Considerations for Adding Biosimilars to Formulary

December 2017 - Vol.14 No. 12 - Page #24
Categories: Generics Manufacturers, Specialty Wholesalers

As biosimilars become available in the US, health systems must develop strategies to evaluate their suitability for formulary inclusion. In 2015, Zarxio (filgrastim-sndz) became the first biosimilar to gain FDA approval under the Biologics Price Competition and Innovation Act. Since then, four other biosimilars have been approved, for the biologic reference products infliximab, etanercept, adalimumab, and bevacizumab (these biosimilars are not yet on the market).1 Biosimilars have the potential to introduce direct competition for branded biologics, which could lead to increased patient access to therapies and decreased total health care expenditures for critical pharmaceuticals. This is important given that the global biologics market is forecast to grow to $479 billion by 2024.2 In the US, it is estimated that the use of biosimilars could lead to a $44.2 billion reduction in direct spending on biologics from 2014 to 2024, although actual savings will be contingent on final FDA regulations and the level of competition.3

Pharmacists are in a unique position to facilitate the introduction of biosimilars to health-system formularies and to educate providers and patients about biosimilar use. This role is predicated on pharmacists being well educated on regulatory and market considerations and thus able to conduct objective evaluations of biosimilars.

Understanding Biosimilars

Biologics Versus Biosimilars

Biologics are complex, protein-based medicines such as vaccines, gene therapies, blood and blood components, and monoclonal antibodies. Unlike small molecule drugs, which are chemically synthesized, biologics are usually manufactured in living organisms (eg, human cells, bacteria, or yeast). A biosimilar—a drug product that is highly similar to an FDA-licensed biologic (ie, the reference or originator drug)—has no clinically meaningful differences to the reference product in terms of safety, purity, and efficacy.4

It must be shown that the biosimilar uses the same mechanism of action for the proposed condition(s) of use as the reference product. Moreover, the biosimilar must have the same route of administration, dosage form, and strength as the reference product. Biosimilar approval is based on the demonstration of biosimilarity between the proposed and the reference product; there is no requirement to establish safety and effectiveness of a proposed product. An interchangeable biosimilar meets additional standards that allow it to be substituted for the reference drug without the intervention of the prescriber (at this time, no interchangeable biosimilars have been approved by the FDA). It is important to note that biosimilars differ from generic drugs, which are exact copies of branded, small-molecule medicines.

The essential purpose of biosimilars is to introduce direct competition for branded biologics, resulting in lower cost for critical pharmaceuticals. With more competition in the marketplace, pricing strategies become more competitive, and cost savings can increase.

Familiarity with Biosimilars

Data suggest that health care providers and patients have limited familiarity with biosimilars. A survey on perceptions and awareness showed that 43% of medical professionals were unsure of biosimilar safety; moreover, 68% of patients had never heard of biosimilars, and 90% of patients had never asked their doctors about alternatives to the biologic drugs they were prescribed.5 Beyond this general lack of knowledge among physicians about the approval process for new drugs, there is also a lack of familiarity with the specific designations granted to products.6

It is important for providers to understand that biosimilars have been used for years, although we may not have realized it. For example, infliximab has undergone 26 process changes in the manufacturing process since approval by the FDA. None of these changes required any additional FDA approval. Other examples of biosimilars that have been used for years include insulins, intravenous immune globulin (IVIG), and vaccines.

Pharmacists As Educators

To make formulary decisions, pharmacists must have a comprehensive understanding of the biosimilars approval process, the analytical tools and techniques that substantiate the similarity of biosimilars to their reference biologics, and the clinical trial data supporting their use. In addition, pharmacists have a responsibility to educate providers and patients about the use and benefits of biosimilars.

Lessons Learned from the Adoption of Generics

To increase awareness of biosimilars, much can be learned from the generic experience. The lack of familiarity with biosimilars is reminiscent of the market’s initial reluctance to adopt generic drugs. Even after 30 years of experience, many providers still prefer to use the brand name drug in narrow therapeutic window medicines, such as levothyroxine and phenytoin. While the initial adoption of generics was slow, 89% of prescriptions are now filled with generic medications.7 This acceptance required time and effort, and was largely influenced by managed care organizations’ attempt to contain costs. By creating different tiers and co-payment programs, insurance companies also helped encourage the use of generics. In the inpatient environment, the driving force for generic adoption was the associated cost savings, aided by the FDA’s therapeutic equivalency or “Orange Book” rating.8 Approval by P&T committees and use of computerized prescriber order entry (CPOE) helped limit medication ordering options to the benefit of generic drugs.

