Biosimilars impact to PBM’s formulary & rebate language

June 6, 2024

Biosimilars are shifting the Humira drug market by providing lower costs to patients and clients.

The first interchangeable biosimilar was approved in October 2021. Since then, a total of 10 FDA-approved biosimilars have been introduced. The most recent approval, in February 2024, was for a high concentration Humira biosimilar.[1] Pharmacy benefit managers have been actively updating their formularies and rebate contract language to accommodate the increasing number of FDA approvals for biosimilars.

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PBM’s Evolving Formulary

The three major pharmacy benefit managers (PBMs) have been closely monitoring the increasing number of approvals for Humira biosimilars. They have been working to ensure that their formularies accurately reflect the coverage options for these new medications. There are a few potential approaches they can take in this regard: excluding Humira from their formularies altogether, modifying their formularies to classify Humira as a non-preferred medication, or incorporating the interchangeable biosimilars into their formularies.

CVS, for example, will completely exclude AbbVie’s Humira from all of their formulary options starting April 1, 2024. By excluding Humira, patients will be recommended to take the biosimilars instead. On the other hand, Optum will continue to offer Humira on their formulary while also adding two low wholesale acquisition cost biosimilars. This gives clients the option to access biosimilars while still having coverage for Humira if they prefer. Similarly, ESI will

adopt low wholesale acquisition cost (WAC) biosimilars to their National Preferred Formulary.[1]

Two pharmacist working in drugstore.

Rebate Contract Language Updates

Many PBM’s will start to evaluate rebate contract language as they shift to utilizing interchangeable biosimilars versus Humira.

Typically, manufacturers provide rebates as a percentage of the wholesale cost. Therefore, if there is a lower-cost alternative available, the rebate amount would be lower as well. The cost of the biologics is less than that of the brand drug in which the PBM may propose a credit to account for this difference.

To illustrate this further, let’s consider a hypothetical scenario. Suppose we have a specialty rebate guarantee of $3,000 based on a $10,000 drug. If the price of the drug decreases to $5,000, the expected rebate would be $1,500, which falls short of meeting the rebate guarantee outlined in the contract. This poses a risk for the PBM, as they may not be able to fulfill the rebate guarantee. To mitigate this risk, the PBM has developed a methodology to provide a rebate credit. This credit will be calculated alongside the regular rebates, ensuring that the rebate guarantee is not impacted by the dispensing of these less costly drugs. Ultimately, the net cost to the plan should remain the same.

While the client pays less for the biologic upfront, there may be a potential reduction in the rebate amount compared to the brand drug. On the other hand, with Humira, the client pays more for the drug but receives a higher rebate. The goal is to maintain a balanced approach that considers both the upfront cost and the rebate amount.

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How can Marsh McLennan Agency Help?

Discover how our dedicated Pharmacy Practice can help you evaluate and manage your pharmacy program. Learn more about how our Rx Coalition can support your organization’s needs and ensure optimal pharmaceutical care. If you have any questions or would like to learn more about pharmacy at MMA, contact our Pharmacy Practice today.

 

Sources:
  1. “FDA Oks First Interchangeable, High Concentration Humira Biosimilar,” Medscape Medical News, accessed April 10, 2024, https://www.medscape.com/viewarticle/fda-oks-first-interchangeable-high-concentration-humira-2024a10003rd?form=fpf
  2. “The Big Three PBM’s 2024 Formulary Exclusions,” Drug Channels, accessed April 10, 2024, https://www.drugchannels.net/2024/04/the-big-three-pbms-2024-formulary.html