Editor's note: This analysis is a collaboration between Mercer and Oliver Wyman.
There has been no shortage of biosimilar development and commercialization in the US over the past few years. More than 20 biosimilar versions of brand products have launched since 2015 when the Food and Drug Administration approved Zarxio, a drug used to reduce the risk of infection in patients receiving chemotherapy. The drugs cut across a range of therapeutic areas — oncology, oncology supportive care, immunology, diabetes, and ophthalmology. Despite the number of product launches, biosimilar adoption in the US has been a mixed bag, especially compared to Europe. For example, pegfilgrastim biosimilars captured roughly 40% volume market share in the US, while exceeding 90% in Spain and 85% in Italy and the United Kingdom in 2021. But the industry could hit a true inflection point in 2023 as adalimumab biosimilars prepare to come to market to compete with the brand name giant, AbbVie’s Humira. Amgen is expected to launch its adalimumab biosimilar, Amgevita, at the end of January. Humira is the first major specialty drug managed largely through the pharmacy benefit to have biosimilars on the market. AbbVie’s revenue for the blockbuster drug totaled $20.7 billion in 2021. To date, the Food and Drug Administration has approved eight adalimumab biosimilars and most are likely launching within a year of Amgen’s Amgevita. Typically, there is a longer wait time for subsequent biosimilars to enter the market, sometimes with multiple years between launches.
Humira Biosimilars Market Impact
How the adalimumab market evolves will depend on several factors, including biosimilar pricing and contracting aggressiveness; how payers set reimbursement policy; the willingness to assign preferential access to biosimilars over Humira; and stability of supply. There are several relevant considerations facing the industry. For instance, significant changes to coverage and reimbursement are unlikely to happen immediately since the largest wave of adalimumab biosimilar launches is anticipated in the third quarter of 2023. It will take time for new payer contracting and formulary policies to be revised. From a pricing and contracting standpoint, our research indicates that biosimilars, including those for Humira, generally need a minimum 10% net price discount to the innovator drug to be considered for parity access. Less than that may not warrant covering a biosimilar version, given the administrative burden associated with the policy change. If the differential reaches something closer to 20%, some payers will consider granting preferred access to the biosimilar managed through a mix of formulary tiering — preferred vs. non-preferred specialty tier placement — and utilization management — requiring a step-through the biosimilar. If the net price differential approaches 50%, payers may consider excluding the innovator brand outright. The high degree of development activity, combined with early indicators that AbbVie is contracting to protect Humira access and share, indicates that an intensely competitive pricing environment will emerge over the next 18 months. Notably, AbbVie has indicated that it has payer agreements in place that confer parity access to biosimilars for 90% of covered lives in the US. AbbVie could continue to contract aggressively.
Employers and Payers Keeping Watch
Payers and employers are acutely focused on how biosimilars can impact costs. Spending on specialty drugs increased by nearly 10% in the last year alone. Since most biologics are specialty drugs, biosimilars are increasingly seen by corporate benefit managers as a priority, and they are looking to their health plan and pharmacy benefit manager partners for ways to relieve some of the cost pressure in these markets. Increasing attention will be paid to savings that can be realized from Humira biosimilars. This is new territory for employers and they need to take steps to ensure they are fully informed and making the best decisions for their business and employees. A first point is acknowledging that declining net prices in a drug category may not translate immediately to lower healthcare spending. Rather, spending reductions will be realized incrementally from lower cost biosimilars being prescribed in larger numbers, Humira’s price falling, or a combination of both. Savings need to be measured in terms of marginal reductions in the rate of drug benefit premium increases. It is also important for employers to recognize that payer strategies will likely change over time as reimbursement policies evolve over the next couple of years. Employers need to be nimble and continually review the direct impact of changes to their plan, including how savings from biosimilars could offset spending on other high-cost novel agents currently on or approaching the market. Employers must also review their pharmacy contracts to ensure biosimilars are sufficiently addressed and to revisit elements of their pharmacy benefit, including member contributions, formulary design, reliance on manufacturer funding like copay cards, and clinical programs. Employers should work with their human resources leadership and benefit advisors to review recent data on Humira utilization and overall spending trends and assess different scenarios. Most importantly, employers need to educate plan members, and anticipate questions, on what biosimilars are and how they compare to other products. Employees need to be fully informed about how their out-of-pocket spending will be impacted. Since Humira and new biosimilars may be on the same cost-share tier and have the same copay or co-insurance, employees might not see measurable change in what they pay for each prescription. Preparing educational materials, and supplementing those with access to payer resources and clinical professionals to answer questions, is critical support for any changes in plan design, and to generally minimize uncertainty or discontent for employees.
Editor’s note: The PDF below offers a deeper analysis of the US biosimilars market, including the potential impact of adalimumab biosimilars, as well as additional guidance for employers and payers.