JustCare

Tag: Biosimilars

  • CVS profits from manufacturing its own generic drugs

    CVS profits from manufacturing its own generic drugs

    CVS has become the sixth largest corporation in America, owning not only a chain of pharmacies, but health insurance company Aetna, and Pharmacy Benefit Manager (PBM), Caremark, among other big businesses. To maximize profits, CVS offers many private label products. To increase those profits further, CVS has begun to sell its own prescription drugs, reports David Wainer for the Wall Street Journal.

    Bottom line, CVS believes that selling its own biosimilars will generate handsome profits. CVS can steer its customers to these generic drugs through its Pharmacy Benefit Manager or PBM, which determines the drugs on many insurance companies’ formularies, including Aetna’s. In the process, CVS can put competitor manufacturers with lower-cost biosimilars out of business.

    The Cordavis unit of CVS Health – lord knows how CVS came up with the name—works with drug manufacturers to create the biosimilars CVS sells. Biosimilars are the generic version of biologicals, prescription drugs made from living cells. The biosimilar market is booming as more blockbuster biologicals, such as Humira, lose their patents.

    Beginning shortly, Humira will no longer be available on CVS formularies. CVS will offer its biosimilar. Similarly, Cigna, which has its own PBM, Express Scripts, will take Humira off its formulary and instead offer its private label biosimilar. For now, the cost will be low for patients, 85 percent lower than Humira’s list price, with no out-of-pocket costs to patients.

    CVS projects that the biosimilar market will grow exponentially in the next five years to $100 million. It was not even $10 million just two years ago. CVS will steer its customers away from brand-name biologicals to its biosimilars and profit big time in the process. Over time, will patients save money and how much? That’s largely up to CVS, an untenable truth.

    The bigger question is how will patients fare as biologicals are replaced by biosimilars? It’s not at all clear; at least for now, it is out of government hands. PBMs, such as CVS Caremark, can and will use their power to determine which drugs people use and at what cost in order to maximize their profits. Before long, some say it’s likely that there will be no prescription drug price competition, only strategies among the PBMs and insurers to maximize profits.

    Here’s more from Just Care:

  • Insurers promote Humira over lower cost alternatives

    Insurers promote Humira over lower cost alternatives

    Humira, which treats rheumatoid arthritis and costs a small fortune, is a blockbuster drug that millions of Americans depend on. Fortunately, there are now far lower-cost biosimilar alternatives. Arthur Allen reports for Kaiser Health News that health insurers and the drug company middlemen they work with have no interest, and everything to gain, from not promoting biosimilars, needlessly costing our health care system hundreds of millions of dollars a year.

    Humira is a biologic, made with living cells, with a list price of $6,600 a month, while biosimilars cost just under $1,000 a month. So, if the prescription drug marketplace worked, most everyone would be taking the biosimilar. But, the Pharmacy Benefit Managers or PBMs, who are responsible for designing insurer formularies– the list of prescription drugs an insurer covers and at what copay–have a financial interest in continuing to steer people to Humira, as do the insurers.

    Even though Humira’s list price has increased six-fold since it was first launched in 2003, the PBMs make money offering it, as do the health insurers. The PBMs receive rebates from Humira’s manufacturer, AbbVie, for promoting the drug and share the rebate with the insurers. The only people who lose are the insureds.

    If 313,000 people who take Humira instead took a biosimilar, the equivalent of a generic version, our health care system could spend about $9 billion less. But, companies manufacturing the Humira biosimilar can’t afford to give PBMs big rebates. So, the PBMs are less interested in promoting their drugs.

    Other wealthy nations don’t have PBM middlemen and therefore don’t deal with these gross financial incentives that drive up health care costs. In other countries, almost everyone has switched to a Humira biosimilar. With the profit motive driving insurers and PBMs in the US, however, it’s not clear whether companies manufacturing biosimilars can survive here.

    It costs about $200 million to develop a biosimilar. Without substantial sales, it’s not worth the effort. Unless Express Scripts, Optum Rx, and CVS Caremark three large PBMs, reduce the copay for the Humira biosimilar so that it’s less than the copay for Humira, doctors are not likely to prescribe the biosimilar, and the PBMs will kill the biosimilar market.

    What’s crazy is that the price of biologics continues to rise at a rate of 12.5 percent a year over the last five years, and it is not affecting the market for them, even when there are biosimilars.

