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Insurers cite cost as top factor in covering biosimilars

Biosimilars have the potential to reduce the cost of treatment, but the savings are not realized for most providers.

Susan Morse, Senior Editor

Biosimilars are gaining acceptance by the health insurance industry, according to a new Avalere report.

A survey of 45 health plans shows 81 percent of plans are covering at least one of two biosimilar products currently on the market, according to a survey of health insurers.

Cost compared to the original treatment was the key factor for determining coverage, followed by a biosimilar's efficacy and safety of the product.

However a recent Navigant study shows biosimilar drugs leads to a reduction in profits for most providers.

[Also: Biosimilar drugs often translate to lower provider profits, says Navigant analysis]

Biosimilars have the potential to reduce the cost of treatment, but the savings are not realized for most providers mainly due to the "buy-and-bill" reimbursement model for infused therapies. The Centers for Medicare and Medicaid Services incentivizes the use of biosimilars through reimbursement, but private payers generally don't, the Navigant study said.

The Food and Drug Administration has approved five biosimilars, medicines that are highly similar to an original biologic used for treatment. They are not considered generic drugs.

Two have launched, Zarxio and Inflectra. Neither sought an interchangeability designation from the FDA.

Neither two years after the launch of Zarxio, it is covered by 94 percent of employer-sponsored insurance plans, the Avalere report said. Zarxio is used in certain treatments to create white blood cells.

Over 40 percent of employer plans cover Zarxio in the preferred brand tier, which is in line with the average of its competitors, Avalere said.

[Also: Study show biosimilar drugs effective, but more research is needed]

Placement on the preferred brand tier results in lower out-of-pocket costs for patients compared to drugs on non-preferred brand or specialty tiers.

"Payers are placing Zarxio in preferred brand tiers, which suggests they are increasingly comfortable with biosimilars once they become familiar with them," said Gillian Woollett, senior vice president at Avalere. "It also suggests uptake of biosimilars by payers may not depend on biosimilars receiving interchangeability status from FDA."

After seven months on the market, 42 percent of employer plans are covering Inflectra.

Inflectra, a biosimilar to Remicade is used to treat Crohn's disease, ulcerative colitis, rheumatoid arthritis, arthritis of the spine, active psoriatic arthritis and chronic severe plaque psoriasis.

"Biosimilars were intended to increase competition among biologics and potentially reduce drug costs, but the biosimilars market has been slow to develop in the U.S.," said Tom Kraus, senior vice president at Avalere. "The growth of the biosimilar market will be measured as policy, market, and intellectual property related challenges continue to be addressed."

There are several obstacles to biosimilar market growth. One such barrier was recently addressed with the Supreme Court decision that would allow a biosimilar to launch sooner than 180 days after approval.

Twitter: @SusanJMorse

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