Insurers must be willing to take a short-term financial loss to get long-term savings from adopting biosimilars, outgoing Food and Drug Administration Commissioner Scott Gottlieb said Tuesday.
There are major commercial obstacles to getting biosimilars onto the market to replace pricey biologics, Gottlieb said at a Brookings Institution event. Even though the FDA has approved 17 biosimilars, very few are on the market. Gottlieb will leave his post as commissioner early next month to spend more time with his family.
"It hasn't surprised me that (the biosimilar market) has been slow to develop," he said.
Biosimilars have the chance to generate tremendous savings for health plans, studies show. A from the RAND Corp. estimated that biosimilars could lower spending on biologic drugs by $54 billion from 2017 to 2026.
Traditionally, biologic-drug makers offer rebates to insurers and will increase that amount when a biosimilar is about to hit the market.
"If you are a health plan and you adopt a biosimilar onto your formulary you lose all the rebates," he said.
To offset the loss of the rebate, the insurance plan needs to sell enough of the biosimilar. But it can be difficult to get patients to switch to the cheaper drug, the commissioner noted, and that could be in part because physicians are resistant to prescribing biosimilars.
Gottlieb believes this resistance will erode over time as more biosimilars are approved to handle chronic conditions.
But an insurance plan should move toward biosimilars because of long-term savings to their drug spending, he said.
"If they put the biosimilar on a formulary they might lose money for a quarter when they lose the rebates, but if they can convert their population over a two-year period to the biosimilar they will create a lot of competition that is going to lower their drug spend," Gottlieb added.