How Biosimilars are Improving Drug Spending

Biologics have been a hot topic for many years. At a significantly higher cost, due to the complexities and uniqueness of these drugs, they are often held partially responsible for rising drug costs in the U.S. That’s one of the reasons the Biologics Price Competition and Innovation Act (BPCIA) of 2009 was passed.

According to the FDA, the goal was to, “create an abbreviated approval pathway for biological products that are demonstrated to be ‘highly similar’ (biosimilar) to or ‘interchangeable’ with an FDA-approved biological product.” Essentially, biosimilars are to biologics what generics are to brand name medications.

With that said, biologics still saw a 50% increase in drug spend from 2014-2018 with $125 billion in sales. So, what are biosimilars, and how are they improving drug spend?

FDA Approval Process for Biosimilars

Currently, there is a two-step process for FDA approval of biosimilars. They must first be approved as a biosimilar product then be approved as an interchangeable product. If a product is considered interchangeable, by law, a pharmacist could substitute it without provider approval.

Reference products have 12-year exclusivity meaning that a biosimilar product may not come to market for at least 12 years after the introduction of the original product.

Additionally, biosimilar manufacturers must provide the manufacturer of the reference product at least 180 days notice after FDA approval before the product can officially be made available.

The Path to Improving Drug Spending

Unfortunately, providers have been hesitant to prescribe this new form of treatment with over half claiming they are unfamiliar with them. This is not surprising as the 12-year exclusivity has kept many biosimilars off the market until recent years. However, the FDA has continued to improve the approval process at a growing rate- from one approval in 2015 to 10 in 2019.

According to a September 2020 Bernstein analysis, cost savings from biosimilars in the U.S. reached $5.6 billion by the end of the second quarter of 2020 and are expected to gain another billion by the end of 2020.

Healthy Competition

As biosimilars continue to get approved competition naturally increases as several are available for any one biosimilar. For example, there are currently 3 biosimilars approved for Neupogen, a colony-stimulating factor used frequently for neutropenia in patients undergoing chemotherapy. Since there are three biosimilars available, the price for these products is very competitive.

Ultimately, biosimilars will lead to a slowing in healthcare costs among patients and the industry as a whole. While increasing competition forces drug companies to lower costs, patients experience a decrease in spending.

The Future of Pharma

The increased popularity of biosimilar products is leading to a shift from new drug development and research to greater time spent in the research and development of biosimilars for many industry leaders. Additionally, newer, start-up companies are recognizing the trend in drug development and are starting to invest with the goal of utilizing the return to help fund other types of research to ultimately ensure a foothold in the market.

What does this mean for PBMs, TPAs, Payers and other Stakeholders?

While the complexities of biologics and biosimilars are greater than that of brand name vs generic, this also means greater attention to detail will be needed when making coverage and formulary decisions regarding these products. This is especially true considering they are not always interchangeable.

This makes it even more important for PBMs, TPAs, Payers and other stakeholders to have constant insight into industry nuances and pharmacy claims analysis. That’s where Xevant comes in.

Xevant is a groundbreaking data analysis platform that automates daily claim information and insights in real-time. Rather than relying on typical PBM reporting methods, that often come in when it’s too late to make meaningful changes, Xevant identifies instant data trends as they are happening and pinpoints areas of improvement. Additionally, Xevant allows for custom KPIs to be set for specific client’s needs and areas of improvement.

The Executive Director of Marketing and Global Biosimilars Commercial Lead for Amgen’s Biosimilars Business Unit, Chad Pettit, said in an interview, “What we see is that biosimilars are doing exactly what they were intended to do, which is creating cost savings through competition with both reference products and other biosimilars. It’s this competition on a level playing field that will continue to create cost savings for patients and for healthcare systems over time.”

It’s this predicted effect that biosimilars will have on the market that makes the Xevant platform even more vital. As the trends of drug spending continue to change, PBMs, providers, pharmacies, benefits consultants, plan sponsors, TPA’s, and health plans will need to work together to ensure well-rounded decisions can be made for both clients and patients. Xevant was built for this task and can help from start to finish.



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Laura Phillipson

Director, Client Success

Laura Phillipson is a client management expert with experience managing client services teams. Her past roles include Sr. Client Services Executive for Navitus and over a decade of experience as a Certified Pharmacy Technician. Laura’s career in client relations spans nearly two decades. An avid sports fan, Laura excels in helping clients create a strong strategy with a competitive edge. Laura’s extensive background in both customer service and the medical field provides an ideal blend to lead client management for Xevant.

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