Considerations for Adding Biosimilars to Formulary

April 2019 - Vol.16 No. 4 - Page #14
Category: Generics Manufacturers

Evaluating biosimilars for formulary inclusion can be a challenging, time-consuming enterprise. The decision to add medications to the formulary, or designate certain drugs as preferred products, is typically made by the Pharmacy and Therapeutics (P&T) committee, which is responsible for ensuring that medications are safe and effective, economically feasible, and will not negatively affect workflow or patient throughput. FDA-approved generic medications have traditionally been a leading focus for cost reduction, as safety and efficacy are assumed to be equivalent to their brand name counterparts. However, with the advent of biosimilars, which by their nature are difficult to produce and thus, difficult to duplicate, the decision-making process for formulary inclusion comprises additional complexity.

With generic drugs, formulary approval usually facilitates widespread use and often complete replacement of the original product. Conversely, the biosimilar approval process may require the P&T committee to define when the drugs should be used. Questions that must be answered include the following:

The requirements are high to attain the Food and Drug Administration (FDA) classification of interchangeability for biosimilars, and to date, FDA has not designated a biosimilar as interchangeable (see SIDEBAR1). However, P&T committees may do so for their health system through the therapeutic interchange process.2 To classify a biosimilar as interchangeable with an innovator product, the P&T committee must be certain that the biosimilar’s safety and efficacy data is sufficient to prevent patient harm and that the biosimilar will produce outcomes similar to the original product.

As more biosimilars enter the marketplace, it is becoming increasingly clear that the decision to add these products to a health system’s formulary is significantly more challenging than adding traditional generic drugs. Considerations for formulary adoption of biosimilars must include an understanding of biosimilarity, evaluation of safety and efficacy, review of the impact of biosimilars on workflow and patient acceptance, as well as cost and reimbursement issues.

Determine Efficacy and Safety

Safety and efficacy are the linchpins governing adoption of biosimilar products. When considering adding biosimilars to the formulary, health system leaders must review the clinical data, determine the product’s role in therapy (if any) in relation to the original product, develop an implementation process, and monitor outcomes to verify that the product is safe and meets the expected endpoints. The majority of the currently approved biosimilars are supportive care products, which increases the likelihood of provider acceptance; it is uncertain if providers are likely to express more reticence in accepting biosimilars that treat cancer and other serious illnesses. Some providers may request direct comparison trials before they will be comfortable using a biosimilar for a specific indication.

To gain full acceptance of bio-similars, health care providers must be convinced that the efficacy and safety of the biosimilar is equivalent to the original product. Thus, a thorough review of the available safety and efficacy data is critical.

Understanding Biosimilarity

The Affordable Care Act defines biosimilarity as3:

The biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components and there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product.

To fully grasp the idea of biosimilarity, health care professionals must understand two important concepts: product drift and extrapolation.

Product Drift

Product drift is defined as a change in a biologic drug resulting from alteration in any step of the manufacturing process. Any change in a manufacturing system—for example, even a change in the size of a fermenter—may result in excursions in product attributes.4,5 Product drift has occurred in the manufacturing of innovator biologic products, resulting in lot-to-lot variation, which introduces the argument that the innovator products available today can actually be described as biosimilars of the originally approved products.5,6 Therefore, an argument could be made that due to product drift, anyone who has recently used a monoclonal antibody (mAb) has used a biosimilar.4

Stakeholders who are comfortable with this concept will find biosimilar acceptance more straightforward. Although current regulations are aimed at minimizing the impact of manufacturing changes on biologics, changes can occur that require further study. For example, the European Medicines Agency mandated clinical studies to demonstrate comparability when a change in the manufacturing process resulted in a change in the DNA sequence for darbepoetin.6 One interesting result of product drift is that it can complicate the development of biosimilars; some biosimilars require multiple iterations before they can be identified as sufficiently similar to the reference compound.4


The FDA’s Scientific Considerations in Demonstrating Biosimilarity to a Reference Product guidance states that the FDA may extrapolate biosimilarity to an indication that has not been formally investigated for the biosimilar but has been approved for the reference product.7 Thus, a biosimilar that was clinically studied in one tumor type may also be approved for use in another tumor type without obtaining new clinical data. Extrapolation is not a new concept; when manufacturers make a change to the manufacturing process for an existing product, they must complete one clinical trial to confirm the equivalence of the original and updated products. The results of that trial may be extrapolated to all indications of the drug.4

The FDA determines biosimilarity based on the totality of the data that has shown similar critical quality attributes, biological function, clinical efficacy, and safety to that of an already licensed biologic reference product (see TABLE 1).8 For the FDA to extrapolate a biosimilar indication, a biosimilar must demonstrate “The same mechanism of action, target-binding characteristics, pharmacokinetics, and biodistribution in the clinically tested and the extrapolated indications, as well as address any expected differences in toxicity or effectiveness.”9 Using the mAb example, the analytical and pharmacokinetic comparisons should, at a minimum, answer the questions listed in TABLE 2.10

