‘Concerning signs’ appear as biosimilars show inability to reduce out-of-pocket costs
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Key takeaways:
- Biosimilars have not lowered out-of-pocket costs for patients overall, although variance exists.
- Price transparency is vital to making biosimilars work monetarily for patients, not just the health care system.
Biosimilars have generated billions of dollars of savings for the health care complex, but they have not had an impact on out-of-pocket expenses for patients with private insurance, according to findings published in JAMA Health Forum.
In an examination of seven biologics, six of which had hematologic or oncologic indications, individuals’ out-of-pocket spending increased from the year before biosimilar approval to 2 years after, although trends varied based on the drug.
“We were saddened to see that there wasn’t this effect of lower out-of-pocket costs for patients, which is what we’d have hoped,” Benjamin N. Rome, MD, MPH, associate physician at Brigham and Women’s Hospital, told Healio. “Part of the reason for Congress allowing biosimilars to come on the market in the first place was to improve affordability and access to these expensive medicines.”
Background and methodology
Patients and payers spent more than $500 billion on prescription drugs in the U.S. in 2021 — more than any other country in the world, according to background information provided by researchers.
To combat costs, Congress created an abbreviated approval pathway for biosimilars with the Biologics Price Competition and Innovation Act of 2010.
Biosimilars can cost 15% to 35% less than biologics, researchers wrote, and those reductions have produced results. Since 2015, biosimilars have created roughly $13 billion in savings, and project to save between $38 billion and $124 billion from 2021 to 2025.
“In general, either prices go down for these biologic medicines or the companies offer discounts or rebates to health plans, and because of those discounts, the health system is seeing cost reductions as a result of biosimilars,” said Rome, adding those reductions can be passed down to patients in the form of lower insurance premiums.
However, Rome and colleagues wanted to determine if those savings translated to out-of-pocket costs.
They used the Optum Clinformatics Data Mart, “a large national administrative health claims database of commercially insured individuals,” to as the study’s data source.
Researchers investigated claims from adults aged 65 years or younger between Jan. 1, 2009, and March 31, 2022, for filgrastim, infliximab, pegfilgrastim, epoetin alfa, bevacizumab, rituximab and trastuzumab.
They evaluated the trend of out-of-patient costs — including deductible, copayment and coinsurance — before and after biosimilar competition began, and spending per claim on biologics and biosimilars.
Rome and colleagues found more than 1.7 million claims for 190,364 individuals (66.3% aged 45-64 years; 58.3% women; 31.4% infliximab claims) and observed 251,566 patient years.
Results
Out-of-pocket costs increased from the year before biosimilar availability to the second year after it when combining all seven drugs together (OR = 1.08; 95% CI, 1.04-1.12).
Additionally, patients spent a mean of 12% more.
However, rituximab and trastuzumab did have lower mean nonzero out-of-pocket spending 2 years after biosimilar availability. Those biologics also have the most recent biosimilar competition.
“There’s sort of, maybe, a trend,” Rome said.
Patients who took biosimilars had a higher likelihood of having nonzero out-of-pocket costs compared with those who took biologics (OR = 1.13, 95% CI, 1.11-1.16), but lower mean expenditures (adjusted mean ratio = 0.92; 95% CI, 0.9-0.93).
Significant variation existed among drugs, however. For example, individuals who had claims for infliximab biosimilars had a higher likelihood to have nonzero out-of-pocket costs, but the opposite occurred for bevacizumab.
Why the lack of savings?
Rome discussed multiple factors for why patients have not received out-of-pocket benefits for biosimilars the way they have for generics.
“The first several drugs that have faced biosimilar competition that we studied are not actually pharmacy-administered drugs,” Rome said.
“These are drugs that you have to go to a doctor’s office or hospital to get infused or injected, and that complicates things a little more because those are typically covered under the same insurance benefit when you go to the doctor’s office,” he added. “It’s under your medical insurance benefit, not under your pharmacy benefit.”
Health plan variance — deductibles, out-of-pocket maximums and payment percentages — also play a role.
“The out-of-pocket costs are set by the health insurers and may or may not depend on the specific price of the medicine,” Rome said. “They may charge a percentage of the drug’s costs, in which case if the drug cost goes down, hopefully patients pay less, but they might also just charge fees for accessing medicine like this that may be somewhat unrelated to the cost of the drug.”
All the differences make it difficult for clinicians to grasp which drugs cost their patients the least.
“If everything were consistent and you always knew which medicine was the lowest cost and which one was going be the least expensive for the patient to access, then it would be easy, but it might not be the biosimilar,” Rome said. “In some cases, the health plans might actually prefer patients use the branded drug — maybe because they’re getting a discount on the back end. All of this just makes it very complicated for doctors to sort out.”
Rome noted this study investigated private insurance claims, and the data may be different for Medicare and Medicaid. His group is doing a similar analysis among Medicare beneficiaries and anticipates different results.
“Medicare reimbursement for these types of drugs, particularly clinician-administered drugs, is a bit different. Medicare pays an average price that’s negotiated by private insurers after all discounts and rebates,” Rome said.
“Because the Medicare reimbursement for these drugs can be lower than in the private market, it’s possible that it’s more closely tied to the cost of the drugs. Medicaid patient out-of-pocket costs are not really much of a problem once patients can get access to the medicine,” he added. “It would be more of a question of, once the biosimilars come out, are more patients able to access the medicines, because once they are, they pay zero or close to zero.”
‘Concerning signs’
Policy change may be the only way for the biosimilars to produce the cost reductions for patients Congress sought when they agreed to abbreviated approval.
Transparency could provide huge dividends.
“Even though there is competition between the biologics and the biosimilars, there still seems to be some gaming of rebates, discounts, confidentiality of prices that is obfuscating the marketplace,” Rome said. Policymakers could step in to stop this gaming of the system once biosimilars come to market, he continued.”
“Just compete on price.,” Rome said. “Whoever’s at the lowest price, that’s the one that health insurers should go with, and that would help change some of the incentives to make sure that health insurers are choosing the one with the lowest price, not the one where they can get the biggest discount.”
Rome also believes insurance regulation could help, specifying how much individuals could pay for medications, but that could produce “unintended consequences.”
“If you step in and tell insurance companies the maximum they can charge for these medicines, that will ultimately shift costs elsewhere, probably toward premiums,” he said.
Rome does not believe the biosimilar experiment has failed, but he admitted to “concerning signs.”
“If we want biosimilar competition to work, we just need to make some regulatory adjustments from the FDA,” he said. “The alternative is, we could throw out the whole thing, stop biosimilar competition and just regulate prices for drugs after they’ve been on the market for a period of time. That’s certainly something some policy folks have thrown out. In terms of which is going to work better, I still think it’s hard to say.”
For more information:
Benjamin N. Rome, MD, MPH, can be reached at brome@bwh.harvard.edu.
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