Impact of discordant preferred drug status between hospitals and payers for chemotherapeutic biosimilars

Introduction

From 2015 to 2016, prescription drug expenses across the United States (U.S.) increased by 4.8% to $323 billion. ¹ This has been associated with the increased use of specialty drugs and biologics, which account for 38% of the U.S prescription drug spending.^1,2 There is promise for lowering medication costs with the introduction of biosimilars to the U.S. market, especially for some of the most expensive medications that require administration in a healthcare setting. ³ The Biologics Price Competition and Innovation Act (BPCIA), enacted by the 2010 Patient Protection and Affordable Care Act (ACA), allowed for an abbreviated licensure pathway for biosimilars with an FDA-approved biological reference. This proved to be a benefit for manufacturers by allowing the avoidance of costly and lengthy clinical trials while maintaining clinical and safety parameters, and also created competition that allowed faster patient access and expanded therapeutic options at a reduced cost to the healthcare system.^1,2 Overall, we expect to see a decrease in biologic drug spending of approximately $54 billion in the U.S. from 2017 to 2026. ¹ In order for biologic drug spending to decrease, there is a need for biosimilars to be marketed to promote competition, lower prices, and increase medication access. This affects multiple marketing relationships including manufacturers, providers, insurers, pharmacy benefit managers, and patients.^1,4–8 Typically, biosimilars are priced at approximately 30% below the reference product price, thereby offering savings and incentives for their use. ¹

In regards to reimbursement, biosimilars, under Medicare Part B, are coded and reimbursed at rates determined by the Centers for Medicare and Medicaid Services (CMS), with administration of most biosimilars currently on the U.S. market typically done within physician offices or hospital-based outpatient settings. ³ Of note, the reimbursement structure for biosimilars involves the Healthcare Common procedure Coding System (HCPCS) code which requires the drug manufacturers to report the average sales price (ASP) for a biosimilar. Medicare reimburses at the products’ own ASP plus 6% of the reference biologic ASP. ³ Under Medicare Part D, patients in the coverage gap are not subject to discounts from the manufacturer, which can negatively impact health-systems. ³ An increasingly common practice is for biologics to be treated as specialty drugs, and thereby managed under the pharmacy benefit. ³

Separate from Medicare and Medicaid, there are private and public health insurance plans that have developed a formulary to manage drug costs. Biosimilars may be placed on a lower cost-sharing tier than their reference products, or the biosimilars may be designated as a preferred product over the reference drug. ³ Manufacturers, in their aim to provide best price to providers (hospitals, physician practice offices, and pharmacies), may offer rebates to insurers to gain increased market share, and may facilitate improved patient access to medications due to lower insurance premiums and lower out of pocket costs. ¹ The implementation of biosimilars can present challenges including safety, efficacy, real-world effectiveness, reimbursement, and acceptance by prescribers and patients.^1,7–10

Bevacizumab and trastuzumab are two biologics that have multiple biosimilars on the market, providing several alternatives to the more costly reference products, Avastin^® and Herceptin^®, respectively. ¹¹ With the availability of multiple biosimilars for both reference products, an increasingly common practice is for hospital and payer formularies to contradict on their preferred product status.^1,3 For hospitals, the selection of a single preferred formulary drug within a class is intended to streamline several processes including inventory management, provider education, medication build within the electronic health record (EHR), and reducing the potential for medication errors.^1,7–10 For insurance payers, selecting a single formulary drug may provide an incentive from the manufacturer, but it is unclear whether there is any added benefit to the patient, or an adverse increase in costs.^1,7–10 Given the lack of evidence measuring the impact of discordant preferred drug status between hospitals and payers for antineoplastic biosimilars, we aim to conduct a study to quantify the impact to health-systems with utilizing multiple products due to payer preference.

The goal of this retrospective study is to measure the impact of discordant preferred drug status between a health-system and payers, specifically for reference product trastuzumab and bevacizumab, and their respective biosimilars. This goal directly addresses the challenges related to payer mandates and insurance issues, value, quality, and cost for patients, providers, and institutions that seek to deliver the highest quality of care, while maintaining cost effectiveness. In general, payer mandates surrounding biosimilar use affect resources such as time, cost, and workflow for health-systems.