Click here to view a larger version of this Table

If clinicians request comparison studies to verify that biosimilars are equivalent to innovator products, they must understand the limitations of these studies. Given that the dosing of a mAb, for example, is well above the target’s saturation point, comparison studies may be insensitive when comparing efficacy endpoints, such that products that are not biosimilar in analytic or pharmacokinetic studies may produce comparable results in safety and efficacy objective outcomes. Comparison trials confirm analytic and pharmacokinetic trials and add to the totality of the data for biosimilars; however, the need for extrapolation remains.10 Thus, when reviewing efficacy and safety data, and as the P&T committee determines a biosimilar’s role in therapy, it is essential to consider the concept of extrapolation.10

Evaluate Cost and Reimbursement

Once the efficacy and safety of a biosimilar are determined to be comparable to the original product, the next step is to complete a financial analysis. It is common for this process to be as complicated as determining efficacy and safety. The economics of biosimilars demand that multiple factors be considered, including the drug’s true cost as well as the costs associated with system change.

Determine the True Cost of the Drug

In today’s pharmaceutical marketplace, determining acquisition cost may not be as simple as identifying the cost the pharmacy pays for the drug. It is critical to consider rebates, incentive contracts, and similar mechanisms to determine the true cost of a product.

In addition, costs accrue whenever a product change occurs. For example, if a biosimilar is added to formulary, the EHR and each order set impacted by the change must be updated. This process raises additional questions: Should the facility build order sets to allow the use of any approved biosimilar, or should each order set be product specific? Other technologies that may be affected by a product change include pharmacy inventory systems, smart pumps, ADCs, and BCMA systems. These interconnected systems must communicate appropriately to ensure that the correct product is used and documented. Unfortunately, many institutions struggle to accurately calculate the downstream costs associated with a product change. Nevertheless, when evaluating biosimilars for formulary adoption, do not neglect to consider the system implications. While the organization may ultimately decide that the cost of the drug and the required systems changes are feasible, it is critical to undertake a comprehensive financial analysis.

Cost Savings from Biosimilars

Although the initial cost savings from biosimilars did not meet expectations, as more products enter the market, savings may increase. In contrast with generic medications, which typically demonstrate price discounts in excess of 40% within 6 months and the branded product often loses more than 75% of its market share, the early experience with biosimilars has been quite different. Innovator products are losing less of their market share and price discounts are averaging 15% to 20%.11 As manufacturers of innovator products continue to offer aggressive contracting terms, the incentive to change may not be as strong with biosimilars as with generics.


Reimbursement must be scrutinized as part of the economic analysis; this is especially important in the outpatient environment, where revenue is key to decision-making. The organization’s payer mix determines the type and amount of reimbursement. The Centers for Medicare and Medicaid Services (CMS) sets biosimilar reimbursement for physicians’ office practices or hospital-based outpatient clinics as the average selling price (ASP) for the biosimilar plus 6% of the ASP of the innovator product, which gives providers a small incentive to use the biosimilar.12 Conversely, for the inpatient setting, CMS bundles the drugs into a fixed payment based on diagnostic related group (DRG), making cost the primary driver for drug decisions in this setting.

With private payers, both inpatient and outpatient reimbursement is usually based on a negotiated percentage of charges, which may be unique to each institution. Thus, cost and reimbursement should both be considered in the economic analysis. A notable development is unfolding as more payers adopt biosimilars: Some are establishing a single preferred product and will not reimburse any non-preferred products. With both the innovator and biosimilar manufacturers offering rebates to payers who agree to use certain products, this can create a perverse situation wherein an institution may be able to access a less expensive drug, but the payer may have a financial incentive to only pay for a more expensive product. In addition, in situations where multiple payers have assigned preferred product status to different biosimilars, the institution may be required to stock all the available products to ensure proper reimbursement.

Maintaining the appropriate balance between cost and revenue for biosimilars requires continual oversight. Contracting in this environment can be particularly complicated. For example, committing to a multi-year contract in order to receive a discounted rate may become problematic if a major insurance provider later decides to only reimburse for a different product. Thus, robust financial analysis requires regular communication among pharmacy, supply chain management, and revenue cycle teams.

Biosimilar Impact on Patient Experience and Workflow

The decision to add a biosimilar to the formulary, particularly if it replaces a currently used product, may impact both the patient experience and the workflow. Consider, for example, the situation wherein the manufacturer of the innovator product changes the delivery system, the product packaging, the route of administration, or another product characteristic just prior to the patent expiration date. Such changes are typically aimed at improving clinical efficiency or enhancing the patient experience. Once an institution adopts these new formats, it complicates the decision to switch to a biosimilar that does not offer the same improvements. In these situations, communication elucidating the advantages of both products as well as their impact on the patient and the institution is especially important, and transparency regarding the decision-making process should be maintained.

