AAM Panel of Manufacturers Says Drug Price Rebates Must Go

Sandoz, Lupin, and Biocon Biologics representatives at the Association for Accessible Medicines (AAM) GRx+Biosims conference said that drug price rebates hinder biosimilar competition.

How do biosimilar manufacturers feel about drug price rebates that obscure the true costs of medicine?

Drug price rebates negotiated between manufacturers and drug middlemen such as pharmacy benefit managers would have been halted under a policy sought by the former Trump administration; however, this initiative has been put on the back burner by President Joe Biden.

Anshuman Patwardhan, PhD, MBA, senior vice president of biologics licensing and global development for Lupin Pharmaceuticals, said implementing the antirebate policy would have improved the competitive landscape for biosimilars, but the impact on the federal budget had not been clearly thought out, “so I’m not surprised it’s not getting implemented.”

“I would say that light is the best disinfectant. Every time there's transparency in the system, every time you know where the discounts are, and what the pricing is, it is always better for not just for the system, but also for the players to then craft the strategies that create healthy competition,” he said at the Association for Accessible Medicines GRx+Biosims conference.

Rebates issued by manufacturers to middlemen for purchases of drugs lower the actual cost of drugs to the wholesale buyer, but the savings often don’t get passed down to the patient, said panelist Paul Thomas, MBA, the US-based chief commercial officer for Biocon Biologics.

“It’s not the only area that needs to be addressed, for sure. But it's an important one,” he said. “You have these savings coming into the system in certain places, but they reach a dead end. You have health plans benefiting but the patient's not getting a benefit. And that's a continuing problem. We’ve seen this front and center with insulins where manufacturer prices have gone down dramatically and there's been really limited movement on what patients have seen.”

In a 2019 hearing before the House Committee on Energy and Commerce, Michael Mason, a senior vice president of Eli Lilly, disclosed that the net price after rebates for one of its insulin products (Humalog) was $135, down from a list price of $594, which meant that a Medicare-covered patient, whose out-of-pocket percentage is often based on list price, would have paid $150—more than the net price.

Rebates are “another prime example of the distortions that that confuse the incentives in the system,” Thomas said. “It would be really good if we could come back to this and try to address it. I think it has an effect.” The rebate system has another disadvantage of helping incumbent or reference drug manufacturers to maintain dominance, he added.

Prices for Humira (adalimumab), which won’t face biosimilar competition until 2023, have soared. In fact, from 2019 to 2020 the increase in spending on this drug in the United States attributable just to net price increases by the manufacturer amounted to $1.4 billion, according to a new report by the Institute for Clinical and Economic Review. Wholesale prices for Humira went up 7.3% and net prices went up 9.6% during that period.

Adalimumab biosimilars, when they debut, could be promoted through Medicare Part D, thereby helping these lower-cost products gain a competitive foothold in the adalimumab market and bring down prices, said Keren Haruvi, MBA, president of Sandoz US and head of North American operations for Sandoz. “If we can create a preference in Medicare Part D for biosimilars vs the reference product, I think that will go a long way.”

Given that Humira is a poster child for high-cost reference products, the impact that biosimilars have on adalimumab pricing will serve as testimony for how effective biosimilars really are for bringing the cost of biologics down to more affordable levels. “I think all eyes are looking at Humira in 2023, so it's very important to get this right,” Patwardhan said.

At the same time, biosimilars are in conflict with themselves, he said. There are biosimilars, which are considered as safe and efficacious as reference products, and there are interchangeable biosimilars, which allow pharmacists latitude to dispense them in place of reference drugs without consulting the prescribing physicians.

Manufacturers with adalimumab biosimilar approvals from the FDA have been seeking interchangeable status for these products on the basis that this would enhance patient acceptance, especially considering that adalimumab is intended for chronic diseases such as rheumatoid arthritis and psoriatic arthritis. Once these conditions are brought under control, patients may need convincing to consider switching to a lower-cost product.

“Lately what is happening, especially as interchangeability is coming into discussions, is that it is being ignored that biosimilars, even without interchangeability, are highly, highly similar to reference products. I think more needs to be done in that area. It’s up to us to talk about data,” Patwardhan said.