Wayne Winegarden, PhD, senior fellow in business and economics at the Pacific Research Institute (PRI) and director of PRI’s Center for Medical Economics and Innovation, discussed why importing drugs may not lower costs and what we can learn from Canada’s biosimilar programs.
To watch part 1 of this interview, click here.
The Center for Biosimilars® (CfB): Hello, I'm Matthew Gavidia. Today on MJH Life SciencesTM Medical World News, The Center for Biosimilars® is pleased to welcome Wayne Winegarden, PhD, a senior fellow in business and economics at the Pacific Research Institute (PRI), as well as director of PRI's Center for Medical Economics and Innovation.
Providers want freedom to use the same biosimilar each time rather than have to use a different one according to each payer and formulary. Do you see any workable solutions to this problem?
Winegarden: Yeah, absolutely. We're beginning to get into broader health insurance and health care reforms. That is an essential part of how we get to a better health care system, where the patient and the provider need to be in control of that patient's health. And to the extent that the provider is familiar with their patient, they understand what other medicines they're on and they understand the patient's unique circumstances. They're obviously much better positioned to know what the right medicine is and so, they absolutely need to be empowered. And the patient, on the flip side, should have that control because it's their health.
Again, this is getting slightly away from specific biosimilar changes and the interchanges of how we fundamentally improve how our health care system is operating from that patient-centered and provider-centric health care model, which is absolutely incredibly important in terms of broader health care reforms.
CfB: Are there other reforms in the payer paradigm that you think might be workable?
Winegarden: There are. We talked about shared savings, fail first therapies, separate biosimilar tiers, and ASP [average sales price] reform so that you have the same percentage dollar markup across a biologic in a biosimilar. All of these types of reforms, again, [represent] the idea being that you're not disincentivizing or disadvantaging one product over the other.
Along those lines, right now, we have a lot of tie-ins and sales. Those can be anticompetitive, and those should be changed. So, what we really need is a more efficient, less obstructed market so that the competitive pressures can come into play. We already see in the generics market that drug competition is a very effective means for driving down price and improving quality of care and improving adherence, which improves health outcomes. That same process can be leveraged for the biologics market. All of those reforms that we're talking about need to work toward that specific goal.
CfB: You talk about regulatory inefficiencies. Can you discuss broadening the applicability of the interchangeable designation?
Winegarden: Interchangeability is one of those complex issues. And a really interesting issue in terms of biologics when we're talking about interchangeability is that normally it refers to a pharmacist, and typically it's much more relevant for the small molecule drugs. Does a pharmacist have the ability to change a patient from a reference product to a generic product without going back to the physician? You need the interchangeability designation to make that work.
Often when we're talking about a biologic, it's being administered in a clinical setting. Well, in a clinical setting when the doctor is administering it, the doctor can prescribe the medicine that they believe is most appropriate for that patient. So, the interchangeability designation for the most part is not relevant. The provider, the doctor, or whoever is administering the medicine should have the right to use the medicine they feel is best for that patient, taking into account differences in costs. You have just as efficacious medicines, like a biosimilar to the originator, but one's cheaper.
There are clear advantages to the doctor having the ability to do that. And if interchangeability issues are creating confusion or hesitancy about that, they become a regulatory obstruction. So, to the extent that those issues are impacting our use of biosimilars, that is a very troubling regulatory policy
CfB: Semglee, an insulin glargine, was approved as a 505(b)(2) application and deemed to be approved under the BPCIA [Biologics Price Competition and Innovation Act]. [Semglee is therefore not technically a biosimilar]. Biocon Biologics has to apply separately to get a biosimilar and an interchangeable designation. What are your thoughts on this?
Winegarden: Again, we need that clear pathway. And to the extent that we don't have that, that is problematic. One of the things about insulin is that a lot of the affordability issues from insulin are actually coming from how we price drugs systemically, that gross-to-net bubble, where the patient's costs are based on that gross price, or the list price, which has been rising, but, actually, net costs have been going down. So, that's a very important concern when we talk about insulin—fixing that problem so that, in effect, we're improving patient affordability to actually reflect the market trends, not this inflated bubble. But with respect to the biosimilar versions, there are those complexities. I believe we're getting closer to getting that resolved. The quicker we can do that, the better. Again, more competition is always better than less. So, we are making progress in terms of that with some of the changes being implemented. That is certainly favorable. Could it be more efficient? Absolutely and we need to push toward that.
CfB: President Trump has proposed to create foreign drug buying pathways for Americans so they can have access to cheaper drugs, particularly insulin. What's your take on this as it relates to Canada?