The benefits of utilizing a given biosimilar should be discussed with patients. For example, a biosimilar product may be less convenient for a patient if it requires the scheduling of an additional appointment to receive another injection. Or, a patient may prefer the convenience of a subcutaneous injection that is completed within 5 to 7 minutes, compared with at least 90 minutes required for the IV infusion of the biosimilar. However, in some situations, a significantly lower price point may offset the convenience offered by a more costly drug.

Multiple workflow issues must be taken into account when transitioning to a biosimilar. For example, it is prudent for pharmacy to exhaust its current supply of the innovator product prior to switching to the biosimilar, so the transition may not occur as quickly as anticipated. Moreover, the organization must decide whether or not to transition patients already taking the innovator product to the biosimilar. Will the biosimilar only be initiated in new patients, or will all patients be switched? Starting only new patients on the biosimilar may be the simplest option, as it eliminates the need to explain the change to patients who are already on the drug; however, this approach might significantly delay the conversion and thus result in a loss of cost savings.

If a decision is made to use more than one product, ensuring medication safety is paramount. The scenario wherein different payers demand use of different products creates added complexity in the drug selection process. System safeguards, such as flags in the electronic medical record to assure the correct product is selected and bar code scanning for both dispensing and administration, must be put in place. Of course, in the absence of an FDA interchangeable designation, at this time it is not recommended to switch back and forth between a biosimilar and an innovator product during the course of treatment.

Biosimilar Availability

A list of the FDA-approved biosimilars is available on the FDA website at: It is critical to note that FDA approval of a biosimilar does not necessarily equate to its immediate availability. Many times, patent issues must be addressed before the biosimilar enters the market. For example, Amgen’s biosimilar bevacizumab (Mvasi) was approved by the FDA in 2017; however, the patent exclusivity for Avastin does not expire until 2019.13 Mylan’s Ogivri, a biosimilar trastuzumab, was approved in December 2017, but is not expected to be marketed until 2019 or 2020 based upon an agreement between Roche and Mylan.14

The Biologics Price Competition and Innovations Act (BPCIA) introduced processes for resolving patent disputes between biosimilar and innovator manufacturers prior to the biosimilar launch. Despite these processes, some early biosimilar manufacturers launched their products without adhering to certain BPCIA provisions involving notification and sharing of patent information between the biosimilar and innovator manufacturer.15 Other biosimilar manufacturers have delayed entering the market after FDA approval to avoid patent litigation risk. A 2015 Supreme Court decision helped clarify uncertainty regarding when the BPCIA patent provisions apply.15,16 In addition, other early court cases will likely set a precedent for patent litigation designed to delay biosimilar entry into the market.15

Future Decision-Making

The era of biosimilar medications is still in its infancy. However, within the next few years, biosimilars will be released for several major mAbs used in cancer treatment. Adoption decisions around these medications could set the foundation for dramatic change in health care. Although early adoption has been slow, as more biosimilars are released and as health care professionals become more confident in analyzing the relevant data, biosimilars may have a far-reaching impact on drug pricing, similar to the effect generic drugs had on pricing for non-biological medications. While biosimilars are more complex than small-molecule generic drugs, some of the same concerns and fears that marked the introduction of generic drugs are now reoccurring with biosimilars.

Looking to the future, biosimilar manufacturers must be held to the FDA standards for safety and efficacy. Hospital decision-makers must be prepared to address questions surrounding the use of biosimilars and conduct analyses to determine which products are best suited for formulary adoption. Payers and health care systems will need to communicate and develop processes to ensure patient access to biosimilars. Ultimately, if biosimilars are to be successful, health care providers must embrace these drugs as part of an integral strategy for properly treating patients while controlling drug costs.

Scott Soefje, PharmD, MBA, BCOP, FCCP, FHOPA, is Director, Pharmacy Cancer Care, at the Mayo Clinic in Rochester, Minnesota. He is a past-president of the Hematology/Oncology Pharmacy Association (HOPA). Scott earned his PharmD from the combined program at The University of Texas Health Sciences Center at San Antonio and The University of Texas at Austin. He is board-certified in oncology pharmacy and earned an MBA from George Washington University.


What Is an Interchangeable Product?

The FDA establishes the definition of an interchangeable product as1:

An interchangeable product is a biosimilar product that meets additional requirements outlined by the Biologics Price Competition and Innovation Act. As part of fulfilling these additional requirements, information is needed to show that an interchangeable product is expected to produce the same clinical result as the reference product in any given patient. Also, for products administered to a patient more than once, the risk in terms of safety and reduced efficacy of switching back and forth between an interchangeable product and a reference product will have been evaluated.

An interchangeable product may be substituted for the reference product without the involvement of the prescriber. FDA’s high standards for approval should assure health care providers that they can be confident in the safety and effectiveness of an interchangeable product, just as they would be for an FDA-approved reference product.


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