    Allen reports that AbbVie is telling health insurers that, if they promote biosimilars over Humira, AbbvVie will cut the rebates it pays them for Humira and other drugs it manufacturers. AbbVie also reportedly increased rebates to PBMs for Humira.

    To be clear, even though patients might have the same copay for Humira as for a biosimilar, their health insurance premiums are significantly higher because people take Humira and not a biosimilar. Humira costs more. Moving to the biosimilar would reduce health care spending and make health care more affordable, helping to ensure people get needed care.

    Even with Medicare, the annual copay for Humira can be as high as $8,000.

    Doctors don’t steer their Humira patients to biosimilars as they tend not to want to switch their patients off medications that work. Even though the biosimilars appear to be as effective as Humira, if patients aren’t saving money by switching off Humira, they have no interest in messing with their drug regimens.

    Small PBMs and insurers who don’t make their money off of drug rebates, such as Prescryptive and Kaiser Permanente, have moved most of their patients to biosimilars, saving their patients money. Prescryptive says that switches to biosimilars have happened “with absolutely no interruption of therapy, no complaints, and no changes.”

    Here’s more from Just Care:

  • California plans to produce generic drugs for its residents

    California plans to produce generic drugs for its residents

    Like most drug prices, insulin prices are out of control. Unlike most other drugs, insulin has been around for decades and tens of millions of Americans with diabetes depend upon it for their health and well-being. Congress can’t seem to get its act together to regulate drug prices so, Angela Hart writes for Kaiser Health News, California has decided to produce its own brand of generic insulin to help its 4 million residents with diabetes, along with other generic drugs.

    Today, three big pharmaceutical companies manufacture brand-name insulin and sell it at a list price of as much as $400 per vial. At that price, it’s difficult for a lot of Americans to buy it and make ends meet. Even with insurance, costs add up. And, the dirty little secret is that it costs these pharmaceutical companies less than $30 a vial to produce.

    Left unchecked, diabetes kills. It can take people’s vision and limbs. Their organs shut down. Still, about one in four people who need insulin can’t afford it because Congress continues to give pharmaceutical companies monopoly pricing power over their drugs.

    CalRx intends to produce insulin, along with other generic drugs people need but can’t get. It will distribute the drugs through pharmacies and mail order. The question is whether California can realize the 70 percent savings on insulin it anticipates. It also apparently needs to find a pharmacy benefit manager to distribute its drugs.

    Governor Newsom plans to launch CalRx with a $100 million investment. California will need to find a drug manufacturing partner. Civica Rx, a relatively new nonprofit drug manufacturing company, could get the contract. It is planning to make three different types of biosimilar insulin, insulin that mimics the insulin currently available through Eli Lilly, Sanofi and Nordisk.

    Civica Rx could be the perfect partner for California, as it plans to sell its insulin for just slightly more than it costs, around $30 a vial and $55 for five pen cartridges. Civica Rx will apparently need pharmacy benefit manager partners to get their drugs on insurers’ formularies.

    Mark Cuban has also created a drug company that sells drugs at their wholesale price plus 15 percent. For whatever reason, California appears less interested in a partnership with Cuban’s company.

    Let’s hope California can succeed, given Congress’ inability to act on behalf of people with Medicare, let alone on behalf of people in corporate health plans and the uninsured. Insulin prices are soaring, up as much as 70 percent in the five years between 2014 and 2019 alone.

    It’s not clear that there will ever come a time when Congress takes control of drug pricing away from manufacturers and pharmacy benefit managers. At the very least, to make drugs affordable quickly and save millions of lives, Congress should be opening US borders so that people can easily and legally import prescription drugs from verified pharmacies around the world.

    Here’s more from Just Care:

  • One way to lower the cost of biologics

    One way to lower the cost of biologics

    Peter B. Bach and Mark R. Trusheim offer a proposal to lower the cost of biologics in an op-ed for The New York Times. The authors recognize that “competition” will never lower the price of biologics, or most other drugs for that matter. Their solution is to set the price of biologics at  the cost of manufacturing them plus 10 percent once their patents expire.

    Biologic drugs are made using living cells and can be self-administered by injection or administered by a doctor. They cost the US billions of dollars a year; but, they can extend people’s lives significantly. Herceptin, which helps people with breast cancer, and Humira, which helps people with rheumatoid arthritis, are two examples.

