacist workflow, simplifies the biosimilar ordering process, and improves efficiency.

Pharmacoeconomic analysis is a crucial part of medication utilization management. The pharmacy team must evaluate the full financial benefit of biosimilars in different healthcare settings. Inpatient and outpatient billing and reimbursement methodologies are different; therefore, the financial impact of biosimilars will vary. Inpatient reimbursement is usually based on diagnosis-related group, or DRG, so the lowest-cost biosimilar should be chosen as the preferred product. In contrast, outpatient reimbursement depends on payer preferences. Before switching a patient from the reference compound to a biosimilar, the pharmacy should work closely with the business office and revenue cycle teams to obtain prior authorization and evaluate net profit.

The impact of biosimilars can also vary depending on the account types. Healthcare systems pay one price for a group purchasing organization purchase and a different price for a wholesale acquisition cost purchase. 340B Drug Pricing Program accounts are particularly interesting. Pursuant to the new CMS reimbursement methodology, biosimilar products within the “pass-through period” will be reimbursed at the average sales price (ASP) plus 6%, instead of ASP minus 22.5% for the reference compound. Thus, by selecting a newer biosimilar product (within the pass-through period) for 340B-qualifying patients, a healthcare facility will save money by purchasing a lower-cost product and receiving a greater reimbursement than for the reference compound or older biosimilars (which are no longer in the pass-through period).

This type of program requires collaboration among pharmacists, physicians, data scientists, finance analysts, business office personnel, and healthcare informatics professionals. The resulting cost reductions and the increased access to care will help improve patient clinical outcomes.

In conclusion, this comprehensive, multidisciplinary medication utilization management model can enhance system-wide acceptance of biosimilars, decrease biologic medication cost, simplify physician workflow, and improve overall pharmacy sustainability.

Providence St. Joseph Health used Toyota’s Kaizen system of nonvariance and standardization to build a model that increased use of biosimilars among physicians. The model employed the electronic health record system to guide physicians toward use of biosimilars, thereby increasing savings.

Sophia Z. Humphreys, PharmD, MHA

Opinion: Biosimilars Can Aid in Post–COVID-19 Health Care Financial Recovery

Hospital System Boosts Biosimilar Use With EHR System