“These [medical pharmacy] trends continue to be a challenge for all stakeholders involved in the care of patients with complex specialty conditions, making it vital for them to stay current and informed for better decision-making,” said Kristen Reimers, RPh, senior vice president, specialty clinical solutions, Magellan Rx Management.

Medical benefit drug spend, or what we call medical pharmacy, continues to be one of the largest cost drivers when it comes to overall specialty drug trends. At Magellan Rx, we have nearly 20 years of experience in managing this high-cost and complex portion of medical pharmacy spend and have published the industry’s only detailed source for trends related to medical pharmacy for the last 11 years.

Here are the trends you need to know from the eleventh edition of the Medical Pharmacy Trend Report:¹

1. Commercial per-member-per-month (PMPM) spend has increased 89% from 2009 to 2019.
2. Medicare remains the highest spend and utilization line of business (LOB) with 10% of members having a medical drug claim.
3. The average annual cost per member for the top 10 drugs is almost $45,000 for Commercial members.
4. For medical specialty drugs 30% of members are driving 96% of the spend.
5. Gene therapy is the top concern for payers in medical pharmacy.
6. Oncology remains #1 highest-spend category across all LOBs.
7. The oncology pipeline is forecasted to increase 105% in PMPM spend from $52 in 2019 to $106 in 2024.
8. There’s a new top five drug list for commercial: Remicade, Neulasta, Ocrevus, Herceptin, Avastin, with Ocrevus entering the top 5 and having an 85% trend.
9. The highest-cost medical benefit drugs exceed $1M per patient per year.
10. Biosimilars Renflexis and Inflectra (in the BDAIDs category) market share increased 4-6 percentage points for commercial and Medicare and a substantial 24 percentage points for Medicaid.

Want to dig into these trends and more, including the latest in management strategies to combat rising pharmacy trend? Download your copy of the report.

1. Unlock the Latest Trends and Emerging Strategies to Manage Rising Medical Benefit Specialty Drug Spend.” Magellan Rx Management Press Release, 20 May 2021. Accessed May 20, 2021.
2. 2020 Magellan Rx Management Medical Pharmacy Trend Report™, © 2021.

Magellan Rx has been a market leader in developing forward-thinking solutions to combat rising specialty spend on the medical benefit for nearly 20 years. With a passion for solving complex pharmacy challenges, such as biosimilar management, we roll up our sleeves and tackle what is truly driving trend while ensuring a high quality of care for the members we serve.

Building on the success of our industry-first medical pharmacy program, including management of medical benefit oncology drug spend, we began to focus on advancing biosimilar utilization in 2015. Our goal was to empower health plan customers with education and strategies that turned biosimilar availability into cost savings while maintaining clinical quality. From the high-cost autoimmune category to oncology and beyond, our philosophy to biosimilar management involves three key components:

• Proactive Management: Assessing and developing clinical protocols while educating and communicating with network providers
• Medical Pharmacy Execution: Leveraging Magellan Rx’s innovative medical management expertise by incorporating biosimilars into key utilization management programs such as medical prior authorization and provider reimbursement/fee schedule management
• Expert Opinion: Continuously working to gain insights from our advisory board of specialists and Expert Clinical Network of key opinion leaders

But first, what is a biosimilar?

According to the U.S. Food and Drug Administration (FDA), a biosimilar is a drug type that is highly similar to an FDA-approved biologic, or reference product, with regards to its purity, molecular structure, and bioactivity. The biosimilar approval pathway starts with an application submission that includes analytical studies, animal studies, and at least one clinical study. A biosimilar is approved by the FDA after evaluation and testing to show it is as safe and effective as its reference product.

As of April 2021, there are now 29 FDA-approved biosimilar products across three different categories—20 have been launched to date, and 18 are oncology or oncology support.

