The Employers Health clinical team traveled to Denver this fall for the Academy of Managed Care Pharmacy (AMCP) Nexus conference to begin recruiting for year five of our pharmacy residency program. It is exciting to see the growing recognition of our fledgling program by future leaders in managed care. Over 25 students visited our Residency Showcase booth prepared with thoughtful questions and genuine interest in one day being a trusted resource for our employer clients.
Residency recruitment was not the only mission for the clinical team that week. We attended multiple continuing education sessions to keep our team up to date on the latest in managed care and pharmacy benefits. Below we’ve highlighted the information we found most relevant for employers and other plan sponsors.
Gene Therapies and Financial Challenges
Gene therapies have seemingly been on the rise for years now. It appears the tipping point is upon us with about 54-74 therapies for over 170 different indications projected to be approved for the US market by 2030. If these products achieve FDA approval, we anticipate that one million Americans will have received a gene therapy by the end of 2025.
The one thing everyone can agree on is that gene therapies pose significant financial challenges given our current payment structure. These financial challenges can be broken down into four categories:
1. Payment timing risk
2. Actuarial risk
3. Product performance risk
4. Mobility (members leaving the plan
These durable therapies distill hefty payments upfront (think, in the millions), and the benefit is seen over time. The health care system is used to recurring payments and benefits seen over time. Some of the most notable and feasible precision financing solutions include orphan reinsurer and benefit manager (ORBM) and risk pools, short-term milestone–based contracts, multi-year performance-based annuities, warranty models, and subscription models.
Senior advisors from the Massachusetts Institute of Technology Center for Biomedical Innovation created a project that aimed to identify existing and emerging products in the market that address these financial challenges. They conducted a request for information to gather specifics from 12 organizations. They discovered 16 new products or services currently being used by these organizations to counteract the financial challenges of gene and cell therapies. These “products” can be broken down into four types:
1. Reinsurance/Stop Loss/Risk Carve Out
2. Contract Negotiation and Data Management
3. Provider Contract Negotiations
4. Financial and Warranty Services
All these were relatively new solutions, with the earliest debut in 2019. One key takeaway was that the solution to gene therapies is not a one-size-fits-all approach. For next steps, seeing as no one solution addresses all stakeholder concerns, our clinical team will continue to scour the market and reassess risks/needs to modify strategies for Employers Health clients.
For more information on the MIT project on gene therapies and further breakdown of these payment models, visit https://payingforcures.mit.edu/toolkit-overview/precision-financing-solutions/
Specialty Pharmaceuticals in Development
High-cost, high-touch and high-complexity specialty medications undeniably dominate today’s conversations around drug spend. Adding to the complexity, the definition of specialty medications can differ from one PBM contract to another. To fully understand how to manage this ever-growing class, it is important to constantly review recent approvals and to prepare for future launches of new specialty pharmaceuticals.
Key specialty market trends that defined this year were increased competition, cancer drug development and orphan drug development. From a competition side, biosimilars are knocking on the door with 98 patent expirations expected through 2025 creating a $61 billion opportunity across multiple disease states. Today, 31 biosimilars are approved, though only a handful are actually marketed today, and even fewer are preferred on formularies. Semglee, a biosimilar for Lantus, is the first interchangeable biosimilar in the U.S. and can provide an idea of how stakeholders will respond. The much-anticipated Humira biosimilars are slated for 2023, and the expectation is that those products will significantly shake up the landscape. There will be more to come on these products, but the hope is they will provide much-needed competition and financial relief to the specialty space.
In terms of cancer drug development, the extensive pipeline continues to grow with oncology constituting about 30% of new FDA approvals in 2020 and 2021 combined. Considering there are about 1.9 million new diagnoses and 610,000 cancer deaths each year, this is promising news for those who are affected by this terrible disease. The good news is that the death rate has dropped 25% since 1991 demonstrating the value of these oncology products. As a result, cancer is now considered and treated more like a chronic condition when discussing future medication spend.