In light of the challenges to understanding and accepting biosimilars, pharmacists must remain realistic and avoid overemphasizing the benefits of biosimilars. Adoption of biosimilars, to the extent required to influence market conditions, will necessitate a sustained commitment on the part of all stakeholders; market, legal, regulatory, and practice hurdles exist and will take time to overcome. It is critical to appreciate the complexities of the reimbursement process when evaluating the relative value of biosimilars and to understand the incentives offered to other stakeholders beyond the health-system audience. Clarifying these issues will help determine if and when a health system should convert from a reference biologic to a biosimilar. Considerations will differ depending on whether the biosimilar is to be used in the inpatient environment, in outpatient infusion clinics, or dispensed through a PBM, as each location has a different reimbursement and billing structure.

Formulary Considerations

The decision about whether to include biosimilars on formulary involves many key factors:

  • Acquisition Costs. Biosimilars are given a different HCPCS code than the original reference product. Biosimilars of the same reference product will share a code. Under average sales price (ASP), the current biosimilar reimbursement under Medicare Part B is 100% ASP (biosimilar) + 6% ASP (originator). The wholesale acquisition cost (WAC) is used for reimbursement before ASP is established.9

It is important to implement a monitoring plan to assess the impact of ASP adjustments on reimbursement. At times, the drug with the lowest acquisition cost may not be the best choice. For example, for patients covered under Medicare Part D, biosimilars currently are not eligible for the Coverage Gap Discount Program and may actually cost more than an originator. For the Medicaid rebate, the biosimilar manufacturer rebate is calculated according to the 23.1% level of sole-sourced drugs.10,11

  • Provider Acceptance. Educating physicians about the FDA approval process is essential to gain acceptance of biosimilars as products having equal safety and efficacy. This can reduce the potential for errors resulting from carrying multiple products on formulary.
  • Wholesaler Availability. Not all pharmaceutical wholesalers are able to supply biosimilar products. Most pharmacy departments purchase products from the wholesaler at a cost minus. If the biosimilar does not come through the wholesaler, costs will be higher.
  • 340B Pricing. For health systems that are 340B-eligible, a competitive 340B price is critical to the formulary decision, especially for agents that are used primarily in outpatient settings.
  • Contracting. Because biosimilars are often bundled with other products, the overall impact on existing contracts or rebates must be assessed.
  • Formulation Options. The available products and formulations must be reviewed. For example, changing from a vial to a syringe may require purchasing larger refrigerators for storage.
  • IT and CPOE Builds. Resources must be dedicated to developing calculations for product conversion. New insurance authorizations will be required to account for the different J-codes. To configure the CPOE database, it is critical to include the two names for biologics, the core name and the proper name (core name plus a four-letter suffix). Using the proper name in the CPOE system will prevent inadvertent substitution.

Biosimilars Are Coming

Health systems can expect additional biosimilars to enter the market in the near future, which will require pharmacy to develop a comprehensive understanding of biosimilars to support appropriate evaluation, adoption, and use of these products. In addition to the FDA approval process and regulatory requirements, pharmacy must develop an understanding of the market factors that influence the adoption of biosimilars, including pricing strategies, managed care influences, and legal requirements. This information will assist pharmacists in assessing the value of a biosimilar compared to its originator biologic in terms of price, reimbursement, and patient assistance, and develop strategies for appropriate biosimilar use across the health system.

Molly Billstein Leber, PharmD, BCPS, FASHP, is the manager of medication policy and formulary management at the Yale New Haven Health System. She received her PharmD from the University of Montana and completed a PGY1 residency at Yale New Haven Hospital. Molly’s professional interests include formulary standardization, drug use policy, pharmacy informatics, and medication safety.


  1. US Department of Health & Human Services. Food and Drug Administration. Purple Book: Lists of Licensed Biological Products with Reference Product Exclusivity and Biosimilarity or Interchangeability Evaluations. Accessed October 4, 2017.
  2. Transparency Market Research. Biologics Market (Product - Monoclonal Antibodies, Vaccines, Cell Therapy, Recombinant Hormones/Proteins, and Gene Therapy; Applications - Infectious Diseases, Oncology, Immunology, and Autoimmune Diseases) - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2016 - 2024. Accessed October 31, 2017.
  3. Mulcahy AW, Predmore Z, Mattke S. The cost savings potential of biosimilar drugs in the United States. (RAND Corporation). Accessed October 27, 2017.
  4. US Department of Health & Human Services. Food and Drug Administration. Drugs: Information on Biosimilars. Accessed October 4, 2017.
  5. Biosimilar Adoption in the United States (Life Sciences Research Brief). Clarkston Consulting. Accessed November 14, 2017.
  6. Kesselheim AS, Eddings W, Raj T, et al. Physicians’ trust in the FDA’s use of product-specific pathways for generic drug approval. PLOS One. 11(10): e0163339. doi:10.1371/journal.pone.0163339.
  7. Quintiles IMS. Medicines Use and Spending in the U.S. (May 2017). Accessed November 1, 2017.
  8. US Department of Health & Human Services. Food and Drug Administration. Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book). Accessed October 31, 2017.
  9. Centers for Medicare & Medicaid Services. Part B Biosimilar Biological Product Payment and Required Modifiers. Accessed November 14, 2017.
  10. Patient Out-of-Pocket Costs for Biosimilars in Medicare Part D. Avalere Health, April 2016. Accessed November 14, 2017.
  11. Medicaid Drug Rebate Program. Accessed November 14, 2017.

