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How Kaiser Permanente Got Biosimilars Into Play


Biologics are not cheap, and if you can get biosimilars into the hands of patients, you’ve got something going. A strategist describes the step-by-step process that made this possible at Kaiser Permanente.

Kaiser Permanente has achieved very high biosimilar utilization, and a reason for this is that the payer is very largely a “closed system” with a large degree of control over decisions that are made on drug usage. Even so, there have been challenges to biosimilar uptake.

A recent MJH Life Sciences™ webinar included Timothy J. Chiu, PharmD, who serves as pharmacist evidence analyst and strategist for Hematology and Oncology at Kaiser Permanente. The panel of experts looked into how drug rebates are, in many cases, frustrating the ideals of biosimilar utilization, because they may disincentivize the use of the biosimilar that costs the patient the least. And when it comes to biologics, prices can be very high, and the use of lowest-cost biosimilars can be paramount.

Webinar audience members submitted questions for Chiu, which he graciously answered in this first of a series of articles on responses to these questions. Chiu discusses how Kaiser Permanente developed a system for addressing concerns about the risks of biosimilar switching, payer reluctance to push for biosimilar adoption, and various other key issues.

How concerned is Kaiser Permanente about differences in safety or efficacy when switching individual patients between biosimilars?

Chiu: Kaiser Permanente has taken a collaborative approach in potentially switching biosimilars, thus hopefully limiting any major concerns on switching. Initially the totality of evidence around a class of biosimilars is discussed with specialist leaders with the goal of addressing all questions and concerns about the potential switching regardless of treatment setting. This information is further relayed to discussions between frontline team members and patients as needed. The whole process allows for broad discussion and has led to a greater endorsement and comfort with biosimilars over time. Ultimately, most clinicians now are comfortable switching to biosimilars for their patients within the organization, which has translated to biosimilar use in a majority of patients in applicable arenas.

Has Kaiser Permanente’s closed system, which has a higher degree of formulary coordination and control across acute and ambulatory care, experienced the same challenges with biosimilars as the a-la-carte health care delivery model of preferred provider organizations and health maintenance organizations?

Although Kaiser Permanente has gained much biosimilar experience, even in preparation for the launch of Zarxio (filgrastim), there have been similar challenges to what has been reported by other models. For example, a lot of questions and concerns arose in the path leading up to eventual formulary and system decisions, including confusion about interchangeability status and meaning, how confident we should be in the available data and the use of extrapolation, or if there would be risks in switching in amid treatment or in the curative setting of oncology (or risk of flares for patients doing well on the reference product for inflammatory diseases). The learnings from all these conversations was that education and proactive engagement with clinicians and patients were essential to prepare for biosimilar strategies.

That said, Kaiser Permanente’s infrastructure may lead to some differences in implementation of the strategy once formed, including efficient communication channels, formulary decisions, and implementation, as well as information technology modifications to promote ease of transition to a biosimilar within one system.

Why do you think payers have hesitated to push for more adoption of biosimilars versus small molecule generics, which are always pushed?

There may be multiple important considerations for this topic, but some reasons could be financial incentives tied to biologics and how they are administered, not to mention their relatively more complex structure. A 2017 article in JAMA covered some of these ideas,1 including:

  1. Biosimilars are relatively new and there may be initial hesitation by various parties before using these products. Small-molecule generics had a similar response when introduced but these days are widely embraced. A potential limited understanding about biosimilars may lead to concerns about differences in efficacy or a loss of stable maintenance of disease if products are switched, despite the totality of available evidence.
  2. Biologic reference products may be associated with substantial rebates or agreements that may not incentivize a payer to change products.
  3. Similarly, biologics are often administered in a clinic setting, thus reimbursement models may also affect decisions. This includes the potential for utilizing high-cost options if reimbursement is based on a percentage of the medication cost (where biosimilars are often substantially lower cost).

Payers contribute to barriers to biosimilar utilization, but can you dig into the financial incentives of "buy and bill" and how that influences the original treatment decision?

Financial incentives, including the buy-and-bill model, have been a barrier to biosimilar utilization—a higher-costing reference product with the 6% add-on payment would be favored over a biosimilar with a lower reimbursement, given its generally reduced cost. Thus, the relatively low uptake of biosimilars may be strongly influenced by models such as this. Perhaps Congress will pass legislation so that the payment for biosimilars is based on the average sale price of the reference product and the add-on payment is increased from 6% to 8%. Hopefully, these types of policy efforts will help change the dynamic and remove the incentives that may be stacked against biosimilars.

How do you see rebates affecting the future of biosimilars? Do you expect manufacturers to make rebates available to payers so that they will more likely include more biosimilars on formulary?

Rebates, or any financial incentive, can play a strong role in the future of biosimilars, where one of the primary objectives is to provide more and affordable options to the health care system. There have been plenty of discussions on how rebates may be used to as a disincentive for biosimilars (by financially favoring use of reference products; ie, “the rebate trap”). Along those lines, rebates may also be a method to help bring biosimilars into a favorable financial position when balancing all the incentives that payers and others consider. Ultimately, financial incentives, whether by contracts, rebates, or otherwise, that allow for a lower net cost to the health care system can assist in promoting biosimilars and affect decisions like formulary placement.


1. Hakim A, Ross JS. Obstacles to the adoption of biosimilars for chronic diseases. JAMA. 2017;317(21):2163-2164. doi:10.1001/jama.2017.5202

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