Tennessee Struggles to Realize Potential Savings from Biosimilar Drugs

Tennessee Struggles to Realize Potential Savings from Biosimilar Drugs

Tennessee has been spending a staggering $48 million on the drug Humira, which amounts to approximately $62,000 per patient. However, with the arrival of nine biosimilar alternatives to Humira, priced as low as $995 per month, there is the potential for significant savings. Unfortunately, the healthcare system in the U.S. has not yet fully embraced the use of biosimilars due to the lack of support from large pharmacy benefit managers (PBMs).

In order for true competition to take place, PBMs that negotiate prices and determine the list of covered prescription drugs for 80% of insured patients in the U.S. need to favorably position biosimilars within health plans. Despite the potential to save the healthcare system $9 billion and bring about overall savings from biosimilars, PBMs have not yet made such a move. Humira has enjoyed exclusivity in the U.S. for 20 years, and the introduction of biosimilars could have a similar impact to the savings realized through the purchase of generic drugs.

Biologics, including brand-name drugs and their biosimilar imitators, are manufactured using living cells. With the patent protection for many biologics set to expire in the next two decades, biosimilars have the potential to generate even greater savings compared to generic drugs. However, the high cost of developing biosimilars—requiring up to eight years and $200 million—means that they need to gain significant market share to be financially viable.

Express Scripts and Optum Rx, two of the largest PBMs, have included biosimilars in their formularies, but at the same price as Humira. This lack of price differentiation gives doctors and patients little incentive to switch to the cheaper alternatives. Until PBMs take steps to promote the use of biosimilars, Humira is likely to remain dominant in the market.

The convoluted U.S. healthcare system, with its inconsistent prescription drug coverage and unequal expenditures, is exemplified by the ongoing saga of Humira’s pricing. Biologics, such as Humira, account for a growing share of healthcare spending in the U.S., with costs increasing by 12.5% annually over the past five years. These drugs play a crucial role in the treatment of conditions such as cancer and autoimmune diseases.

AbbVie, the manufacturer of Humira, has taken various strategies to maintain its market share. For example, the company has warned health plans that recommending biosimilars could result in the loss of rebates on other AbbVie drugs. Additionally, sources state that AbbVie has increased its Humira rebates, contributing to higher costs for health plan sponsors.

The influence of PBMs, such as Express Scripts, Optum, and CVS Caremark, is significant. However, challenges to their practices are increasing, with the Federal Trade Commission conducting a major investigation into these companies. Critics of PBMs see the introduction of biosimilars as an opportunity to address the opaque business processes that have contributed to high drug prices.

Sources: Tennessee Journal of Medicine, The New York Times

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