Suggested Reading List

Ascione FJ, Kirking DM, Gaither CA, et al. Historical overview of generic medication policy. J Am Pharm Assoc. 2001;41(4):567-577.

Blackstone EA, Joseph PF. The economics of biosimilars. Am Health Drug Benefits. 2013;6(8):469-478.

Boehm G, Yao L, Han L, et al. Development of the generic drug industry in the US after the Hatch-Waxman Act of 1984. Acta Pharmaceutica Sinica B. 2013;3(5):297-311.

Falit BP, Singh SC, Brennan TA. Biosimilar competition in the United States: statutory incentives, payers, and pharmacy benefit managers. Health Aff (Millwood). 2015;34(2):294-301.

Food and Drug Administration. Guidance for Industry. Biosimilars: Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009 (April 2015). Accessed October 27, 2017.

Food and Drug Administration. Guidance for Industry. Considerations in Demonstrating Interchangeability with a Reference Product. Accessed October 27, 2017.

Food and Drug Administration. Guidance for Industry. Scientific Considerations in Demonstrating Biosimilarity to a Reference Product (April 2015). Accessed October 27, 2017.

Generic Pharmaceutical Association. 2016 Generic Drug Savings & Access in the United States Report. Accessed October 27, 2017.

Kalman-Szekeres Z, Olajos M, Ganzler K. Analytical aspects of biosimilarity of protein drugs. J Pharm Biomed Anal. 2012;69:185-195.

Lucio SD, Stevenson JG, Hoffman JM. Biosimilars: implications for health-system pharmacists. Am J Health Syst Pharm. 2013;70(22):2004-2017.

McCamish M, Woollett G. The continuum of comparability extends to biosimilarity: how much is enough and what clinical data are necessary? Clin Pharmacol Ther. 2013;93(4):315-317.

Mellstedt H, Niederwieser D, Ludwig H. The challenge of biosimilars. Ann Oncol. 2008;19(3):411-419.

Mulcahy AW, Predmore Z, Mattke S. The cost savings potential of biosimilar drugs in the United States. (RAND Corporation). Accessed October 27, 2017.

Schwartz LL. The debate over substitution policy. Its evolution and scientific basis. Am J Med. 1985;79(suppl 2B):38-44.

Weise M, Bielsky MC, De Smet K, et. al. Biosimilars: what clinicians should know. Blood. 2012;120(26):5111-5117.

Case Study: The Yale New Haven Health System Approach to Managing Biosimilars

Health care deliverers, including the Yale New Haven Health System (YNHHS) in Connecticut, must develop policies and procedures (P&Ps) directing biosimilar management and formulary inclusion. The YNHHS comprises four hospitals, a physician foundation, and 7600 medical staff members. Recognizing the need to set a precedent for the management of biosimilars approved through the FDA’s 351(k) biosimilar approval pathway, YNHHS named its Oncology Chief Medical Officer as project sponsor and began an extensive staff education program delineating the safety and efficacy of biosimilars, with an emphasis on the positive impact for patients. This education was presented to the YNNHS Oncology Subcommittee, the P&T Committee, and on oncology grand rounds, as well as during one-on-one stakeholder discussions that occurred as needed.

As a result of this initiative, YNHHS now designates biosimilars therapeutically equivalent to the reference product for the FDA-approved indications for each drug, which allows formulary decisions to be based on financial and operational considerations. Pharmacy communicates with key stakeholders prior to any formulary conversion and allows a request for a formal review if there is significant data supporting the innovator product. Declaring all biosimilars therapeutically equivalent to their reference drug has allowed YNHHS to start contract discussions with drug makers earlier, sometimes even before the medicines become commercially available. We expect this flexibility will be advantageous as additional biosimilars enter the market.


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