Report Finds Payers’ Biosimilars Strategies in Flux in a Rapidly Shifting Landscape

Gain insights into biosimilar strategies from our 2024 Trends in Specialty Drug Benefits Report

On April 29th, we released our highly anticipated 2024 Trends in Specialty Drug Benefits Report. This annual report details a wide range of specialty drug benefit design choices, financial and clinical strategies, goals, challenges, and needs. It is based on results from an annual survey of individuals representing employers, health plans, and unions/Taft-Hartley plans.

One key topic in the report is biosimilars. As more Humira biosimilars are approved and biosimilars begin to enter the market for other top specialty drugs such as Stelara, this will continue to be an area for discussion. Let’s take a closer look to better understand how payers perceive biosimilars and what strategies they’re implementing to address them.

Understanding the Biosimilar Landscape

Biosimilars have a rapidly growing presence in the biologics market in the United States. As highlighted in our State of Specialty Spend and Trend Report series, biosimilar utilization has grown steadily over the past several years. In 2023, 9 biosimilars launched for Humira, which is the top specialty drug by spend for most plans. The pipeline continues to grow, with many more biosimilars in clinical trials or pending FDA approval in key categories including diabetes and immunology. According to a recent report, Stelara, the #2 specialty drug by spend and one of the leading sources of specialty drug rebates, currently has 4 biosimilars pending FDA approval and another 5 in clinical trials. While the entrance of new biosimilars brings opportunities for plans, they also present challenges, and the biosimilar landscape is continually changing. For example, Humira biosimilars came to the market with new pricing approaches that added complexity to biosimilar coverage strategies. Plans need both data and expertise to make appropriate strategic decisions that consider many relevant factors including current brand name biologic utilization, potential drug transitions among members, and the variables that impact the net cost of each drug. Let’s dive deeper into the results of our recent research report to learn more.

Biosimilar Report Findings

There are several biosimilar strategies that plans frequently use in their pharmacy benefit management. Among them are:

• Lowest net cost strategy
• Mandatory biosimilars for patients new to therapy where a biosimilar is available
• Mandatory conversion of patients on the same dosage of the branded reference biologic to a biosimilar

We asked our survey respondents which biosimilar strategies they currently use. About half of employers and just over two thirds of health plans reported using a lowest net cost strategy.

We also asked questions to better understand how plans are approaching Humira biosimilars, which brought disruptive potential but for which uptake has been slow due in large part to the three largest PBMs (CVS Caremark, Express Scripts, OptumRx) putting Humira and its biosimilars at parity in their formularies. This is rapidly evolving, as these PBMs have begun to implement active strategies for Humira biosimilars, starting with CVS Caremark in April 2024. Already, we’ve seen biosimilar adoption rise as a result of these changes, and many experts agree this could be a turning point in rising biosimilar adoption.

In our survey conducted in late 2023, we found that 35% of all plans — 26% of employers and 56% of health plans — had one or more Humira biosimilars in a preferred position on their formulary.

Humira biosimilars are particularly complex because several have come to the market at multiple price points. When manufacturers provide deep rebates, the Wholesale Acquisition Cost (WAC) list prices of the drugs are inflated. This is known as a high WAC/high rebate pricing structure. In a low WAC scenario, the manufacturer offers little or no rebate incentives and instead sets the WAC list price much lower than the WAC list price of the originator product. As biosimilars come to the market, their manufacturers often use low WAC/low rebate pricing structures. In the case of Humira, some have offered both high WAC and low WAC options. The challenge for plans is finding the coverage strategy that makes the most sense for their business and their members. The chart below shows how respondents are choosing between high WAC and low WAC options. However, perhaps the most notable part of these data is the large percentage of respondents who were not sure of their strategy in this area (35% of the overall sample and nearly half of employers), which speaks to the complexity these options have introduced.

Considerations For Plans

When developing a biosimilar strategy, it is important to examine several factors. Key considerations plans should bear in mind include:

• Ensuring that the plan has a true measure of net cost can be complicated, but it is critical in making the best decisions for your organization
• Moving members from an originator product to a biosimilar will cause member disruption that will need to be addressed and accounted for
• Contract complexity will arise as PBMs and plans navigate the balance between high WAC and low WAC pricing and what that means for their contracts (e.g., brand/generic classifications and guarantee exclusions)

Biosimilars have positive disruptive potential, but optimizing your biosimilar strategy can be challenging. To learn more about biosimilars and other specialty drug benefit topics, download our latest report: 2024 Trends in Specialty Drug Benefits.