Driving Drug Competition To Lower Cost

In any industry, competition often leads to lower prices – period. In the U.S. pharmaceutical market, drug manufacturers can – and do – increase prices to what the market will bear for drugs that have no competition, and charge lower prices for drugs where there is robust competition.

PBMs like Express Scripts are more effective in negotiating discounts when there is greater competition among prescription drugs. In the biosimilar landscape for example, biologics have little direct competition, largely due to patent litigation with biosimilar manufacturers. Having multiple competing products – whether another branded drug, multiple generics or a biosimilar – with equivalent patient benefits on the market allows PBMs to drive drug manufacturers to compete and provide patients and plan sponsors with access to lower cost drugs.

PBMs drive drug competition by: 

Using formulary placement to prefer drugs that drive the lowest net costs

Implementing drug utilization management programs that encourage the adoption of lower-cost, clinically equivalent options

Developing products and solutions that incentivize utilization of lower cost products

Encouraging pharmacies to dispense lower cost alternatives where appropriate

PBMs use generic and biosimilar competition to accelerate lower drug costs

Once medications lose their patent protection, new, less costly options may become available in the form of generics and biosimilars.

While PBMs have been using generic competition for decades to lower drug costs, biosimilars are relatively new in the marketplace. Biosimilars are clinically equivalent, lower-cost versions of biologics, which are complex medications made from natural and living sources.

Capturing the biosimilar opportunity to lower costs

The Importance of Interchangeability

Unlike most generics, biosimilars are not automatically designated as interchangeable upon FDA approval. If a patient is prescribed a branded drug that has a generic alternative, pharmacists can generally automatically substitute the lower-cost generic at the pharmacy counter. However, for biosimilars, the pharmacist would have to wait until the original biologic has a designated interchangeable biosimilar alternative in order to substitute the lower-cost alternative at the point of sale.

How competition and an interchangeable biosimilar are changing the insulin market

The long-acting insulin pen injector Lantus was launched in 2010 with a high list price that more than doubled over 2010-2014, with limited rebates. In 2015, competition entered the market and subsequently Lantus’ price increased only modestly year-over-year and rebates substantially increased.

Express Scripts announced in October 2021 that Semglee®, an interchangeable biosimilar with Lantus®, would be available as a preferred product on our National Preferred Formulary. Semglee® is paving the way for automatic substitutions in certain states, where pharmacies can automatically dispense the lower cost product, but only to the extent those states’ laws allow.

Express Scripts estimates that clients and customers saved as much as $20 million in 2022 as a result of our biosimilar formulary strategy.

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