The other sizable portion of the specialty pipeline is made up of “orphan drugs” constituting about 47% of the specialty pipeline. Orphan drugs are often indicated for rare diseases which affect less than 200,000 people in the U.S. Because of their rare nature, these drugs are often the only option for people with these rare conditions and are often quite expensive posing a challenge for payers on how to expect and prepare for such patients. Challenges include having multiple high-cost patients with different orphan diseases, the absence of treatment guidelines to guide utilization management and obvious lack of competition between products within the space to contain prices. As more orphan drugs hit the market, it will be important to turn towards unique payment models and value-based reimbursement to assure payers that their money is well-spent on these products.
Looking forward, top therapeutic states with robust product pipelines include anti-inflammatory, atopic dermatitis, HIV, nonalcoholic steatohepatitis (NASH) and hemophilia.
- The anti-inflammatory space continues to grow at an astonishing rate due to the substantial number of chronic diseases that fall under its bucket. The key theme within this space is movement towards oral products instead of subcutaneous injections and expanded indications of existing products.
- Atopic dermatitis is also seeing an increase in competition which can help disrupt Dupixent’s current market share.
- New HIV products mentioned seek to improve patient adherence issues by reducing dosing frequency by way of monthly pills and weekly injections.
- Although expected to have made an impact back in 2019, NASH remains a hot topic this year with many drugs with various manufacturers and mechanisms in the pipeline still awaiting FDA approval.
- Hemophilia, an expensive and sensitive disease state, has 6 potential gene therapies in the pipeline which will provide a new challenge on the pharmacy benefit side.
Naturally, this is not all-inclusive of the products mentioned at this conference, but specialty growth is clearly not slowing down anytime soon. While there are a host of new first-line products for rare diseases coming, there does seem to be a strong pipeline of alternative drugs that will help provide reprieve for existing spend drivers.
Biosimilars Market Update
As the already astronomical price tags of biological products continue to rise, biosimilars offer a pathway to affordable treatment options for patients and payors. Despite having similar safety and efficacy profiles when compared to their reference biologics, biosimilar products face a multitude of obstacles ranging from adoption variability to marketing and patent litigation tactics by biologic manufacturers.
The entrance of biosimilars into the autoimmune space has been highly anticipated by industry experts with hope that biosimilar competition will finally decrease the high list prices of specialty biologics. In the past year, we have witnessed monumental strides towards integrating biosimilars into mainstream practice. The approval of the first two biosimilar products to ever receive interchangeability status from the FDA was a massive milestone that established a precedent for future applications.
The importance of interchangeability status cannot be understated, as this allows the biosimilar and reference, also known as the originator product, to be interchanged at the point of dispensing. This permits interchangeability-approved products to be substituted at the pharmacy level without need to ask the prescriber, similar to how brand and generics function. Notably, one of the biosimilars to gain interchangeability status references the specialty blockbuster product, Humira, which currently holds over $10 billion worth of market share.
Even though significant progress has been made, biosimilars still face multiple obstacles limiting their potential market penetration. Manufacturers have taken multiple approaches to avoid biosimilar launches of reference products such as reformulating the originator product and creating patent thickets around existing biologics. Patent thickets purposefully delay generic or biosimilar competition to maintain current market share. A posterchild of patent thickets is none other than AbbVie’s Humira, which has over 100 patents protecting its exclusivity, even though the original patent expired in 2016. This profoundly impacts the market, as the cost of Humira doubled from 2014 to 2018 after additional patents extended the date of exclusivity to 2023.
According to pharmacy leaders at IPD Analytics, differences in market share growth between launched biosimilars can be attributed to varying prescriber knowledge, familiarity and preexisting conceptions of biosimilars. This difference is apparent in the rapid uptake of biosimilars in the oncology space compared to rheumatology and gastroenterology counterparts. This illustrates the opportunity for medical affairs initiatives to enhance provider education and promote the use of safe, effective and affordable biosimilar products.
Our team of clinical pharmacists is constantly working to stay apprised of the latest developments in managed care pharmacy to proactively help employers combat rising drug prices. Please reach out to email@example.com if you have any questions or would like to learn more about our clinical solutions. You can also view the latest episode of Sightlines: A Clear Look at Pharmacy Benefits for the latest pharmacy benefit strategies featuring Employers Health Clinical Advisor, Kevin Wenceslao.