Medicare Advantage (MA) continues to evolve, and as we step into 2024, there are notable trends, particularly in the benefit designs that health plans are offering. These trends reflect a broader shift toward a more patient-centric and holistic approach to health care within the Medicare Advantage landscape, but also come with a trade-off of greater use of cost management tools such as prior authorization, step therapy, and more restrictive provider networks for plans to be able to afford the enhancements.

Biosimilars for oncology products and supportive agents have been on the market longer than any other class of biosimilars, with the first being a filgrastim biosimilar approved in 2015.1 There are now multiple biosimilars for filgrastim, pegfilgrastim, bevacizumab, trastuzumab, and rituximab.2 Payers have reported a significant decrease in cost per claim of oncology products that have biosimilars since 2019 with decreases in cost per claim between 33% and 39%.3 While oncology biosimilar uptake was initially slow, biosimilars for bevacizumab, trastuzumab, and rituximab now make up more than 73% of the market share through 2022.3 Support of biosimilars from multiple organizations, including ASCO, HOPA, and NCCN, has led to their successful uptake.4,5

Given the number of biosimilars in the oncology space, manufacturers of both biosimilars and originator products continue to provide additional discounts to purchasers in the market. The oncology products with biosimilars include mainly provider-administered drugs, for which the reimbursement is typically based on average sales price (ASP). ASP is calculated based on all discounts provided by the manufacturer in a given quarter. As more discounts are given, the ASP drops, and reimbursement to providers drops correspondingly. This dynamic has created a race to the bottom to have the lowest price and secure market share and has created misaligned incentives between the different stakeholders in the system.

With the dynamics in this market to date, payers need to consider how they can align incentives and drive market share to the lowest net cost product. Centers for Medicare and Medicaid Services has made steps toward this with the Inflation Reduction Act, by enhancing Part B payments for biosimilars to providers from 6% to 8% of the reference product ASP for a 5-year period. Commercial payers in turn may follow suit by increasing reimbursement on provider fee schedules for preferred products. Payers who also offer risk-sharing agreements with upside risk could incentivize providers to use their preferred products by sharing in the savings from use of biosimilars with their providers.

Manufacturers of reference products, biosimilars, and other products that compete with biosimilars may want to proactively consider these downstream impacts at launch when setting their price as well as when offering contracting terms for preferred status. If manufacturers start at a higher list price, they may need to offer steeper discounts and should forecast the impact to their ASP to plan for this proactively. This includes estimating the market share and utilization increase that will result from the contracts. In addition, when making contracting offers, they may want to consider contractual requirements around reimbursement to providers for lines of business where reimbursement is adjustable. They may also want to consider whether contracting terms should adjust the discount based on the product’s ASP. For example, as the ASP drops, the rebate discount may also decrease accordingly to protect the manufacturer.

The oncology biosimilar market has provided substantial savings to the health care system but has also provided some unexpected lessons. The dynamics of this market can inform other competitive markets, particularly in the biosimilar and provider administered drug space, in the future.

  1. James D. First biosimilar approved in United States. Pharmacy Times. March 6, 2015. https://www.pharmacytimes.com/view/first-biosimilar-approved-in-united-states
  2. Biosimilar product information. Accessed February 12, 2024. https://www.fda.gov/drugs/biosimilars/biosimilar-product-information
  3. Magellan 2023 Medical Pharmacy Trend report. https://issuu.com/magellanrx/docs/medical-pharmacy-trend-report-2023?fr=sYmEzZTY2MjgzNzc
  4. Nahleh Z, Lyman GH, Shilsky RL, et al. Use of biosimilar medications in oncology. JCO Oncology Practice. January 28, 2022. https://ascopubs.org/doi/full/10.1200/OP.21.00771
  5. Hematology/Oncology Pharmacy Association. https://www.hoparx.org/documents/5/HOPA_Biosimilars_Issue_Final_Dec_2015.pdf