The overall objective of this project is to quantify these challenges by reviewing parameters such as time, cost, and workflow that are impacted by differences in insurance-mandated product versus the health-system's preferred biosimilar on formulary. Specifically, the impact was measured by hospital drug cost, time expended to adjust treatment orders, and workflow changes to healthcare provider and team because of discordant preferred drug status between the health system and insurance providers for trastuzumab and bevacizumab biosimilars. This study aims to contribute to the scarce body of literature describing real-world challenges that may limit widespread and expedient adoption and use of biosimilars.

Methods

This study was IRB-approved and funded by a grant from Pfizer and National Comprehensive Cancer Network (NCCN). This was designed as a retrospective EHR review of outpatient infusion treatment orders for reference products trastuzumab and bevacizumab, and their respective biosimilars, based on their NCCN guideline approved uses. Patient charts were reviewed after the date of service and included patient encounters from October 1, 2020, until February 28, 2022. Patients that had insurance denials of the hospital preferred products and required a switch to the insurance biosimilar of choice were identified at the point of benefits verification and tracked through an excel sheet or via patient-specific tracking in the EHR. Inclusion criteria consisted of patients 18 to 64 years of age with commercial insurance plans started on trastuzumab or bevacizumab biosimilars for an NCCN guideline-approved indication (Figure 1). Patients were excluded if they had traditional Medicare/Medicaid benefits, were enrolled in a patient assistance program or charity care for bevacizumab or trastuzumab or utilized trastuzumab or bevacizumab for an indication not approved by FDA or NCCN guidelines.

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Figure 1.

Flow diagram of patients included in analysis.

This project was conducted at a health-system comprised of eight hospitals spanning the greater Houston metropolitan area, including a large academic medical center, several community hospitals, 340B covered entities, and a long-term acute care hospital. This project was led by the Department of Pharmacy and conducted system-wide including sites providing hospital-based outpatient infusion services for trastuzumab and bevacizumab.

There are multiple primary outcomes of this study. We evaluated the financial impact to the health-system because of utilizing multiple products due to payer preference, as measured by increased cost to the hospital. This was measured as the difference between potential cost savings (with 100% conversion to the health-system preferred biosimilar) versus actual realized savings (X% actual conversion due to payer preferences requiring use of an alternate biosimilar), measured as percentage increase in acquisition cost. Second, we reported the added cost to Disproportionate Share Hospitals (DSH) that purchase medications at either wholesale acquisition cost (WAC) or 340B price, pursuant to Health Resources and Services Administration (HRSA) requirements. Third, we quantified additional resources required to align hospital practice with payer preference by analyzing administrative time spent per denial, as well as impact on information systems. The administrative time spent on denial was measured as the time spent by patient access specialist (PAS) per case, in minutes, to coordinate a denial which included notification to clinical team, awaiting re-entry of the treatment plan by the clinical team, resubmission of the pre-authorization, and monitoring for approval. The administrative time for the pharmacist to re-enter the treatment plan for the patient's insurance approved biosimilar was also measured. The impact on information systems was measured based on the time spent on the information technology (IT) teams to build multiple medication profiles and/or modify treatment plans in the EHR, infusion pump library, and intravenous product preparation system. Administrative cost and impact on information systems were obtained by surveying health-system team members to produce an average amount of time needed to perform the necessary tasks.

The secondary outcome of this study was the median turnaround time for pre-authorization approvals required due to resubmission process and new financial clearance once the initial biosimilar authorization is denied.

A descriptive analysis was also conducted to measure the percentage increase in total billed charged as an implication of utilizing the insurance mandated product instead of the hospital preferred biosimilar.

Results

Administrative time spent and impact on information systems on denials

The administrative time of various stakeholders (pharmacist, PAS, and IT teams) was analyzed in multiple steps (Figure 2) throughout the process of ordering, purchasing, and procuring insurance/payer-mandated biosimilar. The average time for the pharmacist to change the medication order from the hospital-preferred biosimilar to the insurance-mandated product was 35 min per patient, inclusive of the time required to communicate with the various stakeholders involved in this process. Additionally, the average time for PAS to communicate the denial to the clinical team and resubmit for new authorization for final approval was 60 min. From our analysis, the 18 denials that required use of the insurance-mandated biosimilar resulted in an overall additional 10.5 h of pharmacist administrative time and 18 h of PAS administrative time.