Magellan Rx’s approach

In 2015, ahead of the first biosimilar approval in the U.S., our work began with a committee of experts to review the biosimilar landscape and potential impacts for payers. By 2016, we had established our first biosimilar-over-reference policy on the medical benefit, and in 2017 additional clients opted into the strategy with more growth in biosimilar savings.

The program was expanded in 2018 to include infliximab—the biosimilar for Remicade, a top spend drug used to treat autoimmune conditions such as rheumatoid arthritis and inflammatory bowel disease—by leveraging a comprehensive utilization management solution. As part of this initiative, our team of highly-trained pharmacists worked with physician offices and hospitals to ensure appropriate utilization for each patient’s unique situation.

Also in 2018, we established an Oncology Biosimilar Workgroup to prepare for future launches in this high-spend category (in fact, oncology and oncology support accounts for more than 40% of total medical pharmacy spend across the Commercial, Medicare, and Medicaid lines of business¹). We aimed to educate health plan customers, members, and providers through individualized strategies that consider clinical, financial, and regulatory factors. The oncology biosimilar program was launched in 2019 as oncology biosimilars hit the market, with early adopter implementation that resulted in maintaining or expanding member access to clinically-effective treatments while delivering significant drug spend savings.

Due to the success of the infliximab program and proactive approach to the launch of oncology biosimilars, we experienced a rapid expansion in 2020 as clients, representing millions of lives, began to adopt these innovative solutions. Oncology biosimilar utilization surged, and the (measured by the number of prior authorizations approved for the first two therapies with biosimilars compared to the reference brands) for early adopters. We also showcased results in research presented at the 2020 AMCP Annual and AMCP NEXUS industry events.

So far in 2021, biosimilar uptake continues to increase. Our team of experts previewed results from the oncology biosimilar program at the 2021 AMCP Annual event and spoke to The Center for Biosimilars on strategies that payers are using to promote biosimilar adoption.

Looking ahead, Magellan Rx remains committed to the biosimilar-first strategy and will continue to expand the program to include additional categories and available biosimilar agents as they are approved by the FDA. For more on payer management concerns related to biosimilars, read page 24 of the latest Magellan Rx Management Trend Report.  For up-to-date pipeline news, check out the MRx Pipeline Report. Have questions or want to implement a solution to meet the needs of your unique population? Connect with us today!

To learn more about Magellan Rx’s work, click here. 

1. Magellan Rx Management Medical Pharmacy Trend Report™, © 2021.

In contrast to the conventional drug approval pathway in which drugs are reviewed under a New Drug Application (NDA), approval of a biological product is done under a separate pathway known as the Biologics License Application (BLA). Examples of biologics include therapeutic proteins such as insulin, monoclonal antibodies, vaccines, and blood-derived products. While the NDA and BLA processes are similar, they are not identical. The typical generic drug provisions (e.g., same active ingredient, bioequivalence) do not apply to BLAs. Instead, the single biological product already approved by the United States (US) Food and Drug Administration (FDA) is referred to as the reference product; the new potential biosimilar is then compared to the reference product. For approval as a biosimilar, the manufacturer must demonstrate that the agent is highly similar with no clinically meaningful differences.

In July 2018, the FDA released their Biosimilar Action Plan, described by then FDA Commissioner Dr. Scott Gottlieb, as “aimed at promoting competition and affordability.” Then, in December 2018, the FDA announced the plan to transition biological products that were historically regulated as drugs and approved via NDAs to the biologics pathway, taking effect in March 2020. These products include insulin, human growth hormone, and glucagon, among others. This change was mandated by Congress in the 2009 Biologics Price Competition and Innovation Act, which allowed 10 years for the transition. When considered as drugs under the NDA pathway, it was virtually impossible to develop a generic equivalent due to the nature and the inherent variation in the manufacturing process of these products. On March 23, 2020, the FDA issued a statement noting that this change is now in effect.

