Ivo Abraham, PhD, RN, University of Arizona Cancer Center, analyzes the need for innovative risk-sharing models to promote biosimilar development and utilization.
Ivo Abraham, PhD, RN, director of the Center for Health Outcomes and PharmacoEconomic Research at the University of Arizona Cancer Center, highlights the challenges and opportunities of biosimilar development and utilization in an interview with The Center for Biosimilars®.
Abraham suggests innovative risk-sharing models between manufacturers, payers, and providers to incentivize biosimilar development and ensure efficient utilization.
This transcript was lightly edited for clarity.
Transcript
How can innovative risk-sharing models between manufacturers, payers, and providers incentivize biosimilar development and ensure efficient utilization once available?
We first need to ask ourselves, what are the risks of biosimilars? There is always a possibility that there are some extreme cases of a few patients where a biosimilar does not produce the clinical and safety aspects and it can be attributed purely to the biosimilar. So, if a patient has an adverse event or becomes febrile, neutropenic, then we can say it was not because the patients failed to respond to the treatment, that it was something related to the biosimilar. That probability is going to be very, very small, and it's minimal. We have modelled that statistically.
Now, there's the other part of the risk sharing that is important, and that is the financial risks. Their payers and biosimilar manufacturers need to cooperate, and probably need to cooperate on a little bit different model or approach that payers typically cooperate with manufacturers—that is, basically trying to get the lowest price.
We need to take into account that the manufacturer of the reference product is making proportionately a lot more money than the biosimilar company and has the latitude to also come down in price. We can term that price erosion but think of it as competing in an increasingly commoditized markets.
The manufacturer of the reference products, we can ask why is it that they make more money proportionately, and it is because they don't have to recoup development costs, regulatory approval costs, legal costs, and so on and so on.
The manufacturer of the reference product to stay competitive has to also lower its price, come in at a lower price, and then either stay the same or minimally increase, but basically, it's a downsloping curve. In terms of the risk sharing, there is clinical risk, which is minimal, but the financial risk is a lot higher for biosimilar companies.
It took many of us by surprise, when suddenly, we saw the announcements—well some of us knew that there was something in the works—of what CVS did with Cordavis. They're saying they have an interest in using biosimilars as much as possible as a payer, so if they can also cut out more of the middle people, they can help some biosimilar manufacturers, work with them and help them with their developments and then have some kind of an agreement and then that becomes our biologic. Perhaps, this could even lead to the development of a new version of a particular biologic.
In the risk sharing, we see a lot more happening inside the house of the payer, as opposed to everybody sitting around the table and speaking on how to handle risk sharing. The risk is financial as opposed to in other treatment areas or newer treatment areas, where the risk is also clinical—for instance, a new monoclonal antibody that gets approved.
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