    Because pharmaceutical companies are granted patents on new biologics, they can set prices for these drugs sky high. The patent life is supposed to allow the manufacturers to profit from their innovations. And, it is supposed to end and lead to competition that drives down prices over time.

    Bach and Trusheim explain that the problem with biologics is that they are not simple to manufacture. Competition, therefore, is not as likely in the biosimilars (generic alternatives to biologics) marketplace as in the regular prescription drug marketplace. Moreover, to the extent there have been competitive biosimilars, they have not successfully lowered the drug’s price. So, the price of biologics remain sky high.

    Just to say it, competition is woefully lacking in the prescription drug marketplace writ large. In today’s world, there are many generic drugs that are still priced well-above what they should be priced. Competition in the prescription drug market often does not work to bring down prices.

    Through legislation, Congress has tried to create a competitive market for biologics and has failed. More than eight in ten biologics that could have biosimilar competitors do not. Biologics need to be affordable.

    Bach and Trusheim propose that Congress require pharmaceutical companies to lower the prices of their biologics once their patents expire to 10 percent above their production cost. That reform would reduce the price of biologics significantly. Good luck getting this law enacted and, if enacted, figuring out manufacturing costs for each biologic.

    That said, the Washington Post reports that HR3, the prescription drug pricing bill that passed the House in 2019, has a chance of getting passed in this Congress. It would lower the price of 350 of the most commonly used prescription drugs (50-250 a year) in Medicare and private insurance. The price of a drug would be no more than 120 percent of what six other wealthy nations pay (Australia, Canada, France, Germany, Japan and the United Kingdom) over the next ten years. For some inexplicable reason, it would not lower drug prices for the uninsured.

    Here’s more from Just Care:

  • Trump administration drug proposals will keep prices high

    Trump administration drug proposals will keep prices high

    Nicholas Florko reports for Stat News on minor and arguably risky efforts by the Trump administration to drive competition in the Medicare Part D prescription drug marketplace through the promotion of biosimilars and generic drugs. The administration’s drug proposals will keep prices high. To bring down drug costs, Congress should set prices at the average of what other wealthy countries pay for them.

    One administration proposal would give bonuses to Medicare Part D drug plans if they steered their members towards generic drugs. Right now, drugmakers pay insurers to push their costly drugs, so the insurers tend to do so. Another proposal recommends that insurers create a special low-cost tier in their formularies for lower-cost medicines.

    Promoting the use of generic drugs or biosimilars, which are generic versions of biologicals made from living cells, should not be controversial. They make sense. But, for a host of reasons, patient advocates, pharmaceutical companies, health insurers and pharmacists are pushing back against these proposals. 

    Of course, health insurers should not need to be incentivized to promote generics and biosimilars. But, they are not doing so in many instances where they should be. So, the Centers for Medicare and Medicaid Services (CMS) has proposed that it would factor in the frequency with which Part D insurers have patients taking generics and biosimilars as part of their star-rating, which in turn affects the amount of money CMS pays them.

    One issue is that insurers receive rebates, money back from pharmaceutical companies, when they put certain brand-name drugs on their formularies and promote them. The insurers say that sometimes these rebates make brand-name drugs less costly than generic drugs. So, they argue that pushing generics could drive up costs.

    The pharmaceutical companies argue that biosimilars are not identical to biologics. So, it would be wrong to push the biosimilars in many cases.

    What’s particularly troublesome about the fights over these proposals is that the insurance and pharmaceutical industries seem to win them with the argument that they will drive up costs because pharmaceutical companies will respond with higher prices for drugs. The fact is that any attempt to “save” money can be met with higher brand-name drug prices since Congress has given pharmaceutical companies the power to set prices through the patent system.

    For brand-name drugs, pharmaceutical companies control the price. Insurers will pay an agreed upon high price because they will benefit financially–with a rebate–from the pharmaceutical companies. So long as drugmakers can set the price and insurers can pocket rebate dollars–they can also keep the amount of the rebates secret–there’s no way for the American public to see lower drug prices.

    The simplest and fairest solution in a global marketplace is for the federal government to establish drug prices in the US that are on average what other wealthy countries pay for their drugs. Although President Trump at one point argued that Americans should not be paying higher drug prices than people in other wealthy countries, it appears he has since been swayed otherwise.