However, in the US, even if an agent is determined to be biosimilar, it is not automatically interchangeable (a process by which a product can be substituted for another without the approval of the prescriber). For a biosimilar to be considered interchangeable by the FDA, it must meet even more rigorous requirements and be approved as interchangeable. For products that are biosimilar but not interchangeable, the prescriber still needs to write for the specific product. In addition, even if determined to be interchangeable by the FDA, state pharmacy laws may further regulate what substitutions may be made at the pharmacy level without the approval of the prescriber. Just as a listing of generic equivalents is available through the FDA in their Orange Book, the FDA lists biologics and any respective biosimilars in their Purple Book. Recently converted to an online database format, the Purple Book provides details on reference products, their corresponding approved biosimilars, and whether or not the biosimilar is interchangeable. To date, no biosimilar has been designated as interchangeable.

As described in a previous blog post, the cost of insulin has risen substantially, leading patients to take desperate measures. At a time of economic instability and health uncertainty, these access concerns are even larger. Now that these products have transitioned to the biologic approval pathway, once patent exclusivity has passed, biosimilars can be developed, evaluated, and approved. Moreover, biosimilars can be reviewed further and may be classified as interchangeable, which can further alleviate the burden by allowing substitution at the retail level depending on local laws. This landmark change can promote market competition, potentially driving increased availability and decreased cost. The FDA reports that even having one generic drug on the market can decrease prices to approximately two-thirds of the price without competition. Generally, initial list prices of launched biosimilars have been 15% to 35% lower than their reference products. Most importantly, in their announcement of this change on March 23, the FDA pledged that they are ready to review eligible applications to ensure efficient approval. Ultimately, this revised process will provide an opportunity for other manufacturers to introduce safe and effective product competition without clinically meaningful differences. While this may be challenging in light of the ongoing global pandemic, this change, 10 years in the making, offers hope for patients who use these medications.

Featuring excerpts used with permission from the Magellan Rx Management Medical Pharmacy Trend Report^TM, ©2020. Get a copy of the full report at magellanrx.com/trendreport.

In 2010, plans were just starting to manage drugs on the medical benefit; there were only nine approvals for medical injectable drugs, and biosimilars were talked about but still five years away. Now, the medical benefit is top of mind, and in 2019 alone there were triple that number of approvals—seven of them biosimilars.

For the 10th year in a row, the top five commercial drugs were Remicade, Neulasta, Rituxan, Herceptin, and Avastin. Remicade saw decreases in PMPM due to the introduction of biosimilars Renflexis and Inflectra. We may see similar trends in upcoming data, since all of these top 5 agents now have marketed biosimilars.

How have biosimilars impacted some of the top-spend medical benefit categories?

There are 26 FDA-approved biosimilar products across three different therapeutic categories, of which 17 have been launched. Fifteen of those are oncology or oncology support agents.

Biologic Drugs for Autoimmune Disorders (BDAIDs)

Trend remained relatively flat in this category as Remicade market share decreased, with biosimilars Renflexis and Inflectra beginning to gain market share (market share data for these biosimilars was not available for 2017 and 2018, but we expect to include it in next year’s report).

Oncology & Oncology Support

Oncology spend is a concern for payers, and oncology immunotherapies and gene therapy will continue to contribute to this spend. However, many opportunities for savings are anticipated with the biosimilars for Avastin, Herceptin, and Rituxan.

There are currently several biosimilars on the market in the oncology support category for the long- and short-acting CSFs and the ESAs. The predicted negative forecast growth illustrates their impact. Specifically, Neulasta biosimilars are now on the market, with Fulphila and Udenyca gaining market share.

Payer feedback on current bio-similar strategies

The biosimilars currently on the market proved to have an impact on medical pharmacy strategy, as 40% of plans, based on number of lives, reported they were currently reimbursing based on a maximum allowable cost (equivalent reimbursement for reference and biosimilar). At the time of our survey (summer 2019), there were no oncology bio-similar products on the market, but payers were planning to utilize the same formulary strategies, including step therapy.

