Vizient predicts that drug price inflation, partly due to the coronavirus disease 2019 (COVID-19), will be 3.29% in 2021 and is banking on biosimilars to help contain the rising cost of medication, it said in a comprehensive review for its member health companies.
In the health care services company’s 2020 drug price forecast, Vizient said coronavirus disease 2019 (COVID-19) has driven up costs of care including the need for acute care, which value-based care advocates had been trying to reduce. It advised its member health groups to hedge against drug price inflation, which will reach 3.29% in 2021, via the use of biosimilars. Specialty drug inflation will be more than a percentage point higher, the company predicted.
“The COVID-19 pandemic has had an extraordinary impact on hospitals and health systems. As a result, any increase in pricing, even a modest one, makes the challenge of economic recovery even more difficult,” said Dan Kistner, PharmD, group senior vice president of pharmacy solutions at Vizient.
The report notes the growing market share of biosimilars, which fall under the heading of specialty drugs, and also the missed opportunity of biosimilars in the case of adalimumab, which does not have biosimilar competition yet and accounts for the highest proportion of nonacute care drug spending among Vizient’s member health institutions.
Adalimumab accounts for 19.15% of spending among the top 10 disease-modifying therapies used by Vizient members. The drug won’t lose exclusivity in the United States until 2023, and Vizient anticipated significant price increases for the drug before that time. “In January 2020, the list price of AbbVie’s adalimumab increased by 7.4%,” Vizient said.
The second highest-spend drug on the top 10 list was etanercept (16.5%), which also does not yet face biosimilar competition.
The authors of the forecast report said the overwhelming focus lately on the clinical and economic impacts of the COVID-19 crisis makes it easy to overlook the economic benefits of the increased adoption of biosimilars. “Biosimilars should not be viewed as an alternative endeavor separate from COVID-19 recovery, but rather as an integral component of improvement plans,” they said.
Vizient encouraged its members to partner with their billing and finance offices to address reimbursement challenges associated with slow biosimilar uptake in the United States. The company also recommended members to partner with Vizient on advocacy opportunities to raise awareness about the need for biosimilars and other initiatives to drive and sustain competition.
“Generic competition and biosimilars have curbed the impact of routine price increases for frequently used medications,” the report said.
Biosimilar Market Changes
For specialty drugs, the estimated drug price inflation rate from January 1, 2021 to December 31, 2021 will be 4.47%, and that breaks down to 3.14% for biologics and 1.33% for nonbiologics, Vizient said.
In the report, Vizient expressed hope that although US uptake for biosimilars is slow, competition faced by originator biologics will continue to increase. “The biosimilar effect continues to take hold. The traditional budget behemoths—infliximab and pegfilgrastim [by originator market share]—have continued to decline as the market sees an increasing number of biosimilars.”
Specialty drugs continue to increase their share of total drug spending. Specialty drugs account for 48% of all nondiscounted pharmacy spending, versus 38% just 5 years ago, Vizient said. Biosimilar market share in the United States has been on the increase, although, “When reviewing the current market share of biosimilars compared to originator products, we see substantial variations across markets,” the authors wrote.
As of April 2020, filgrastim biosimilars had taken a significant share of the market away from the originator product, which retains a 38% share of the US market for filgrastim, with biosimilars commanding the remainder. Filgrastim biosimilars have been in the market the longest of all biosimilars (since 2015), the authors noted, and now “dominate purchases compared to the originator.”
By contrast, infliximab biosimilars have achieved a mere 11% market share compared with the reference product (89%). Additionally, pegfilgrastim biosimilars have achieved a 23% market share, with the originator product holding on to 17% and the originator’s pegfilgrastim Onpro injector kit, launched in 2015, taking the remaining share (60%). There are 5 trastuzumab biosimilars on the market, but these began arriving on market in July 2019 and have achieved less than a 30% market share.
The rituximab and bevacizumab originator products still have 82% and 71% shares of the market, respectively.
There is potential for many more biosimilars, the Vizient authors noted. At present, there are 6 FDA-approved adalimumab biosimilars waiting to enter the US market, with roughly the same number in phase 3 development. If all these drugs make it to market, they hold the potential to significantly lower the current annual $14.9 billion tab for adalimumab in the United States.
Insulin products are now regulated as biologics, according to a March 2020 transition under the Biologics Price Competition and Innovation Act, which makes it possible for biosimilar insulins to emerge. Various other types of biologics were included in the transition, “and can now be considered for biosimilar development,” Vizient wrote, advising its membership to work biosimilars to best advantage.
For insulins, having biosimilar status means they could also be approved to be directly substituted at the pharmacy for originator drugs. “Bringing insulins under regulation as biologics creates the opportunity for the approval of interchangeable versions of these commonly used products,” wrote the authors.
The report revealed an erosion in spending on originator products that are facing biosimilar competition in specialty areas such as oncology, neurology and rheumatology. Vizient expects this erosion occur for outpatient, chronic, and other specialty pharmaceuticals.
Current and Future Biosimilar Plans
The role of COVID-19 in changing health care priorities and affecting spending was a prominent focus of the report. The authors noted that at the onset of COVID-19, the concern that supplies of critical active pharmaceutical ingredients would be disrupted. “Largely, that outcome did not occur.” Instead, demand simply outstripped supply in many cases. The increase in spending for tocilizumab, an acute care drug, was 438% for the March to April 2020 period versus the same 2019 period.
“Primary care patient visits, preventive treatments, diagnostic interventions and nonurgent surgical procedures all trended downward during the pandemic, causing financial hurdles and potential long-term, negative clinical consequences,” the report said.
The pandemic has reinforced the importance of acute care hospital-based treatment; but at the same time, it has demonstrated the “tremendous opportunity” for “care delivery with less interperson interaction and in settings removed from the critical care environments where COVID-19 patients are treated,” the report said.
Vizient concluded the pandemic has “validated the strategic relevance” of expansion of medical management via retail pharmacy, specialty pharmacy practice, home infusion, and telepharmacy.