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By Jacquie Lee
Consolidation within the drug supply chain is keeping cheaper versions of complex drugs from reaching patients despite high drug approval rates, Scott Gottlieb, head of the FDA, said Sept. 4.
The Food and Drug Administration has approved 12 biosimilars—six were approved last year alone. But fewer than half of these drugs have actually been marketed to patients, putting a damper on the agency’s historically high drug approval levels.
Consequently, patients sometimes pay exorbitant amounts for biologic drugs despite cheaper versions being available because consolidation “can work in favor of the incumbent reference biologic and discourage adoption of biosimilar competitors,” Gottlieb said at a public hearing at the agency’s headquarters. Gottlieb didn’t specify which companies he was referring to, but pharmacy benefit managers have received renewed scrutiny over the past year.
Three major PBMs—CVS Health Corp., Express Scripts Holding Co., and UnitedHealth Group Inc.’s OptumRx unit—make up roughly 70 percent of the PBM market. Those companies are in charge of placing drugs on the formulary list of medicines health insurance plans will cover and are paid a percentage of what they can save insurers. If one of these PBMs decides not to place a biosimilar on their list, it severely diminishes a drug’s chances of reaching patients.
Biosimilars, which are similar to drugs made from living cells called biologics, are meant to be cheaper. Theoretically, by putting them on drug formularies, PBMs rake in lower profits because reimbursements for biosimilars aren’t as high as reimbursements for the original biologic, PBM critics say. That lack of formulary access for biosimilars is called the “formulary wall” and is one of the biggest factors keeping biosimilars from reaching patients, according to drugmakers, patient groups, and biosimilar advocates.
“The barriers to access are not scientific but commercial,” Madelaine Feldman, the chair of the Alliance for Safe Biologic Medicines, said at a public hearing at the FDA’s headquarters Sept. 4. The group is made up of doctors’ associations and patient groups.
However, some are starting to push back on the narrative that PBMs are central to keeping drug prices high. Sens. Elizabeth Warren (D-Mass.) and Tina Smith (D-Minn.) are asking Alex Azar, head of the Health and Human Services Department, to clarify his comments regarding PBMs and their manipulation of drug prices.
Azar said at a Senate committee hearing in June that drug companies are virtually held hostage by PBMs that demand higher list prices so they can negotiate a higher discount for insurers, increasing the PBMs’ profits.
The two senators sent letters in late June to the six largest PBMs, including Express Scripts and Optum RX, and the three largest drug distributors—McKesson, Cardinal Health, and AmerisourceBergen—asking whether they had any say in drug pricing and whether drugmakers made commitments to lower their prices. Each of the PBMs and distributors wrote back in mid-July and said they didn’t play a role in deciding a drug’s list price.
PBMs “have an obligation to negotiate the lowest drug costs available, whether for a biologic or biosimilar product,” a spokesman for the Pharmaceutical Care Management Association told Bloomberg Law. They’re the leading industry group for PBMs.
“Neither payers nor PBMs determine how quickly the FDA approves biosimilars, or whether and when the FDA will finalize workable interchangeability guidelines to increase uptake of biosimilars,” Greg Lopes, the spokesman, said. The agency hasn’t provided final industry advice on interchangeability, which is when a pharmacist or doctor can swap one drug for another without notifying the prescriber.
Gottlieb says the agency will continue to work with the Federal Trade Commission to “strike the appropriate balance between encouraging ongoing innovation in biologics while also facilitating the robust competition that can reduce costs to patients.”
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