What biosimilar strategies should payers be deploying NOW to prepare for the FUTURE?

At Magellan Rx, our 16+ years of total specialty drug management expertise enables us to prepare our customers for what comes next through forward-thinking solutions that keep a pulse on future industry trends. Through successful medical pharmacy management across all sites of service, we can deliver targeted, customized solutions designed to yield substantial drug cost savings while maintaining a high level of clinical quality.

• We’ve seen that health plans can experience a significant shift in utilization to lower-cost biosimilars through implementation of a comprehensive utilization management solution.
• Initial results from our new oncology biosimilar solution show proactive utilization management of oncology drugs via step therapy increases use of less expensive biosimilars. We encourage customers to combine the power of all our oncology solutions—such as utilization management, drug wastage, dose optimization, sophisticated claims editing, enhanced regimen review, site of service management, targeted solutions for oncology immunotherapies and oncology care management—to enhance outcomes and improve member quality of care.

Learn more about our total specialty drug solutions.

In January, the Food and Drug Administration’s (FDA) Center for Drug Evaluation and Research (CDER) published Advancing Health through Innovation: 2018 New Drug Therapy Approvals. This report provides a benchmark for approvals and highlights the game-changers approved in 2018. Compared to 2016 and 2017, in which CDER approved 22 and 46 new drugs, respectively, in 2018 a total of 59 novel agents were approved. This number does not even include new and expanded uses of already approved drugs, new formulations, new dosage forms, or the seven biosimilar approvals. This marks the largest number of novel approvals in over two decades and far exceeds the average of 33 novel approvals per year in the past 10 years, surpassing the record setting approvals in 2017. Figure 1 outlines approvals and filings over the past 10 years.

Several potential explanations may account for this uptake in approvals in the past couple years. The FDA’s leadership, with its continued strategic initiatives, may be partly responsible for the increase. In early 2017, the FDA was criticized following the lower than average approvals seen in 2016. Public interest in opioid abuse and dependence treatment, access to drugs for rare diseases, drug shortages, and competition potentially affecting pricing have also put the FDA at the forefront of the public’s mind, further challenging the FDA to demonstrate action in the public’s interest. Finally, additional defined methodology for evaluating data in rare diseases, such as real-world and patient reported outcomes, may also have played a role.

Last year, all 59 novel drug approvals met their Prescription Drug User Fee Act (PDUFA) goal dates. In 2018, 32% were considered first-in-class and 58% were approved for rare diseases (Orphan Drugs). Priority Review was granted to 73% of new drugs, 7% received Accelerated Approval, 24% were designated as Breakthrough Therapy, and 41% garnered Fast Track designation. Furthermore, 95% were approved in the first review cycle, and 71% were approved in the US prior to approval in other countries. A breakdown of the types of drugs approved in 2018 is illustrated in Figure 2, with drugs in the expansive oncology spectrum once again dominating the approvals.

Some of the notable 2018 approvals included the first non-opioid drug approved to reduce opioid withdrawal symptoms, a new antiretroviral for multidrug resistant human immunodeficiency virus-1, a new class of drugs for migraine (calcitonin gene-related peptide receptor antagonists), the first FDA-approved drug derived from marijuana, the first treatment approved for multiple sclerosis in children, expanded options for cystic fibrosis, and the first antibiotic approved under the Limited Population Pathway for Antibacterial and Antifungal Drugs.

Among the several Orphan Drugs approvals were drugs for Fabry disease, phenylketonuria, X-linked hypophosphatemia, Lennox-Gastaut syndrome, Dravet syndrome, hemophagocytic lymphohistiocytosis, adenosine deaminase deficiency, and Lambert-Eaton myasthenic syndrome.

Although 2019 approvals have begun more slowly, given the substantial number of approvals in 2018, it appears that the large number of approvals from 2017 was not an anomaly but, perhaps, the continuation of a trend.