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Figure 2.

Key stakeholder process for payer-mandated biosimilar product.

For each additional biosimilar product on the formulary, the IT team spent an average of 5 h building new medication records in the EHR, 2 h to configure the IV drug preparation software, and 3 h to update the infusion smart pump system, for a total average of 10 h. There were 7 additional biosimilar products for both bevacizumab and trastuzumab to be built in the EHR, resulting in a total of 70 h utilized.

Discussion

Biosimilars present significant cost savings opportunities to providers, payers, patients, and the healthcare system at large, but their level of integration into healthcare practice has been staggered and varied. The FDA approval of multiple biosimilars for a single reference product has allowed for competitive pricing, but has also introduced challenges to utilization for providers, particularly as payers implement strategies that limit biosimilar coverage to a single, or a limited selection of products.

Our health system opted to select a single preferred product for health-system use that would be designated as the first-line option for ordering within our EHR. If, during the benefits verification process, it was realized that an alternate biosimilar was required due to payer policy, the patient access coordinator would notify the care team, the pharmacist would coordinate with the provider to place a new order for the payer-preferred product, and the patient access coordinator would re-submit for a new insurance approval. Our study found that this added workflow burden, due to insurance denial and a product switch, increased pharmacist time by 10 h, and patient access coordinator time by 18 h. According to the average hourly wage of pharmacists in Texas, this amounts to an additional ∼$600 of labor costs. Based on our institution's internal salary information, additional time for PAS and IT would result in an additional ∼ $450 and $5210 respectively for labor cost. While this would likely not warrant additional resources to manage the workflow for the two products that were analyzed, it does place added pressure on the existing workforce, potentially further contributing to burnout. Should the same pattern persist for other products with biosimilars with a broader scope, more substantial labor and financial impact may be made.

The most anticipated and least reported impact of biosimilars within our healthcare system is the potential to lower out of pocket costs for patients. Financial toxicity among cancer patients is a well-documented burden, fueled in many ways by medication costs, especially high-cost infusion therapies such as a trastuzumab and bevacizumab. Patient cost-sharing for medications covered under the medical benefit varies significantly by plan design, thus making it difficult to quantify impact at the patient level. However, there is a correlation between hospital billed charge and patient out of pocket costs. As a result of utilizing payer-preferred biosimilars which were often more costly than the hospital-preferred biosimilar, we calculated a 1.6% increase in billed charge. Though this is not realized directly by the patient, and the extent to which it falls on the patient varies widely based on plan design and time of the year, we can reasonably expect a correlation between utilization of a higher cost, and as a result, higher billed charge product, and patient out-of-pocket costs.

Operationalizing multiple medications within hospital EHR systems is also burdensome to IT teams that must build multiple medication records for ordering, update order sets and order groups to reflect multiple products, build multiple medication entries within pharmacy automation and dose preparation software, as well as update IV infusion pump libraries. With the biosimilar landscape at the time of this study, we observed an additional 70 h of IT time utilized to operationalize multiple biosimilar products within our information systems.

Health-systems naturally aim to streamline their medication use process using a formulary, where a single preferred agent within a medication class allows the system to leverage optimal pricing, strategic contracts, and coordinate logistics and workflow among multidisciplinary teams. Unfortunately, payers, especially several large national payers, have opted for utilization management strategies that often limit coverage to a single, or sometimes a small handful of biosimilars within a class, driven by lucrative rebates and discounts. This strategy presents challenges for providers, especially health-systems at large, to optimize their biosimilar strategy as they are forced to operationalize the use of multiple biosimilars for a single reference product. Though it is still relatively early in the overall landscape of biosimilar use in the U.S., some early challenges highlighted by this study outline the importance of payer parity to incentivize maximal biosimilar uptake in the health-system setting.

Conclusion

The results of this study demonstrate the added financial and operational burden to healthcare systems when required to utilize multiple biosimilar products, as dictated by the patient's insurance plan. Insurance plans are subject to change frequently and leave health-systems in a position that requires them to remain agile and responsive to payer changes and stretch their personnel resources. Further research is required to describe the impact to patients from insurance plans that restrict biosimilar coverage to limited products. It is our aim that further research in this area guides insurer payers plan decisions that improve biosimilar uptake and positively impact healthcare spending and patient out of pocket costs.