Whether it's biosimilars, hep C or PCSK9, reining in costs or excluding Sovaldi, the buzz of the 2015 Pharmacy Benefit Management Institute conference in San Antonio was biologics.
The pharmaceutical landscape is shifting rapidly, and PBMs will have to be nimble to stay upright. Already, Express Scripts, bold move in December 2014 to exclude Gilead's astronomically priced Sovaldi and Harvoni drugs for hep C is old news. Even a prediction by James Langley of Mead Consulting Group that the first biosimilar drug would be approved this year was proven true just two days later when Novartis Zarxio, an alternative to Amgen's biologic cancer drug Neupogen, became the first biosimilar to receive U.S. Food and Drug Administration approval.
At least 16 more blockbuster specialty drugs, accounting for about $90 billion in annual drug spend, are coming off patent over the next five years, including familiar names such as Herceptin, Humira, and Remicade.
While PBMs may be looking wistfully at the biosimilars in the pipeline for relief from the sky-high price of these specialty drugs, Jim Smith, AbbVie's associate director for biosimilar education and strategy, told conference attendees not to expect "fingerprint-like similarity" from biosimilars. Unlike generic drugs, biosimilars are not bioequivalent to the original biological drug, Langley also pointed out.
And they won't be cheap. Unlike generics, biosimilars require clinical trials and have high service and support costs and high development costs, just like the specialty drugs on which they are based.
-Biosimilars are a bright spot, said Steven G. Avey, vice president of specialty programs for MedImpact Healthcare Systems. They may actually lower costs, if the price differential is at least 30 percent, he said. Fifteen percent isn't enough. [The original drug manufacturers] will cut them out with rebates.
In a recent interview with Reuters, CVS Health Chief Medical Officer Troyen Brennan, M.D., said he expects discounts for biosimilars to go even higher than 30 percent, especially with multiple biosimilars coming onto the market to compete against just one original branded specialty drug. As Express Scripts demonstrated in late 2014, the price-concession battle is being waged with formulary exclusions, and some PBM executives are bullish on the power of that tactic to force significant concessions.
Other strategies suggested to keep the drug benefit in the black included having the pharmaceutical company share the risk of failure of an expensive drug therapy. This tactic is already being introduced in some PBM contracts, along with requiring patients to also assume some risk, for example, by having hep C patients on expensive drug therapy sign contracts not to abuse drugs or alcohol.
Still, there's no denying that PBMs are facing a rather bleak near-term outlook given the number of very expensive drugs in the pipeline, along with a movement by plan sponsors toward all-generic formularies and more government intervention.
-I'm not optimistic on PBM stocks right now, George Hill, analyst for Deutsche Bank, told a packed room of pharmacy benefit managers. Only manufacturers make money on brands, PBMs make more money on generic mail order.
Then he clicked up graphics showing declining mail-order volume and rising branded-specialty trend lines on two 15-foot screens in the Marriott Rivercenter's ballroom.
-We as a society cannot continue to bear these costs, Pat Gleason, director of health outcomes for Prime Therapeutics, said in his session on hep C, echoing the general angst that reverberated throughout the 2015 conference.
Is the drug benefit even sustainable, MedImpact's Avey asked.
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