Winegarden: It's a terrible idea. It's a terrible idea in relation to Canada, the [United Kingdom], and Europe. It is a bad idea for a number of reasons. First, let's think about Canada and let's think about the practical issues. There's 300 million Americans and there's 37 million Canadians. It's not possible for Canada to be the drugstore for the United States. [This policy would not] address our drug affordability issues.
I think, more importantly, you have access issues in Canada. They have access to about 50% of the medicines that have come out over the last decade and a half or so. We have access to nearly 90% of those medicines, which, by the way, means that if you have drug importation on that 50% of medicines that aren't available, you don't have drug importation. You can't import something that's not available. There are those problems as well.
But you're not importing all of those problems to the extent that you can get [drugs] into the United States; you're just taking the Canadian price controls. If you think price controls are the way to lower costs here, and [they’re] not, we should have the courage to have that debate and do it here or not do it here. The problem with price controls is that you decrease the amount of innovation. So, you harm patients in the future, and you decrease access. All of the problems that you've seen in these other countries, you would import into the United States.
I think, more importantly, there are ways to address drug affordability in the United States that maintain that balance that we get right. We do this better than other countries. We promote affordability and innovation. Look at the small molecule markets: 90% of small molecule drugs purchased over the pharmacy counter are generics. Most of those, about 95%, are going to cost the patient $20 or less. So, we have affordable drugs and we have continued innovation because you have the incentive to cover the $2.6 billion to $2.9 billion it costs to develop a new a new drug or a new biologic. We have that balance struck well on the small molecule side.
With respect to biologics, there are issues we have to talk about, such as biosimilar competition. We have to address the pricing issue in terms of the gross-to-net bubble, where we have an incentive for gross prices to overinflate. It [affects] the competition. You really want competition on the net prices in the market price. That would drive down the cost for the patients, but it would keep the systemic costs where they are. I don't think most people realize that if you look at the growth in net prices over the last 5 to 10 years, it’s actually less than overall medical care inflation. So, the problem is that the drug pricing system that we have is shifting too much of the cost to patients, and that's what needs to be addressed.
I go into that tangent because that's a much more effective way to create drug affordability here in the United States without bringing in all the problems that we would through drug importation, or bringing in price controls. And we haven't even gotten into the issue of counterfeit drugs.
If you open up the US drug markets to importation, you also open exposures to this problem [of counterfeit drugs], which is already a large problem. [Some] 10% of drugs on the market are counterfeit drugs. These are medicines that [may contain] a yellow highway paint, gypsum. Sometimes they'll have a drug that's not supposed to be there or that you could be allergic to. Again, we're opening up the drug supply chain to greater infiltration by counterfeits, and that's dangerous to patients. For all of those reasons, importation just makes no sense.
CfB: British Columbia has noticed significant savings on its mandatory switching since May 2019, and they've been able to plow substantial savings back into health care to improve access. Are there any lessons here that we can learn from?
Winegarden: I think the lessons are biosimilars create systemic savings. These are medicines that are just as efficacious [as reference products] and can lower overall spending. We don't need mandates. Again, this is something that providers need to be in control of along with the patient in that patient-centered proposal. But again, if you have a medicine that's just as efficacious [as the reference product], but is much cheaper, why wouldn't you use it where it's appropriate. And so, I think it demonstrates the real savings that we can generate here by just creating a more competitive market, not to go down that mandating route, but to remove the obstacles that are inhibiting a much more advanced competitive market here in the United States.
CfB: Can you discuss any current biosimilar legislation that you find promising or noteworthy?
Winegarden: What I'm most excited about, more than legislation, is the actual market dynamics that we're seeing. And I think that the growth in share that's occurring in the biosimilars market has been very encouraging. And we're beginning to see that market stand up. We're beginning to see the [effects of] education. People are recognizing the potential savings that biosimilars can offer and how they actually are just as efficacious as the originator product. As that continues to grow and as more companies continue to insist on favorable tiers for biosimilars and favorable terms, it could be very exciting for the future.
CfB: And lastly, as the FDA is busy with COVID-19–related issues, how is that affecting the pace of biosimilar approvals? And does the FDA have the resources it needs to do the job?
Winegarden: All hands being on deck on COVID-19 has consequences. It has consequences across the board. You see that in clinical trials. And so, obviously, the faster we can overcome that, the better. But there are undoubtedly consequences because everything requires resources and there's just a finite amount of resources. Things are still progressing across the board. We're still seeing progress outside of the COVID-19 area, including innovation with drug approvals. All of those haven't come to a complete standstill; but, undoubtedly, the focus, and rightly so, is on addressing COVID-19. So, it is the right thing to do, but as with so many things in the economy and society right now, COVID-19 is front and center.
CfB: To learn more, visit our website at centerforbiosimilars.com. I'm Matthew Gavidia. Thanks for joining us.