There are now four categories of pharmaceutical drugs, and each is competing for market share and the confidence of health care providers. Branded drugs, Generic drugs, Biosimilars and Biologics each have a potential cost impact on employee benefit plans as well.
What are Biosimilars?
Whereas Generic drugs are identical to branded drugs in terms of active ingredients and strengths, Biosimilars are different. As the name suggests, they are similar but not identical in terms of quality, safety, and efficacy to the existing licensed reference biologic drug. Biosimilar drugs and biologic reference drugs are made from living organisms, but they are made with different processes using slightly different substances. At the cellular level, Biosimilars have different chemical structures with differences in complex proteins. Biosimilars must be as safe and as effective as the reference drug, and used the same way at the same dosage for the same condition.
Biosimilars in Canada are regulated as new drugs under the Food and Drugs Act. Biosimilar products have a shorter approval pathway and the cost of making them is less expensive than Biologics, for example.
Biosimilars now include blood and plasma products, non-recombinant as well as recombinant products, monoclonal antibodies, and vaccines. They are used to treat diseases and conditions like anemia, diabetes, hormone deficiencies, rheumatoid arthritis, some types of cancer, and inflammatory bowel disease.
Switching to Biosimilars
On average, biosimilars are 27% cheaper than their biologic counterparts. The main reason for the cost difference is that because biologics use a different process with living organisms, and they are more difficult to make. Biologics can cost $1000 – $3000 per month to manage chronic diseases or conditions such as rheumatoid arthritis. The drugs are administered by IV or injection, in some cases weekly, and in other cases, once per month.
Because of the cost difference between biologics and biosimilars, some Canadian provinces are switching from biologic drugs to biosimilar drugs for cost savings. British Columbia became the first province to implement a mandatory policy in 2019 for Pharmacare recipients to switch from originator biologics Remicade, Enbrel and Lantus to biosimilars. BC Health predicted that the switch would save the province $100 million in the first three years, enabling the province to invest the savings to cover new drugs.
Alberta launched its Biosimilar Initiative in 2021, ending coverage for some biologic drugs to switch to biosimilars versions. The government expects to save approximately $30 million annually which can be invested into other healthcare services for Albertans.
Implications for Benefits Plans
According to the Canadian Agency for Drugs and Technology in Health (CADTH), biosimilars represent a total future savings potential of up to $1.8 billion per year. Some employers are encouraging plan members to switch from biologics to biosimilars, and others are leaving that decision up to the insurers.
For this reason, some benefit plans will not cover Biologics but will cover Biosimilar products. As mentioned, in some provinces, the biologics have been delisted, the insurance carriers almost certainly will likely delist them or risk coordination problems. As an example, for Manulife plan members over 65, Manulife is aligning its coverage to what is offered through the Alberta provincial plan which means delisting some biologics.
Legal and Ethical Issues of “Switching”
However, some patients should not or cannot switch to a biosimilar, as determined by their physicians. For example, if a cancer patient is in remission on a biologic, it may cause a regression to switch them to a new drug. Patients who are switched to a biosimilar need to be closely monitored because the drugs will work differently and have different side effects.
If a plan member needs to maintain access to a biologic, then that can create an issue for their benefits plan coverage. SunLife Financial’s policy is that they will allow plan members to switch to the biosimilar if they choose to, but if they remain on the biologic, the cost will be the same as for the biosimilar. Each insurer will have it’s own policy on switching to biosimilars.
Canadian law requires physicians to give precedence to their patients’ best interests over social interests such as cost containment. The primacy of patients’ interests is also clearly reflected in professional policies and codes of ethics. Under Canadian law, physicians may be obligated to tell patients about the ability to access unfunded biologics, provide scientific information in order to obtain informed consent for treatment with biologics, even if patients lack the resources to obtain them. In the end, while there is no inherent right to funding for reference biologics in Canada, physicians in some circumstances may have a legal obligation to advocate on behalf of their patients to remain on a reference biologic.
- Biosimilars are highly similar to the reference product in safety and efficacy, but not identical.
- Biosimilars offer a choice for patients and may improve access.
- Biosimilars create savings that can be redirected elsewhere within Employee Benefit Plans.
- Biosimilars may not be an option for some plan members.
At Health Risk Services, we are keeping a close eye on the issues and opportunities surrounding the four types of pharmaceuticals in the prescription drug space. We help benefits managers create or revise benefits plans to provide the most cost-effective benefits with the best possible offerings for employees.
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