Should prices of biosimilars be regulated in the US?
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Yes.
Bringing down the prices of biosimilars in the United States will be a tricky balance. On one hand, you want to be able to make these drugs available to every patient who needs them. On the other hand, just lowering the prices artificially through legislation could stunt innovation and disincentivize companies from bringing these drugs to market.
The market for biosimilars is driven in large part by hospitals and insurance providers. The different thing about biosimilars is that these are not drugs you get at CVS or Rite Aid. These are distributed through the pharmacy, and getting them often depends on contracts between the carrier and the hospital for a specific price over a specific time period. However, that doesn’t mean there is no regulation. The fact we are even having discussions about the prices of biosimilars means there has been some legislative action over the past decade.
As an example of how some regulation could work, a cross-sectional study published in JAMA Network Open showed that increases in the percentage of drug sales subject to inflation penalties lowered annual price increases for drugs. The researcher concluded that broader application of inflation penalties may help reduce drug price increases and decrease overall drug spending.
In the study, Dickson examined the association of existing inflation penalties in the U.S. 340B Drug Pricing Program with manufacturer pricing behavior in the Medicare Part D program and associated changes in Medicare pharmacy expenditures. The analysis included 2,148 brand-name drugs, 606 of which were used by more than 5,000 beneficiaries annually, with a mean sales percentage subject to inflation penalties of 12.1%.
A higher sales percentage subject to inflation penalties was associated with lower annual price increases. Lower price increases because of penalties led to a reduction in Medicare Part D pharmacy expenditures of $7.1 billion between 2013 and 2017.
We have to remember that these companies research and work on many drugs that never make it to market. Finding a winner takes a lot of effort and research, and there is a big cost to that. There are other ways to help promote competition without the government getting involved. Greater education and use of the biosimilars will ramp up production and competition. That is not done by the government; that is up to us in the field. Competition after a certain patent has worn off is also beneficial, especially if the cost savings are passed down to patients.
On the other hand, the hospital markups could be huge because of the price of the drug and the cost of delivery. So there has to be transparency on what the patient is receiving, how effective it is compared with the originator, and what the cost is compared with the originator.
Reference:
Dickson S. JAMA Netw Open. 2020;doi:10.1001/jamanetworkopen.2020.16388.
Joshua P. Kesterson, MD, FACP, is professor in the department of obstetrics and gynecology at Pennsylvania State University Cancer Institute. He can be reached at jkesterson@pennstatehealth.psu.edu.
No.
The best way to bring down the prices of biosimilars is through a multifaceted approach and via education.
That said, there is a lot of room for improvement in the pricing of biosimilars. We can learn from other countries that are successful in this regard, and lawmakers could have a role in bringing down the price of both biosimilars and the originator drugs.
However, heavy regulations, such as lawmakers putting caps on the numbers of biosimilars for an originator drug, would not help bring prices down. Biosimilar companies pick the originator drugs based on how much they think they could profit. So, caps may be counterproductive because there would be less coming onto the market overall.
We have an informed, evidence-based approach to how we prescribe drugs at my institution. We have meetings to decide which drugs we are comfortable prescribing but, ultimately, we have to work with the insurance companies because we don’t want patients to have to pay out of pocket for these very expensive drugs.
Many times, patients don’t know what their insurance plan covers, so transparency would help. A lot of the decisions we make are driven by the patient’s insurance, so it is sometimes out of our hands.
For the most part, the insurance companies are accommodating with biosimilars. In many cases, they only cover biosimilars and not the originator drug. It can be very challenging to coordinate getting approval from the insurance company and then getting an urgent delivery from the specialty pharmacy. At our institution, we have conversations about how we can get through this red tape as quickly as possible, but it is very time-consuming.
We now have a whole group — patient financial services — that helps us with these challenges but, without a government group looking out for all this, it falls to the doctors. Ideally, there could be better communication between the insurance companies and the pharmacies. Instead, physicians have to contact both, even after the insurance company has approved it, and there can be a breakdown in communication.
Any laws that can help with access to these expensive drugs would be beneficial. There are patient-advocate groups and physicians lobbying for this, and a lot of the companies have compassionate use programs that can provide a route to make a drug available for a population who wouldn’t normally have access to these drugs.
Roisin E. O’Cearbhaill, MD, is a medical oncologist at Memorial Sloan Kettering Cancer Center. She can be reached at ocearbhr@mskcc.org.
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