PBMs vs. patients: The hidden battle for affordable biosimilars

Biosimilar medications — drugs developed to be very similar, but not identical, to an FDA-approved biologic — were intended to play a vital role in increasing affordable options for patients struggling with a range of chronic conditions.

Unfortunately, those goals are not being accomplished. Pharmacy benefit managers (PBMs) are making it exceedingly difficult for physicians to provide treatments, including biosimilars. PBMs — and the insurers who often own them — are constantly changing the medications they will cover, causing unnecessary burdens for physicians while disrupting patients’ continuity of care.

PBMs ‘shortchange’ physicians, patients

PBMs secure rebates and other price concessions from drug manufacturers in exchange for placing drugs favorably in their formularies, or covered drugs list. Formulary placement can make or break a drug’s market access, so drug companies are willing to pay generously for preferred formulary status. The resulting rebates lower a biosimilar’s average sales price (ASP), the technical measurement that commercial insurers and CMS use to determine reimbursement for the medication.

However, the rebates PBMs secure from drug manufacturers do not affect the acquisition costs that a practice pays to purchase the insurer’s preferred drugs. As a result, insurers often pocket the rebate savings and shortchange physicians for each biosimilar drug they acquire and administer to a patient in their care. It’s an incredibly technical policy, but make no mistake of the impact: Small, independent physician practices are often forced to take significant losses if they use these “underwater” biosimilars to treat patients.

This dynamic negatively affects patients as well. In a historic report, the Federal Trade Commission delivered a scathing analysis of the six most prominent PBMs — three of which control 80% of the market — and found that they “oversee critical decisions about access to and affordability of medications without transparency or accountability to the public.” It’s patients who ultimately suffer because the rebates provided to PBMs do not translate to reduced out-of-pocket costs, which was the initial promise of PBMs and biosimilars.

Left holding the bag

PBM cost-sharing may even be assessed against the “sticker price” of the medication before rebates and other price concessions are factored in. Adding insult to injury, once an independent practice can no longer afford to offer the biosimilar, patients must be referred to a hospital or standalone infusion center, often owned by the same insurer, for their infusions. This disrupts the continuity of care, and patients are on the hook to cover the increased costs associated with these settings. If this continues unchecked, it will undermine patient access to these medications.

Moreover, most biosimilars must go through PBM-owned or -affiliated specialty pharmacies, many of which have “white-bagging” mandates that require these drugs to be shipped first to the pharmacy or the patient’s home and then to physician offices rather than just being sent to practices directly for providers to prepare.

Every time PBMs change their formularies — which may happen every few months — physicians are required to inform their patients, who then must contact their specialty pharmacy and provide verbal permission to switch their prescriptions. This change adds multiple layers of unnecessary administrative burden onto providers and places excessive obstacles between patients and life-sustaining medications.

Not only can “white-bagging” lead to delays in care — if patients can’t be reached or if the medication gets stuck in the mail, for example — but these policies expose patients to unnecessary safety risks. When preprepared biosimilars and other medications arrive at physician practices, there is no way to know for certain whether they were stored and handled properly along the way.

Prioritize ‘patients over profits’

Whether a patient has rheumatoid arthritis, lupus, Crohn’s disease or ulcerative colitis, any disruption to the care they need can be debilitating because it can diminish their quality of life, force them to miss work or lead to worse health care outcomes. Steps must be taken to reform the PBM practices that enable these insurer-owned groups to control patient access to necessary treatments while undercutting the clinical decisions made by medical professionals who strive to provide high-quality care.

The main perverse incentive underlying the issue with biosimilars is that PBM compensation is tied to a drug’s list price. Because PBMs negotiate a percentage-based price concession off that cost, they stand to profit more on drugs with higher list prices. The negative results of this have been well-documented, especially in the case of biosimilars. It has also led some biosimilar manufacturers to over-rebate in some cases.

Congress is considering several bills to delink the price of a drug from a PBM’s compensation. To accomplish the most meaningful reform, delinking should include no loopholes and apply to as many federally regulated insurance plans as possible, including Medicare.

This long-needed reform will correct the bizarre incentive whereby PBMs — the very entities tasked with keeping drug prices low — profit more when list prices are high. It will also move us closer to a system in which formularies are designed based on clinical data and cost minimization for the patient. In such a system, biosimilar access would flourish in the way Congress intended.

It’s time for Congress to act — and prioritize patients over profit.

For more information:

Maria T. Abreu, MD, is president of AGA, director of the Crohn’s & Colitis Center at University of Miami Health System and professor of medicine, microbiology and immunology at University of Miami Miller School of Medicine.

Deborah Dyett Desir, MD, is president of the American College of Rheumatology and associate professor of medicine in the section of rheumatology, allergy & immunology at Yale School of Medicine.