Scott Vogel, partner and PBM executive, Confidio, recently spoke about the many challenges biosimilars face coming to market and where the market might be heading. Part 2 of this interview, with Sonja Quale, PharmD, of Confidio, can be found here.
Can you tell us about yourself and your position in health care?
I worked for Express Scripts, a pharmacy benefit manager (PBM), for over 11 years. While there, I held positions in finance, account management, and sales.
During those 11 years, I learned the business from the inside out. It became quite clear to me that consultants who consider themselves the best and brightest in the pharmacy benefit arena were not necessarily presenting data, information, and analytics to clients in a way that was 100% accurate.
I saw analyses that had assumptions which were not likely to come true or were overly inflated. At times, I would be leading the sales organization for the PBM and a consultant would inform me that my financial proposal was deficient by an amount that was more than the profit that we had underwritten. It simply was not possible.
These types of experiences made me realize that there is a tremendous opportunity to help small and mid-sized businesses as well as benefit advisors who are completely being taken advantage of because they do not have pharmacy expertise.
When I started my own consulting firm, I fully intended to serve mid-market benefit advisors and clients, but quickly learned that some of the largest organizations in the country struggled with the same issues as smaller organizations. Their issues were just a little bit more complex.
Ultimately, there’s a cavernous gap in knowledge between the PBM and the buyer. Unless you have a pharmacy expert on your team who grew up on the inside of the PBM, you’re going to be taken advantage of during that transaction.
These dynamics led me to start what is now Confidio. At Confidio, we see ourselves as pharmacy benefit optimizers. We’re a technology-enabled pharmacy benefits consulting firm, with a laser-like focus on optimizing the way PBMs work on behalf of our clients.
We do that through three different areas: financial outcomes, health outcomes, and member satisfaction. We’re not a PBM, but we make PBMs work more effectively.
A specific example of an area your firm focuses on would be the market of biosimilars. Would you say the firm has a level of expertise in this market?
I think there are very few people who could claim to be experts in biosimilars because they are so new to the market. I think that while we are a PBM expert, the entire industry is still learning about what’s going to happen in the biosimilar landscape.
We are expert in understanding the levers inside a PBM, how to maneuver around a PBM, and how to get PBMs to work more effectively. Biosimilars is one of the areas that we’re focusing on, trying to prepare our clients for the future - even if that future is still a little murky.
What are some of the challenges that biosimilars are facing coming to market right now?
If you just look at the data, you can see clearly that biosimilars offer a cost savings to clients and have for a number of years, however PBMs misaligned interest limited the historical savings opportunity. Due to rebating strategies, it was financially more advantageous for PBMs to put the other competing products on formulary, such as the branded drug Neupogen versus Zarxio and Granix.
I think their biggest hurdle, for biosimilar adoption quite frankly, is financial. Certainly, there is also potential physician pushback. More recently, we have seen some PBMs be very successful and deploy formulary and coverage strategies that capture almost all the savings through exclusionary formulary strategies.
I think that the biosimilar opportunity is there and can easily be captured with appropriate formulary and coverage decisions. PBMs simply need to be more aggressive and keep their clients’ best interests in mind.
How would you propose they be more aggressive?
Deploy more exclusionary strategies. If you look within the filgrastim category, Neupogen had a 98% market share. Six months later, post a Neupogen formulary exclusion, Zarxio moved from a 2% market share to a 90% market share.
This is a strategy that has been available for years. PBMs have had exclusionary strategies, but only since 2017 have they really been deployed for biosimilars. I would say that this strategy is not being broadly deployed within the biosimilar areas of opportunity.
Can you describe some of the major differences between the pricing dynamics of biosimilars versus reference products?
With respect to biosimilars, we have some really interesting insights into the list price of the average wholesale price (AWP), and the actual net price that’s being paid net of rebates, which is the average sale price (ASP). At least that’s the most directional data point we have to the net price.
We also have some interesting insights that allow us to see the true net cost of these drugs. We can track back estimated rebating and see how the list price has varied relative to the actual net price over time. Of course, members are the only ones who pay attention to the list price, whereas the PBMs are paying attention to the net price.
Generally speaking, biosimilars have been rebated, just not to the extent that the reference products have been rebated. Biosimilars face stiff pricing competition and they are only going to continue to be competitive if they can get their ASP low relative to the reference product ASP.
Any really strong key takeaways from the biosimilar pipeline and the projected 2031 maturing schedule that you think are worth noting?
I would say that it’s just interesting when you look at the biosimilar pipeline, and you look at the value of Enbrel and Humira. Each of them is probably three times larger than any other biosimilar, or any reference product that currently has a biosimilar.
As you start to research and understand the complexities around the multiple patents for these reference products, you realize that there are multiple lawsuits around several issues with a given patent that can protect a reference product.
Based on our analysis, we believe that $83 billion in biologics that will have competition by 2027. Our analysis is based on data from IPD Analytics, which does a great job of analyzing probabilities of patents being upheld.
We definitely need to continue to incentivize biosimilars to enter the market. Hepatitis C is a perfect category—the price came out at $83,000. Competition and rebates have driven the price down to a third of that original cost.
We need competition to drive the specialty cost down, and biosimilars are a key component of that competition- so we need to continue to see biosimilars being brought to the market to help curb costs in the long run.