Pharmacy benefit managers have been slow to embrace biosimilar drugs, but recent moves by big players could signal the sector believes the time is right to back these lower-cost copycat medicines.
As the healthcare industry and consumers contend with rising prescription drug spending, AbbVie's popular rheumatoid arthritis biologic Humira, which brandishes a $7,000 monthly list price, has captured the attention of PBMs looking to rein in costs.
Cigna division Express Scripts announced Friday that it's joining CVS Health subsidiary CVS Caremark in removing the rheumatoid arthritis treatment Humira from its major commercial formularies. CVS Caremark took Humira off its formularies in April.
“With this latest update, we’re prepared to embrace the savings biosimilars offer and pave the way for access to the next wave of prescription drug blockbusters coming down the pike,” said Adam Kautzner, president of Evernorth Care Management and Express Scripts, in a news release Friday.
These PBMs have an incentive beyond the potential to save money for patients and health plan sponsors. Contracts with pharmaceutical companies featuring lucrative rebates for brand name drugs are expiring, leading PBMs to reconsider biosimilars.
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UnitedHealth Group unit OptumRx has yet to cut ties with Humira but has added its biosimilars to formularies. On Tuesday, MedImpact Healthcare Systems, the fifth-largest PBM by market share, announced it will add two Humira biosimilars to formularies while continuing to cover the brand name biologic.
"We are now, for the first time, satisfied that they meet our stringent standards for clinical interchangeability and lowest net cost,” Nicole Ellermeier, MedImpact’s vice president formulary strategy and rebate economics, said in a news release. The company is also considering covering additional biosimilars for several conditions.
Generic pharmaceuticals have been available for many decades, and proliferated after Congress and President Ronald Reagan enacted the Drug Price Competition and Patent Term Restoration Act of 1984, better known as the Hatch-Waxman Act after its chief sponsors, then-Sen. Orrin Hatch (R-Utah) and then-Rep. Henry Waxman (D-Calif.). These generic medicines, which typically carry substantially lower price tags, are chemically identical to their brand-name predecessors.
Biologic drugs such as Humira are different because they are made from living sources, such as blood, cells, proteins or tissue, not chemicals. And biosimilars are different from generic chemical drugs. The Food and Drug Administration describes biosimilars as "highly similar" to what the agency terms the "reference product," not identical, although FDA-approved biosimilars must have "no clinically meaningful differences" from the original medicines. Biosimilars were nonexistent prior to the Affordable Care Act of 2010, which created a regulatory regime for the FDA to review generic biologics.
Biosimilars have the potential to deliver big savings to health insurers, employers and patients in a similar way generic medications have done, and the biosimilars market is expected to grow to more than $100 billion by 2029, according to the market research company Fortune Business Insights.
Relatively speaking, it's been a long time coming. The first Humira biosimilar hit the market in January 2023 and there are now 10 alternatives available. The adoption of these lower-cost drugs has been slower to come to fruition due to big rebates PBMs have been enjoying from drug manufacturers, said Wayne Winegarden, director of the Center for Medical Economics and Innovation at the Pacific Research Institute for Public Policy, a think tank.
“It's the rebating, which is why Humira has stayed on the formularies,” Winegarden said. “The high list price and the large rebates produce a lot of revenues that goes to both the insurer as well as the PBM.”
Political pressure on PBMs and accusations that these companies withhold savings from clients could be pushing them toward covering the less expensive options, he said.
The big PBMs, which also operate specialty pharmacies, are likely making money at the retail level on biosimilars, said Meredith Rosenthal, a health economics professor at Harvard University. In June, Cigna subsidiary Evernorth Health Services, which houses Express Scripts, began offering some patients a $0 out-of-pocket Humira biosimilar at its specialty pharmacy, which the company said could save members $3,500 annually.
CVS Health has gotten into the biosimilar game itself and now manufactures generic biologics through its Cordavis subsidiary. Its Humira biosimilar costs about 80% less than AbbVie's drug.
There's also a marketing component. The PBMs that are early to embrace biosimilars and steer patients away from brand name biologics are likely to gain favor with clients, said Geoffrey Joyce, health policy director at the University of Southern California Schaeffer Center.
“If you potentially maintain a higher-net-cost drug, it means the drug spend in your plans is going up faster than maybe your competitors,” Joyce said. “You have to weigh that trade-off. You can't always go with the high-rebate, high-cost drug.”
Drugmakers are no stranger to generic competition for traditional drugs. But biosimilars, which first came to market in 2015 when the FDA approved a generic version of Amgen's Neupogen, are now also causing disruption. As of July, more than 90 biosimilars are in development, according to the drug distributor Cencora.
Newer drug entrants and early moves by PBMs haven’t made much of a dent in Humira manufacturer AbbVie’s market share, which exceeds 80%. AbbVie executives told investors in July they are bracing for fewer Humira customers next year as payers shift to biosimilars.
“As the biosimilar starts to eat into that market share, even though it's been slow, the incentives [for drugmakers] to keep those rebates high dissipates,” Rosenthal said. “There's probably been a tipping point where the rebates are low enough now that the profits on the biosimilar are higher than the profits on the brand.”
More PBMs giving preferential treatment to biosimilars may provoke drugmakers to keep investing in these alternatives, which should prove better for the consumer and industry overall, Rosenthal said.
“To the extent that we see biosimilar substitution and formulary status moving in this direction, that will encourage companies to develop biosimilars,” she said.
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