    Here’s more from Just Care:

  • Pharmaceutical companies use scare tactics to mislead public about generics

    Pharmaceutical companies use scare tactics to mislead public about generics

    Americans are always being sold, and health care products are no exception. It’s one thing when corporations are pushing the latest snack food or toothbrush, it’s another when they are pushing to make money in ways that endanger our health and well-being. The Washington Post reports that pharmaceutical companies have been using scare tactics to mislead the public about generic drugs and to keep lower-cost drugs off the market.

    We all know that pharmaceutical companies use all the tools in their arsenal to profit off of our health. They charge Americans prices that are double what they charge in other wealthy countries, which regulate drug prices. They pay Pharmacy Benefit Managers to put their higher-cost drugs on insurance company formularies and keep generics off. They pay researchers to help ensure papers are published promoting their latest drugs. They pay TV stations to promote their drugs. They pay disease organizations to support their high prices. They contribute to election campaigns of federal and state policymakers to protect against legislation that would eat into their profits. And, the list goes on.

    Now, they are said to be doing what they can to keep generic versions of their high-cost biologic drugs–biosimilars–off the market. They are misleading people. These generic biosimilar drugs are as safe and effective as the brand-name biologics. They are made with the same ingredients.

    Biologics are made with living cells. And, they can treat a range of life-threatening diseases, including cancer. But, they tend to be extremely costly, often costing many thousands of dollars.  Indeed, the majority of growth in prescription drug costs between 2010 and 2015 can be attributed  to biologics, including Humira.

    If the pharmaceutical companies succeed, it could keep these generics off the market, and many people will be forced to go without necessary treatment. They cannot afford the cost of the biologics; biosimilars could cost as little as half as much. Not surprisingly, drug spending is estimated to be between $54 billion and $200 billion higher over 10 years, if the biosimilars are not available.

    But, what’s curious is that it is the doctors who prescribe these drugs. And, they are perfectly well positioned to tell their patients that biosimilars are as safe and effective as biologics. The Washington Post article does not explain why doctors are not prepared to do so.

    FDA Commissioner Gottlieb suggested that the FDA could step in and issue warning letters to pharmaceutical companies if they are deliberately misleading people. But, it’s hard to imagine that will be helpful.

    Here’s more from Just Care:

  • Biosimilars, almost identical to brand-name drugs at discounted cost

    Biosimilars, almost identical to brand-name drugs at discounted cost

    In this 21st century digital world, it seems like every day a new word or expression surfaces and goes viral. Badass, lit, basic, I can’t keep up. But, when it comes to health care, I try my best! So, I’ve learned that biosimilars are intended to be almost identical to brand-name drugs, essentially generic versions, offering the same outcomes at 20-30 percent less cost.

    Even though biosimilars are made of living cells, a new study published in the Annals of Internal Medicine that looked at one class of biosimilars, indicates that they are safe and effective. Dr. Caleb Alexander, a study author, told Stat news, that after looking at 19 studies, researchers found that the biosimilar drugs for rheumatoid arthritis, inflammatory bowel disease, and psoriasis are essentially “comparable” to the brand-name biologics.

    But, to date, according to Stat news, the FDA has only approved two biosimilars. The alleged concern is that because biosimilars are made of living cells they are slightly different from the brand-name drugs, and those differences could affect their safety. Of course, the drug industry is concerned about the competition that would drive down profits and is investing heavily in keeping biosimilars from being approved.

    Amgen recently won a federal appeals court challenge against a biosimilar manufacturer aimed at slowing down approval of biosimilars. In short, the court prevented the biosimilar manufacturer from marketing its biosimilar drug; it affirmed the lower court opinion that the Biologics Price Competition and Innovations Act keeps manufacturers of biosimilars who receive FDA approval for their drugs from marketing their drugs until 180-days after they give notice of their marketing license, which they only get once the drug is approved.

    This 180-day post-FDA-approval and marketing license period gives brand-name drug manufacturers additional time to sell their brand-name drugs without competition and come up with patent and other challenges to biosimilars.

    More research needs to be done around the safety of biosimilars. And, policies need to evolve to speed up their post-approval entry into the market. Biosimilars open the door to billions of dollars of savings on some critically important and very expensive drugs, like Remicade and Humira, among others.

    Here’s more from Just Care: