The American pharmacy landscape is complicated. Prices are influenced by all sorts of issues and incentives, including patent protection, competition, and incentive schemes involving rebates, drug manufacturers, insurers, and pharmacy benefit managers. Thinking about these various implications caused Jens to write a personal blog post focused on this topic a few years ago which you can read here.

There are interesting nuances within specific realms of each area of prescription drugs (e.g. specialty, generic, physician administered, etc.) The objective of this blog post is to focus thinking on a specific specialty drug: Humira.

What is a specialty drug and why do we care?

This explanation from Brian Schilling on his Commonwealth Fund blog offers some great insights:

"If the rising cost of specialty drugs is not at the top of your list of health care concerns, it may be soon. Specialty drugs currently account for about 17 percent of the average employer’s overall pharmacy costs, and they’re rising fast. One of the nation’s largest pharmacy benefits managers projects that specialty drug costs will increase annually in the range of 21 percent to 24 percent over the next three years. An industry report suggests that specialty pharmacy costs may account for 40 percent of total drug spending by 2020. Even so, employers are giving the issue a collective shrug. According to a November 2011 survey by the Midwest Business Group on Health (MBGH), 25 percent of employers have little or no understanding of specialty pharmacy and 53 percent have only a moderate understanding. Some 30 percent of employers don’t know how much they spend on specialty drugs overall...

While no strict definition of specialty drugs exists, they are commonly thought to require: prescription by a specialist; special handling; intravenous administration; and a high degree of patient management to ensure compliance and safety."

According to Oliver Wyman, one driver increasing costs in specialty drugs is the sheer number of them: “There were just 10 specialty drugs on the market in 1990 – by 2008 that number had reached 200 and stood at 300 in 2015. In recent years, more than half of the novel drugs approved by the Food and Drug Administration have been specialty drugs. And more are on the way. Some two-thirds of the pipeline are reportedly specialty.”

Humira

We recently discussed trends in specialty drugs with a partner of Valhalla Business Advisors with deep expertise in prescription drugs (e.g. credentialed as Pharm. D. and with executive pharmacy experience in leading payor and health system contexts.) He shared an article along with the note, “[t]his is a good short read to give you an idea of what 2023 will likely hold for biosimilars of Humira.  Humira is commonly in the top 3-5 drugs in employer drug spend.  The holy grail will come with interchangeable formulations of Humira.”

According to this report from the House of Representatives Committee on Oversight and Reform, “AbbVie charges approximately $77,000 for a year’s supply of Humira—470% more than when the drug was launched in 2003.”

But, perhaps change is coming…

AbbVie has signaled that it expects about 45% erosion (+/-10%) of its Humira franchise in 2023, after seeing sales similarly plummet in the EU when biosimilars launched there four years ago. AbbVie management also previously indicated that interchangeable biosimilars (a designation Boehringer’s competitor has) will have some impact on pricing as two interchangeable biosimilars were baked into AbbVie’s guidance.

https://endpts.com/abbvie-preps-for-an-onslaught-of-humira-biosimilars-in-2023-with-skyrizi-and-rinvoq-to-fill-the-gap-for-now/

biosimilars

The US Food and Drug Administration (FDA) defines a biologic drug as, “Biological products are a diverse category of products and are generally large, complex molecules. These products may be produced through biotechnology in a living system, such as a microorganism, plant cell, or animal cell, and are often more difficult to characterize than small molecule drugs. There are many types of biological products approved for use in the United States, including therapeutic proteins (such as filgrastim), monoclonal antibodies (such as adalimumab), and vaccines (such as those for influenza and tetanus).”

Biosimilars are further defined as, “A biosimilar is a biological product that is highly similar to and has no clinically meaningful differences from an existing FDA-approved reference product… Minor differences between the reference product and the proposed biosimilar product in clinically inactive components are acceptable. For example, these could include minor differences in the stabilizer or buffer compared to what is used in the reference product. Any differences between the proposed biosimilar product and the reference product are carefully evaluated by FDA to ensure the biosimilar meets FDA’s high approval standards.”

So, what does this mean for plan sponsors and their members using Humira? As referenced in this article, “[b]eginning in January, AbbVie’s and the world’s best-selling drug Humira (adalimumab) will finally see biosimilar competition in the US, with the entrance of Amgen’s biosimilar, followed by Samsung, Boehringer, Viatris, and Sandoz launching their versions of adalimumab next June and July.“

Biosimilar savings are estimated to be as great as 50% of the current Humira cost.  Savings, however, are impacted by rebates, so analysis is necessary to determine the true savings realized by the plan sponsor.

What should plan sponsors do?

The financial impact of the introduction of these biosimilar products will be meaningful to many plan sponsors. The extent by which financial savings are captured will be driven in part by the rate of migration to these alternative therapies. Valhalla has a bespoke strategy leveraging deep domain expertise in the pharmaceutical industry to craft and execute such strategies to optimize results for clients.

Valhalla Business Advisors is pleased to provide an analysis of opportunities to create impact on self-funded plans’ pharmacy programs. To do so, the following collection list serves as a starting point:

• Most recent quarterly summary report from the current PBM
• Most recent 12 months of pharmacy paid claims data with all NCPDP fields
• Most recent 3 months of MEDICAL pharmacy paid claims data with all fields including allowed amount, copay amount, quantity, and provider name, address, etc.
• SBC for periods covered by the claims files
• Existing PBM contract / Statement of Work

Thank you for reading our blogpost and please reach out to Stuart or Jens to discuss further!