Session 104 Lecture: Specialty Drugs - Biosimilar Impact ... · • Reference Market Concessions;...

transcript

Session 104L, Specialty Drugs - Biosimilar Impact on Medical Cost

Trends

Presenters: Drew Kirchner, FSA, MAAA

Keith R. Klimek, FSA, MAAA

SOA Antitrust Disclaimer SOA Presentation Disclaimer

Biosimilar Impact on Medical Cost TrendsSession 104Keith R. Klimek, FSA, MAAAPrincipal and Consulting Actuary

1. Biosimilar Background and Basics

2. Scenario Modeling for a Therapeutic Class

Topics

Background and Basics

• Biosimilar Definition:• A biosimilar is a biological product that is highly similar to and has no clinically

meaningful differences from an existing FDA-approved reference product.

Key Terminology

4https://www.fda.gov/Drugs/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/TherapeuticBiologicApplications/Biosimilars/ucm580419.htm#biosimilar, accessed 4/30/2018

• Reference Product: • A reference product is the single biological product, already approved by FDA,

against which a proposed biosimilar product is compared.• A reference product is approved based on, among other things, a full complement

of safety and effectiveness data.

How are these Reference products used?

Package inserts are identical

Infusion or subcutaneous injection

In the physicians office

• Shift towards self-administration (Dupixent1)

Both medical and pharmacy benefit are in play

Method of Administration

1https://www.dupixent.com/about -dupixent/how-dupixent-is-taken, accessed 4/30/2018

Biologics used in treatment on complex diseases

• Autoimmune

• Oncology

• Respiratory

Clinical Need

• Reference Products with Marketed Biosimilars

• Pipeline (illustrative sample)

United States Biosimilar Marketplace:

12017 United States Sales, http://www.investor.jnj.com/releasedetail.cfm?releaseid=1054959, accessed 6/30/201822017 United States Sales, https://www.amgen.com/media/news-releases/2018/02/amgen-reports-fourth -quarter-and-full-year-2017-financial-results/, accessed 6/13/20183https://www.welldynerx.com/content/uploads/2018/02/PipelineReport -Biosimilar-Drugs.pdf42017 United States Sales, https://www.roche.com/dam/jcr:8476522e-ecb4-4c65-b91d-4a8301ccb14b/en/180201_IR_FY_release_en.pdf52017 United States Sales, https://news.abbvie.com/news/abbvie-reports-full-year-and-fourth -quarter-2017-financial-results.htm62017 United States Sales, https://www.amgen.com/media/news-releases/2018/02/amgen-reports-fourth -quarter-and-full-year-2017-financial-results/

Reference Sales # of CompetitorsRemicade $1,073 M1 2Neupogen $369 M2 1

Reference Sales Estimated Launch Date3

Avastin $2, 939 M4 Mid 2019Humira $12, 361 M5 2020-2023Neulasta $3,931 M6 2018-2019

Reimbursement Structure

Devil is in the Details

Interchangeability • State level• Dynamic environment

Medicare Part B

• HCPCS / J-Codes• Effective, 4/1/2018, different J-

Codes• Distinct Average Sales Price• Modifiers unnecessary

Commercial:• Varies (ASP, WAC, Value-Based)

Legal IssuesReimbursement

Average Sales Price (ASP)

Discounts & Rebates

ASP = Eligible Sa les Dolla rs – Price Concessions

In Medicare Part B, Providers are reimbursed a t ASP+

Eligible Sa les Units

Accounted for on a lagged basis

Market-wide dynamic

$0$10$20$30$40$50$60$70$80$90

Remicade 10 mgAverage Sales Price Trend

So let’s look at an ASP Trend

Signals incrementa l discounting in the market

1https:/ /www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/2018ASPFiles.html

Scenario Modeling

Therapeutic Class Analysis

• Look at this from 4 Perspectives

Scenario Market Dynamic Your Health Plan1 Reference Moves to Block

BiosimilarNo change in policy, on the sidelines

2 Reference Moves to Block Biosimilar

Contract with Reference

3 Open Access No change in policy, on the sidelines4 Open Access Contract with Biosimilar

• A Biosimilar launches into a market with a dominant reference product (80% market share)

• Key Assumptions:• BioSim launches @ 5% lower WAC than reference• Reference Market Concessions; 8% 2019, increased 8% each year thereafter• BioSim Market Concessions; 4% in 2019, 2x each year thereafter• Each product takes 5% Price Increase each January 1st

