What Does New Payer Research on Expected Biosimilar Management Mean to Others?

Although the biosimilar era has officially launched, only one agent has entered the market as of April 2017. That would be Zarxio1, approved in March 2015 as a biosimilar for the market-leading granulocyte colony-stimulating factor Neupogen. Basaglar2, a follow-on biologic—an alternate approval pathway to biosimilars, but “similar”—to the long-acting basal insulin Lantus, has also been available since December 2016.


The relative paucity of actually available biosimilars has not dissuaded some payers from favoring them on formularies. CVS Health announced last summer that Zarxio and Basaglar would replace their branded counterparts on its standard formulary list for 2017.3 To better understand how payers would view biosimilars, we conducted research with 25 individuals who were responsible for payer decisions on medication coverage for pharmacy and medical benefits for over 130 million covered lives in the United States. To assess trends, we asked the same questions from similar research conducted during the spring of 2015, immediately after the Food and Drug Administration (FDA) approval of Zarxio. This column will focus on three components of our findings: discounts, management approach, and expected challenges.  

Biosimilar Discounts

Greater than 80% of respondents indicated in 2015 that biosimilar discounts needed to be 30% or higher in order to significantly change product preference, and this held consistent in 2017. We certainly expect to see variability by product class. For brands where no discounts are currently available, somewhat lower discounts could trigger changes in product preference. At the same time, brands where discounts are available will require larger discounts to influence established preferences.

Biosimilar Management

As biosimilars continue entering the market, payers will need to employ management tools in order to realize utilization of its preferred product—regardless of whether that product is branded or biosimilar. We asked payers what tools they would use to drive utilization to preferred products covered within their pharmacy benefit or medical benefit. In 2015, we gave respondents four choices for managing products on their pharmacy benefit: step-through preferred product (require use of preferred product before nonpreferred); lower member cost share for preferred product; lock-out coverage of nonpreferred product; and move-through specialty pharmacy to perform interchange to preferred product. Each approach was selected by more than one-third of the respondents, indicating that all are viable and likely strategies; this held consistent in 2017. Nearly 90% of respondents selected step-through preferred product as their mechanism in 2015, making it easily the most favored approach. In 2017, we added a fifth mechanism: prior authorization requiring use of preferred product. Both the prior authorization and step therapy mechanisms were rated as the most likely mechanisms to manage preferred products in the pharmacy benefit, with both being selected by more 60% of the respondents (Figure 1). For products managed within the medical benefit, the primary finding is that payers have grown more comfortable with management of pharmaceuticals, illustrated by a 55% increase in the number of mechanisms selected. The largest shift from 2015 to 2017 was providing better provider reimbursement for the preferred product through the fee schedule (25% in 2015 to 50% in 2017).

Biosimilar Challenges

Several challenges were identified, but in both time periods, member acceptance was not one of them. Only one respondent considered it a barrier in 2015, and none did in 2017. A presumption of this sentiment could be that the cost shares for biologics are much larger than traditional medications, so either noncoverage or a differential in cost share would overshadow any biosimilar product concerns. There were interesting shifts between 2015 and 2017, with concerns over interchangeability decreasing at the same time provider acceptance increased. However, the greatest barrier to biosimilar adoption identified by payer respondents both in 2015 and 2017 was existing discounts or rebates on the current branded innovator products (36% in 2015 to 43% in 2017). The only part of that challenge is the biosimilar manufacturer actually offering the same discounts; also crucial is the amount of time in which the utilization of the biosimilar mirrors the innovator brand. Thus, a change in preferred strategy requires both a realistic assessment of the payer’s ability to shift utilization (through the management mechanisms noted above) and significant discounts relative to the innovator brand, noted in the discount section.  


A relatively slow rollout has led to greater clamoring by payers, providers, and patients for the streamlining of the approval and marketing process for biosimilars. Although the FDA still owes further guidance, such as requirements regarding interchangeability, the US Supreme Court is getting in on the act by hearing a case that will likely indicate the rules for sharing patent information and the amount of notice required from approval until market availability (currently 6 months). In the meantime, payers are already identifying—and in some cases, acting upon—mechanisms to hopefully realize the cost savings that have represented the long-awaited promise of biosimilars. We expect the magnitude of discounts to grow, and payers to become more aggressive in preferred product management. We also expect some situations where payers choose the innovator brand instead of its biosimilar counterpart, especially when the innovator manufacturer continues—and potentially increases—existing discounts.  

For those seeing the implications of these dynamics in the preferred products and cost-share impacts to patients, it will seem eerily familiar to current formulary management of multiple-brand products: different product preferences by different payers. Whether that impacts the success of biosimilars in generating cost savings will be closely observed. 


1.    FDA approves first biosimilar product Zarxio. Food and Drug Administration website. https://www.fda.gov/newsevents/newsroom/pressannouncements/ucm436648.htm. Published March 6, 2015. Accessed May 9, 2017.

2.    FDA approves Basaglar, the first “follow-on” insulin glargine product to treat diabetes. Food and Drug Administration website. https://www.fda.gov/newsevents/newsroom/pressannouncements/ucm477734.htm. Published December 16, 2015. Accessed May 9, 2017.

3.    Mangan D. CVS health to replace higher-cost drugs on covered medications list in 2017. http://www.cnbc.com/2016/08/02/cvs-health-to-replace-higher-cost-drugs-on-covered-medication-list-for-2017.html. Published August 2, 2016. Accessed May 9, 2017.