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treating an individual patient via 340B does not require that the patient be uninsured / underinsured . The individual might have ‘ Cadillac ’ insurance – so the pricing via 340B can easily be applied to a very well-insured patient generating more of a profit margin for those administering a medicine . There is a financial disincentive to use the biosimilar molecule in a fee for service setting . Centers that utilize 340B pricing that allows them to purchase medicines at a lower cost would be even more reluctant to use a biosimilar molecule as it might cut into their own bottom line .
Pharmaceutical benefits management ( PBM ) companies can intercalate in the purchase process , creating market inefficiencies that may foster the use of the more expensive brand drug in a tradeoff for another drug pricing arbitrage . This might limit the use of biosimilars in some situations . Some in health care view PBM companies as middlemen that add ‘ economic friction ’ to the process , but to the extent that they can perform prior authorization they might lead providers to more cost-effective options . However , they might also bundle drugs to their clients and not use a biosimilar medicine in a certain relationship in exchange for a lower cost for another branded medicine ( the majority of oncology monoclonal antibodies are branded ). So , the price that the purchaser sees for a biosimilar might actually be higher than the price of the branded molecule for the same indication . This makes it harder to utilize biosimilars depending on contracts and other arrangements .
If one takes the perspective of society at large as the payer for health care , given that the money comes from either taxes or is deducted from working Americans ’ paychecks , a different calculus emerges . Indeed , in California more than 50 % of the population has health care through a public entity ( Medicare , Medicaid , or a managed version of either State or Federal funding ) but these payers may still be playing ‘ catch up ’ on the use of biosimilars . Public payers have less room for price negotiation in a traditional economic sense ; the Centers for Medicare Services does not have much authority to lower prices of medications the way , for example , the National Institute for Health and Care Excellence does in England . Private payers , however , could legally mandate the use of a biosimilar when it exists versus a branded molecule ; or pay the provider at the biosimilar rate only and allow them to choose whether to use the biosimilar or original medicine , reducing the economic benefit of using a more expensive medicine . Private payers might not actually want to do this , as their profit margin is based on the total amount of money they spend a year . So there is not always an incentive to lower the total cost of care they pay for , which can be passed onto the patient ’ s employer in the forms of higher premiums each year – a trend that has been observed over time .
If the economics of paying for biosimilars sounds complicated , it is only because it is ! Physicians in the US – the prescribers – typically are not wellversed in the cost of the medicines they prescribe . Physicians will often use a branded medicine instead of a generic medicine for expediency as they have no financial ‘ skin in the game ’ to prescribe in a cost-effective manner . 8 Education by pharmaceutical manufacturers is being conducted on a wide scale to teach providers .
Where do we go from here ? The situation of payment for health care in the US is extremely dynamic . Many payers are switching to capitated arrangements and value-based care – the topic of value-based cancer care has flourished and is a routine part of the oncology literature . 9 As there is a switch to capitation or value-based payment arrangements , biosimilars would logically be substituted for the brand molecule if the cost to the provider is lower . The topic of health care costs was a prominent one in the primary elections leading up to the 2020 Presidential election , with both Democrats and Republicans drafting plans for health care . Unfortunately , the economic devastation that COVID-19 has unleashed on America has seen many of our citizens lose their employment and thus their health insurance . Many of those will end up on public insurance ( either Medicaid or Medicare or other publicly funded insurance companies ).
The cost of care is on everyone ’ s mind in the US , which is a sea change from 10 or 20 years ago . The situation will likely move in the way of searching for cost-efficiency – as these forces reach out there should be a greater demand for biosimilars . It is unlikely we will ever achieve $ 44.2 billion in savings as the RAND Corporation projected but every little bit saved is helpful in the US . We have seen the gaps between the rich and poor in health care widen and it would seem logical that the system would start to address economic inefficiencies in care that narrow this gap . 10
References 1 Knopf K , Bennett C . The Emperor ’ s new clothes : biosimilars and cost in oncology . ASCO Post 2017 . www . ascopost . com / issues / july-10-2017 / the-emperor-s-new-clothesbiosimilars-and-cost-inoncology / ( accessed August 2020 ). 2 Cjen B et al . Regulatory and clinical experience with biosimilar filgrastim in the U . S ., the European Union , Japan , and Canada . Oncologist 2019 ; 24 ( 4 ): 537 – 48 . 3 Yang YT , Chen B , Bennett CL . Biosimilars – Curb your enthusiasm . JAMA Oncology 2017 ; 3 ( 11 ): 1467 – 8 . 4 Delgado-Guay M et al . Financial distress and its association with physical and emotional symptoms and quality of life among advanced cancer patients . Oncologist 2015 ; 20:1092 – 8 . 5 Goulart BHL . Value : The next frontier in cancer care . Oncologist 2016 ; 21:651 – 3 . 6 Smeeding J et al . Biosimilars : Considerations for payers . PT 2019 ; 44 ( 2 ): 54 – 63 . 7 Thomas S , Schulman K . The unintended consequences of the 340B safety-net drug discount program . Health Serv Res 2020 ; 55:153 – 6 . 8 Avorn J . The psychology of clinical decision making – implications for medication use . N Engl J Med 2018 ; 37 ( 8 ): 689 – 90 . 9 Alvarnas J , Majkowski GR , Levine A . Moving toward economically sustainable value-based cancer care in the academic setting . JAMA Oncol 2015 ; 1 ( 9 ): 1221 – 2 . 10 Jackson JD , Moy B , Evans MK . The elimination of cancer heatlh disparities : are we ready to do the heavy lifting ? Oncologist 2016 ; 21:1411 – 13 .
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