The House Ways and Means Committee heard testimony on hindrances to the expansion of use of biosimilars, medications close in structure and function to a patented biologic medicine.
Witnesses at the April 8 hearing told legislators biosimilars save patients and taxpayers money, that pharmacy benefit manager (PBM) middlemen often raise prices or limit availability for biosimilars, and provisions of the Inflation Reduction Act (IRA) introduce pricing unpredictability that inhibits biosimilar development.
Testimony indicated biosimilars provide a 53 percent reduction in the average price for both the name brand and the biosimilar medications they replace, and have added 344 million more patient days of therapeutic care than would have otherwise been provided. In addition, with proper incentives to increase biosimilar accessibility, expanded use could result in savings of $7 billion to Medicare over 10 years, witnesses testified.
PBM Pricing Gimmicks
Witnesses described how pharmacy benefit managers (PBMs) frequently offer large rebates for more-expensive brand-name drugs, establishing an artificially low price compared to biosimilars. This creates a perverse incentive where physicians can profit from the rebate on prescribing the higher-cost drug while biosimilars are “underwater” because the physician’s reimbursement is less than their cost.
South Carolina rheumatologist Colin Edgerton, M.D., testified about his experience with PBMs.
“Currently, for one of the medications we use for rheumatoid arthritis, most commercial insurance plans that are served by a PBM are requiring one of two biosimilars as the first-line agent for treating that condition,” Edgerton told the committee.
“Unfortunately, both of those biosimilars are underwater, so we wind up with this kind of perverse situation where the preferred medication, which should also be the lowest-cost medication, cannot be obtained because of this situation where the acquisition cost of the drug is higher than the reimbursement,” said Edgerton. “It’s not helpful that those medications are required by the PBM, so to speak, in that setting, because the acquisition has been undermined.”
Reform Necessity
PBM reform is essential, says Gregg Girvan, a resident fellow at the Foundation for Research on Equal Opportunity.
“We need PBM reform, especially reforms that increase transparency into how PBMs operate and the ways they profit,” Girvan told Health Care News. “Many bills proposed in Congress would also prohibit certain PBM practices, such as spread pricing or direct and indirect remuneration fees. While addressing these types of fees is a step in the right direction, my fear is that PBMs will find ways around these prohibitions and will use other pricing techniques that do not serve the best interests of patients.”
IRA Impediments
Rep. Carol Miller (R-WV) expressed concern a potential pause in price-setting for certain biosimilars in the Inflation Reduction Act (IRA) complicated the process and disrupted the predictability needed for biosimilar development. Miller asked Craig Burton, senior vice president of policy and strategic alliances for the Association for Accessible Medicines and executive director of the Biosimilars Council, about that.
“For a biosimilar manufacturer, if you’re thinking about investing $300 million in a new, lower-cost product, you need predictability,” Burton testified. “You need to know that that market is going to be there 10 years from now when you actually get to the end of that race. That means you need to be able to guess what the market size is going to look like.
“It also means you need to know you’re going to get adoption,” said Burton. “Not only do biosimilars face all the issues we’ve discussed today, but the IRA puts in place what I think was a well-intended approach that will harm biosimilar adoption.”
Executive Action
The president can help remove obstacles to greater acceptance and use of biosimilars, says Girvan.
“President Trump has expressed a willingness to take on high drug prices, including enhancing the IRA’s drug price negotiation program and by once again proposing a most favored nation model—this time applied to drugs sold in Medicaid—that would tie prices of drugs to those of other nations,” said Girvan (see article on opposite page).
“Trump should also work with Congress to pass meaningful reforms, including allowing generic and biosimilar companies to more easily challenge drug patents, reducing the [Food and Drug Administration’s] exclusivity timeline for biologics, and designating all biosimilars as interchangeable with reference biologics to facilitate automatic substitution at the pharmacy level.”
Trump can supplement that with other actions, said Girvan.
“With Trump’s backing, a reform package could include measures to reduce the cost and time of drug approvals, which has the potential to achieve drug affordability on a scale similar to Hatch-Waxman,” said Girvan. “The Fair Care Act of 2024, introduced by Rep. Bruce Westerman (R-AR), includes these and many other provisions that would make America’s health care system more affordable.”
Legislative Initiatives
Legislation is necessary to bolster the biosimilars market, Burton told Health Care News.
“The U.S. biosimilars market is languishing due to outdated and costly regulatory requirements, anticompetitive tactics used by brand manufacturers, and the fact that insurers and PBMs continue to pick higher-cost reference products due to the financial incentives associated with them,” Burton said.
“Policymakers must solve for these issues through legislation, as well as by reforming the ill-thought-out drug price negotiation provisions in the IRA that ultimately harm biosimilar competition and increase costs for patients and the health care industry in the long term,” said Burton. “Biosimilars are the best tools we have to ensure more Americans receive access to lifesaving medicines. We must start treating them as such.”
Kevin Stone ([email protected]) writes from Arlington, Texas.
