Canada’s first major biosimilar drug appears to be having a rough start in the private group insurance industry. Meanwhile, it looks like much smoother sailing for public drug plans, which are going ahead with preferred listing status for Inflectra based on a price that’s 47% less than the originator biologic, Remicade (which is Canada’s number-one drug by purchases, with sales just shy of $1 billion in 2015).
Why are most private plans not putting similar policies in place? The answers touch on a myriad of issues that are unique to this sector of specialty pharmaceuticals, but one thing is clear: without listing policies from both public and private payers, biosimilars (also referred to as subsequent- entry biologics, or SEBs) may not be able to establish enough of a market in Canada. When you consider that patents on 15 originator biologics are set to expire by 2020, this could mean significant missed opportunities for savings.
“There’s an urgency to bring our clients up to speed on biosimilars,” says Robert Houle, Vice-President of Capcorp Financial in Ottawa, Ontario, and a participant in the Eastern Roundtable for the Advisors Forum in November, 2016. “This also points to our role in advocacy, as members of The Benefits Alliance Group, by encouraging employers to lobby with organizations like the Business Council of Canada and Chambers of Commerce to raise awareness and generate public pressure on private payers.”
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In April 2016, the pan-Canadian Pharmaceutical Alliance (pCPA) released First Principles for Subsequent Entry Biologics (SEBs), a document to guide its negotiations with manufacturers of biosimilars and, possibly, originator biologics. The document includes the following statement:
“The introduction of an SEB must provide a reduction in the drug’s transparent price to benefit all Canadians.”
In other words, if manufacturers of biosimilars want their drugs to be included in public plans, they must provide a reduction in their transparent list price that is available to all Canadians—not just beneficiaries of public drug plans. Only a few insurance carriers in Canada, however, can currently take advantage of pCPA’s policy for biosimilars. Green Shield Canada (GSC), for example, has its own policy giving preferred listing status to biosimilars, for plan members not already taking the originator biologic.
In the case of Inflectra in particular, that means that GSC pays the same price as public drug plans, which represents a 47% discount off the price of Remicade. For plan members starting treatment for rheumatoid arthritis, this translates into about $12,500 for the first year of Inflectra, compared to about $23,700 for Remicade.
Meanwhile, a number of Canada’s insurers and pharmacy benefits managers (PBMs) have taken a different approach. Well before pCPA negotiated its price for Inflectra and released its First Principles document, these providers opted to negotiate confidential agreements with the manufacturer of Remicade. Details of these agreements, including their duration, remain under wraps.
Should these confidential arrangements with the manufacturers of originator biologics take root, what happens to the biosimilar market in Canada? “Why would manufacturers of SEBs continue to invest in Canada, when they know they’ll be undercut by private payers signing deals with originator products?” asks Ned Pojskic, pharmacy strategy leader at GSC and guest speaker at the Eastern Roundtable of the Advisors Forum. “We need to look at the longterm picture and see it as our responsibility to support SEBs, just like we support generics, to drive competitive market forces.” This echoes pCPA’s position: “the pCPA will encourage a competitive environment that includes SEB market growth and is conducive to long-term cost reductions and sustainability.”
That could include agreements with manufacturers of originator biologics as well, but only if they “provide at least similar overall value compared to the SEB, and must include similar or better transparent price reductions.”
Getting the word out
Members of the The Benefits Alliance Group Advisors Forum unanimously agree that advisors can do more to educate clients. “How many advisors, let alone employers, know about the 47% discount off Remicade? I don’t think most realize the discount is that big, and that it applies to private plans,” says Paul Crossdale, President of Morrow Crossdale & Associates Inc. in Unionville, Ontario.
“We can proactively communicate and educate clients that in order to protect the integrity of your health and benefit plan in the long term, biosimilars have to be part of the solution,”
-Agrees Rob Green, President and lead consultant, Green Benefits Group in Burlington, Ontario. “If government has already mandated that biosimilars come into play, I feel we have to hear more from the private side as well.”
“If every carrier did what Green Shield did, Remicade would have to be market competitive. There would be no individual deals,” adds Lio Spagnuolo, Managing Partner and COO at Penmore Benefits Inc. in Concord, Ontario.
Client education must also go beyond price, as advisors can help dispel misconceptions regarding the safety and effectiveness of biosimilars. “It’s not unlike the education we do for generics,” notes David McCulloch, Partner at Leystone Insurance & Financial Inc. in Ottawa, Ontario. “Once we educate clients about efficacy and safety, and the fact that the savings are there for the long term, then they will realize that covering biosimilars is the right thing to do. And that these agreements with the manufacturers of the original biologics don’t seem to be the right thing to do.”
Where are the savings?
Another question begs to be asked: where are the savings from the agreements for Remicade? “Right now it seems that all the savings are going into carriers’ pools, because we’re certainly not seeing any direct cause and effect for clients,” says Jim Kilgour, President at Advanced Benefits Consulting in Waterloo, Ontario. “It may still be too soon to see the impact, but do we simply trust that carriers will manage their pools appropriately? There needs to be more accountability for our clients.”
Even as biosimilars secure their place on private drug plans, it will take time for savings to filter down to plan sponsors and plan members. In part because the market is in its infancy in Canada, and in part because savings will be indirectly realized through pooling or stop-loss charges, and reduced co-pays for plan members. As well, more clinical proof is required before people already taking the originator biologic can switch to a biosimilar.
“Unlike with mandatory generics, where we can save money off the top, the thunder is not going to be there right away with SEBs. Which is why it’s all the more important for advisors to make sure clients understand the bigger picture,” says Doug Calow, President of Calow Benefit Partners Inc. in Barrie, Ontario. To help bring that picture into focus, members of The Benefits Alliance Group can advocate on behalf of clients by raising the following questions with carriers and PBMs:
• What is your policy for biosimilars, especially now that the pan-Canadian Pharmaceutical Alliance requires that its negotiated lower list prices be available to all Canadians? How are we taking advantage of this?
• What savings can plan sponsors expect to see in terms of stop-loss pool rates?
• For agreements between providers and manufacturers of originator biologics, do price reductions match or surpass what’s negotiated by the pCPA? Does the lower price for the originator biologic apply only to new claims, or for existing claims as well? Are plan members benefiting through lower co-pays?
• How can advisors and their clients evaluate which approach—a policy to support biosimilars or agreements with originator biologics—is better for them?
• Do the manufacturers of biosimilars provide patient support programs that are comparable to those provided by manufacturers of originator biologics?