Greater uptake, an alternative reimbursement methodology needed to realize cost-saving potential of oncology biosimilars in the United States

BACKGROUND: Biologics are an important treatment option for solid tumors and hematological malignancies but are a primary driver of health care spending growth. The United States has yet to realize the promise of reduced costs via biosimilars because of slow uptake, partially resulting from commercial payer reimbursement models that create economic incentives favoring the prescribing of reference biologics. OBJECTIVE: To examine the economic feasibility of an alternative reimbursement methodology that prospectively shares savings across commercial payers and providers to shift economic incentives in favor of lower-cost oncology biosimilars. METHODS: Using 3 oncology monoclonal antibody drugs (trastuzumab, bevacizumab, and rituximab) as examples, we developed an alternative reimbursement model that would offer an additional per unit payment (or "extra consideration") such that providers' net income per unit for biosimilars and reference biologics become equal. Provider-negotiated rates (or payer-allowable amounts) and average sales prices were obtained from claims data and projected to develop prices/costs from 2021 through 2025. Scenario analyses by varying key model assumptions were performed. RESULTS: The alternative reimbursement model achieved 1-year and 5-year payer savings in the commercial market for all 3 drugs in the sites of service analyzed. The base analysis showed first-year cost savings to payers, net of cost sharing, of up to 9% in physician offices (POs) and up to 1% in non-340B hospital outpatient departments (HOPDs) for patients using the drugs analyzed. Five-year cumulative savings per patient ranged from about $12,600-$16,100 in PO and $2,200-$4,100 in HOPD. Payer savings varied depending on the characteristics of the provider with which the payer was negotiating (eg, lower- vs highermarkup providers, POs vs HOPDs). CONCLUSIONS: Positive payer savings shown in our modeling suggest that an alternative reimbursement arrangement could facilitate an economic compromise wherein commercial payers can save on biosimilars while providers' incomes are preserved. DISCLOSURES: Research funding was provided by Pfizer Inc. Yang and Shelbaya are employees of Pfizer Inc. and own Pfizer stock. Carioto, Pyenson, Smith, Jacobson, and Pittinger are employees of Milliman Inc., which received research funding from Pfizer Inc., for work on this study. Milliman, Inc., provides actuarial and other professional services to organizations throughout the healthcare industry. None of these are contingent, equity or investment relationships.