Tony Hagen is senior managing editor for The Center for Biosimilars®.
Drug rebates have survived despite the payment reforms imposed by the Medicare Modernization Act of 2003, and now payers are taking advantage of them, too, panelists noted at the National Comprehensive Cancer Network (NCCN) 2020 Virtual Annual Conference.
Biosimilars have potential to bring down costs and they may not be used as often as they should be, particularly because they are carefully patterned after innovator drugs that command higher prices, but among payers and health plans, the discussion whether to incentivize the use of these products remains “ongoing,” said Bhuvana Sagar, MD, national medical executive for Cigna Health Care, a panelist who spoke during the National Comprehensive Cancer Network (NCCN) 2020 Virtual Annual Conference.
“It’s still very difficult to incentivize optimal use, although I’m sure a lot of payers are looking at this very issue of how to promote the utilization of drugs that are essentially safe and lower-cost options,” Sagar said.
Panelists discussed the sensitive issue of rebates as incentives for biosimilar uptake, as well as related issues connected with the use of these agents. Rebates may incentivize use of a particular drug, but not always for the right reasons, said panelist Michael Kolodziej, MD, a vice president and chief innovation officer for ADVI Health.
Rebates and the Medicare Modernization Act
Prior to the Medicare Modernization Act of 2003, rebates were primarily agreements between manufacturers and provider organizations to bring down the price of a drug based on the degree of utilization, Kolodziej said. This led to an increase in the margin that providers could earn by prescribing that particular drug in quantity.
The Medicare Modernization Act introduced the concept of average sales price (ASP), which is the net cost of a medicine after all discounts have been subtracted, and this is the amount that Medicare bases its payments on. “So, theoretically, in an ASP-based world, rebates shouldn’t exist,” Kolodziej said.
However, they do. Manufacturers can still incentivize use of their products through rebates because ASP prices are not updated for months after sales actually occur, and so a manufacturer can reduce cost for a provider organization through a rebate and those providers can still gain a margin of revenue that would not exist in a real-time ASP world, Kolodziej said. “These rebates are invariably tied to preferred formulary position. You have to agree to use a certain amount of a drug in a given category.”
“This is adult talk,” Kolodziej added. “This is the way the world works.”
In a new twist to the rebate deal, “the payers have decided that they would like some of that rebate money, and they are negotiating directly with the biosimilar manufacturer or the reference product manufacturer to get a discount so that they have a lower net.…Now, the payers are in on it, and there’s direct conflict, and that’s why this has gotten to be such a sensitive issue,” he said.
The rebate dynamic creates trickle-down problems, noted panelist Scott A. Soefje, PharmD, RPh, director of the Department of Pharmacy at Mayo Clinic. One of those issues is complexity and making sure that health care is executed safely and efficiently.
Too Many Products Causes Confusion
He noted that there are 6 trastuzumab products, including reference and biosimilar drugs, and so there are multiple commercial entities angling to get those agents, all essentially the same type of product, into the clinic. “Imagine a world where we have 6 different payers in each region who negotiated 6 different contracts for rebates, and each one is demanding different trastuzumabs.
“In our pharmacies, that means we have to stock all of them,” Soefje said. “We have to make sure we’re pulling the right drug out of the refrigerator to give it to the patient. So now you have sound-alike, look-alike boxes.” It has the potential to confuse clinicians and pharmacists. The provider institution has “no contracting power whatsoever” and cannot, for example, reduce the number of trastuzumabs to avoid this scenario and make things easier for health care workers and safer for patients, Soefje said.
The pharmacy acrobatics required to skillfully manage multiple versions of an identical product run counter to the actual need for a single biosimilar product that would vastly improve conditions, said panelist Drew S. Mace, PharmD, pharmacy supervisor at the Ann B. Barshinger Cancer Institute in Lancaster, Pennsylvania.
With respect to biosimilars and reference products, “by and large, we have noticed zero difference in terms of efficacy and/or safety when we have performed our pharmacovigilance,” Mace said. This pharmacovigilance at his institution has been considered necessary to quell any lingering concerns that prescribers may have with biosimilars. “We would view any biosimilar equivalent in terms of interchangeability.”
In Part I of this article, The Center for Biosimilars® reported the NCCN panelists’ discussion about patient education on biosimilars.