Confusing, complicated, disconcerting—these are some of the words that advisors participating in The Benefits Alliance Group’s recent roundtable discussion use to describe the market for biologic drugs in Canada today (see page 6 for the names of participants).
While no one disputes the value of these life-changing drugs, which use living cells to treat serious conditions, their cost relative to traditional, chemical drugs has been a challenge from day one.
Seven out of the 10 top-selling drugs in Canada are biologics, used to treat less than two percent of the population.
“We get many complaints about the cost of biologic drugs, and their effect on stop-loss plans. Now we’re hearing about the biosimilars. They cost less, but are they saving money for plan sponsors? It doesn’t seem to be happening,” notes Mike Skube, Principal at mls Financial Services in Thunder Bay, Ontario. “There is an awful lot of confusion out there, especially when it comes to pricing strategies with carriers,” adds Brian Brophy, Principal at Navigo Financial Solutions Inc. in Oakville, Ontario.
Biosimilar biologics began entering the market a few years ago, as patents expired for originator biologics. They are typically priced 30 to 35 percent lower than the originator, sometimes lower, as negotiated by the pan-Canadian Pharmaceutical Alliance. Currently, there are 12 biosimilars in Canada, and another seven may come over the next few years — if manufacturers choose to stick around.
“A big concern here is that manufacturers will stop coming to Canada with their biosimilars,” says Kirk Davis, Principal at Davis Benefits & Pensions in Vancouver, B.C.
Why? Because the uptake of biosimilars in Canada is well behind that of European countries, despite growing clinical evidence showing that they are as safe and effective as originators. Canada’s complex system for reimbursement, comprised of multiple public drug plans and multiple, competitive private insurers, is part of the problem. While this system works well enough for traditional drugs, it struggles to adequately address higher-cost specialty drugs.
In the past year, provincial drug plans have adopted policies that require or facilitate starting new patients on biosimilars; however, Canada’s top three private insurers have not followed suit. Instead, they’ve opted to negotiate lower prices for Remicade, an originator biologic that is the top-selling drug in Canada, and some have implemented policies that reimburse an originator biologic up to the price of its biosimilar. For patients taking the originator who can’t afford to pay the difference, financial assistance is likely available through the originator’s patient support program (PSP).
“This may sound okay in the short run because we’re getting the lower prices for the originators, but it doesn’t support a market economy. And it’s not transparent,” says Davis. Steve Hesketh, Principal at CapriCMW in Kelowna, B.C., agrees: “Manufacturers and carriers might be messing with economics to the point where they may dissuade future biosimilars coming to market. And if biosimilars leave Canada, how will insurers negotiate savings with the originators if they can’t leverage biosimilar pricing?”
Insurers’ current practices also raise questions about current pooling charges, when one considers that the lower negotiated prices have been in place for several years now. “Why are we not seeing some relief in pooling costs today? Perhaps we should be pushing harder to get answers on that,” suggests Doug Calow, Principal at Calow Benefits Group in Barrie, Ontario.
Increased utilization of biosimilars, on the other hand, should have a more direct, positive impact on pooling costs. Not only are the prices of biosimilars transparent, but they are far more likely to fall under most plan sponsors’ thresholds for pooling.
The key to uptake for biosimilars, ultimately, lies in switching or transitioning patients already on an originator to a biosimilar. These patients account for about 80% of the potential market for biosimilars. It should be noted that switching is not to be confused with automatic substitution, which can occur at the pharmacy without the need for a doctor’s prescription (as is the case when brand-name traditional drugs are automatically substituted with generic drugs).
While regulatory bodies around the world were understandably cautious about switching in the early years, numerous studies have since shown that it is safe and does not change health outcomes. As a result, regulatory bodies and governments in Europe have taken steps to publicly endorse, encourage, or enforce switching.
In Canada, public plans have yet to endorse or require the switching of patients already on an originator to a biosimilar, and it’s highly unlikely that any of the large private insurers will make the first move.
Advisors at the roundtable agree that the ball is mainly in the public payer’s court when it comes to jump-starting switches from originator biologics to biosimilar biologics, as well as bringing transparency to the market. “The issues around liability, accessibility, interchangeability, and prescribing behaviour—the sense is that private plans are looking to the public side to take leadership, and then they can follow,” summarizes Hesketh.
Where does that leave advisors and plan sponsors today? In somewhat of a holding pattern, with an onus on advisors to keep on top of the situation. “Right now, most clients really don’t know the floor from the ceiling in this whole area, so we need to have enough of a dialogue to help prepare them for such a complex issue. Then when we’re ready to make a recommendation, it’s not the first time they’re hearing about it,” says Hesketh.