• Impact Period• Compare 2019 and 2022 class cost

Scenario 1:Market Dynamic Your Health Plan

Reference Moves to Block Biosimilar

No change in policy, on the sidelines

Scenario 1:

Market Dynamic Your Health Plan

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

2019Q2 2020Q2 2021Q2 2022Q2

Annual Cost of Therapy

Reference_WAC

BioSim WAC

Reference_ASP

BioSim ASPImpact of increasing price concessions

Scenario 1:

20.00%

40.00%

60.00%

80.00%

100.00%

2018 2020 2022

Market Share

Reference Biosim Other

Gradual decrease in market share

Product Patients Avg. ASP ($K) Cost ($M)

Reference 3,875 $ 92.3 $ 357.9

Biosimilar 125 $ 92.5 $ 11.6

Other 1,000 $ 120.0 $ 120.0

Total Cost 5,000 $ 97.9 $ 489.4

2019 Cost of Care 2022 Cost of Care

• 7.5% reduction in class costs over 4 years• Driven by ASP decline

Reference 3,156 82.9 261.6

Biosimilar 844 85.3 72.0

Other 1,000 120.0 120.0

Total Cost 5,000 $ 90.7 $ 453.5

• Reference Product has additional 5% discount off ASP as negotiated by health plan

Reference 3,875 87.7 340.0

Other 1,000 120.0 120.0

Total Cost 5,000 $ 94.3 $ 471.5

• 10% reduction in class costs over 4 years*

Reference 3,156 78.7 248.5

Other 1,000 120.0 120.0

Total Cost 5,000 $ 88.1 $ 440.4

*Baseline is $489M in 2019 costs under Scenario 1

Cost ($M)

$ 559.9

ASP Contract

WAC Contract

• Key Assumptions:• BioSim launches @ 5% lower WAC than reference• Reference Market Concessions; 8% 2019, stays constant• BioSim Market Concessions; 4% in 2019, 8% thereafter• Each product takes 5% Price Increase each January 1st

Open Access No change in policy / sidelines

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

2019Q2 2020Q2 2021Q2 2022Q2

Annual Cost of Therapy

Reference_WAC

BioSim WAC

Reference_ASP

BioSim ASP

Scenario 3:

ASP steadily increasing because discounts are

constant

Scenario 3:

20.00%

40.00%

60.00%

80.00%

100.00%

2018 2020 2022

Market Share

Reference Biosim Other

Reference is losing share much faster

Reference 3,781 92.3 349.1

Other 1,000 120.0 120.0

Total Cost 5,000 $ 97.9 $ 489.3

• 2022 Cost considerably higher than Scenario 1• Limited ASP declines/ trends to contribute to savings

Reference 2,313 103.6 239.5

Biosimilar 1,688 99.6 168.0

Other 1,000 120.0 120.0

Total Cost 5,000 $ 105.5 $ 527.6

• Biosimilar Product has additional 15% discount off ASP as negotiated by health plan

Open Access Contract with Biosimilar

Reference 3,781 92.3 349.1

Other 1,000 120.0 120.0

Total Cost 5,000 $ 97.3 $ 486.3

• 15% discount crea tes savings, but share shift is not sufficient to dramatica lly lower overa ll costs

Reference 2,313 103.6 239.5

Biosimilar 1,688 84.6 142.8

Other 1,000 120.0 120.0

Total 5,000 $ 100.5 $ 502.4

Therapeutic Class Analysis - Summary

Scenario Market Dynamic

Your Health Plan 2019 Cost ($M)

2022 Cost ($M)

Change

1 Reference moves to block Biosimilar

489.4 453.5 -7.3%

2 Reference moves to block Biosimilar

Contract with reference

471.5 440.4 -6.6%

3 Open Access No change in policy, on the sidelines

489.3 527.6 7.8%

4 Open Access Contract with biosimilar

486.3 502.4 3.3%

• Short-term, discounts on reference products projects the grea test savings in the considered scenarios

• Long-term va lue to diversifying your class spend• ASP responds to market dynamics, WAC does not

Risk is our business.

It shouldn’t be yours.

Session 104 Lecture: Specialty Drugs - Biosimilar Impact ... · • Reference Market Concessions;...

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