Biosimilar/Brand Patent Settlements Need US Antitrust Review, PBM Says

Federal Trade Commission and Department of Justice should be able to scrutinize settlements between biologic reference product sponsors and biosimilar developers, Express Scripts says; PBM's policy proposals for coming year include safe harbor for certain value-based reimbursement arrangements, and mandatory electronic prescribing and dispensing limits for opioids.

Patent litigation settlements between reference biologic sponsors and biosimilar developers should face the same level of antitrust scrutiny as agreements involving small molecule drugs, Express Scripts Holding Co. believes.

In the wake of AbbVie Inc.'s recent settlement of Humira (adalimumab) patent litigation with biosimilar sponsor Amgen Inc., the pharmacy benefit manager (PBM) is calling for heightened attention to such agreements in the biologic space.

Express Scripts' proposal that biologic product patent settlements be reviewed by the Federal Trade Commission and Department of Justice is one of three new policy recommendations that it believes are "ripe for legislative and/or regulatory attention."

The PBM also is calling for a safe harbor on certain types of value-based reimbursement agreements and new restrictions on opioid prescribing.

The company released its report, "Prescription Drug Pricing: A Public Policy Analysis," on Feb. 6 in conjunction with its "2017 Drug Trend Report."

The annual trend report found that commercial plan drug spending in several key therapeutic categories increased less than expected due to the entry of generic competition and Express Scripts' suite of utilization tools and value-based agreements, which helped mitigate the impact of any increases in drug utilization and unit cost.

The annual report gives Express Scripts the opportunity to quantify the value it brings to the pharmaceutical supply chain, countering the biopharmaceutical industry's arguments that PBMs, not manufacturers, are responsible for patients' high drug costs. (Also see "Drug Pricing Legislation Appears Nowhere In Sight Following Senate Hearing" - Pink Sheet, 17 Oct, 2017.)

Humira Settlement Highlights Need For Antitrust Review

So-called "pay-for-delay" agreements, also known as reverse-payment settlements, traditionally have involved payment by a brand manufacturer to an abbreviated new drug application (ANDA) sponsor in return for the latter's delay in bringing its generic to market.

Under the Medicare Modernization Act of 2003, patent settlement agreements between brand drug makers and ANDA sponsors must be submitted to FTC and DoJ for antitrust review. However, this provision applies only to drugs, not biologics or biosimilars, Express Scripts said.

The biosimilars pathway was created through the Biologics Price Competition and Innovation Act, which was enacted in 2010 as part of the Affordable Care Act. Consequently, "drugmakers can enter into settlements delaying the market introduction of biosimilars without disclosing said settlement to the FTC," the policy analysis states.

"Congress struck a balance in 2003 by allowing these types of settlements to occur, but requiring oversight by the FTC and DoJ to avoid anticompetitive harms. The same policy needs to be adopted and applied to biologics and biosimilars approved under the Public Health Service Act." – Express Scripts

Express Scripts points to the 2017 settlement of patent litigation over Amgen's Amjevita (adalimumab-atto), a biosimilar version of AbbVie's Humira, calling it "one of the most underreported healthcare stories of 2017."

FDA approved Amjevita in September 2016, but product launch was delayed by patent litigation. In a settlement with AbbVie announced in September 2017, Amgen received non-exclusive patent licenses for the use and sale of its biosimilar worldwide. Amgen expects to launch the biosimilar in Europe in October 2018, and in the US in January 2023. Further terms of the agreement were not disclosed. (Also see "Humira Biosimilar Settlement Could Be Model For Other Disputes" - Pink Sheet, 28 Sep, 2017.) However, Amgen has said it did not receive payment from AbbVie under the settlement.

Express Scripts asserted that pay-for-delay deals hinder the introduction of cheaper versions of branded products, and it noted that the Supreme Court's decision in a 2013 case, FTC v. Actavis, increased the commission's ability to challenge such agreements in federal court.

In that case, the high court ruled that reverse payment settlements can violate antitrust law and the circumstances of each agreement must be considered in determining if an agreement is anticompetitive. (Also see "Pay-For-Delay Deals May Be Smaller After Supreme Court Okays FTC Suits" - Pink Sheet, 24 Jun, 2013.)

The number of brand/generic settlements that potentially could be viewed as pay-for-delay deals has declined since the Supreme Court decision. (Also see "Pay-For-Delay Settlements Decline In Wake Of Supreme Court Ruling" - Pink Sheet, 2 Nov, 2017.)

"Congress struck a balance in 2003 by allowing these types of settlements to occur, but requiring oversight by the FTC and DoJ to avoid anticompetitive harms," Express Scripts said. "The same policy needs to be adopted and applied to biologics and biosimilars approved under the Public Health Service Act."

"Payers’ drug spending costs increased minimally in the markets where this oversight exists, but surged more than 11.3% among specialty drugs, including biologics," the policy analysis states. "The best way to reverse this trend is to adopt policies that promote a competitive biosimilars market, which includes ensuring that drugmakers aren’t delaying competition themselves. Requiring patent settlements between biologic and biosimilar manufacturers to be reported to FTC and DoJ will ensure that these agencies have the information needed to challenge anticompetitive agreements in federal court."

Protecting Value-Based Arrangements

Express Scripts also supports the creation of new safe harbors protecting entities involved in value-based reimbursement agreements from Medicaid best price requirements and enforcement under the Anti-Kickback Statute.

The PBM notes it has successfully launched programs that reimburse plan sponsors for patient non-adherence, cap inflation costs, set prices based on indication, and set treatment costs for therapy classes.

"These new programs, however, are off-limits to public payers (Medicare, Medicaid, exchanges) due to concerns about Anti-Kickback Statute enforcement and the Medicaid best price requirements," the PBM said, describing these laws as "inflexible when plans want to share risk in novel contracting arrangements."

"Express Scrips supports efforts, in conjunction with some drugmakers, to propose a new regulatory safety harbor to [the Department of Health and Human Services] that allows value-based programs that promote therapy adherence," the policy analysis states. "The precise drafting of such a safe harbor is complex, but critical to moving public programs along with the commercial market in adopting best practices to make prescription drugs affordable."

Stakeholders repeatedly have asked HHS' Office of Inspector General to establish safe harbors that would address biopharma concerns about value-based contracts, including protections for arrangements supporting treatment adherence. To date, OIG has declined a blanket safe harbor for proposed value-based payments, but said it will consider proposals on a case-by-case basis. (Also see "Value-Based Contracts Getting More Safe Harbor Attention From OIG" - Pink Sheet, 10 Dec, 2017.)

Opioids: E-Rxing And Dispensing Limits

The third prong of Express Scripts' policy recommendations focuses on addressing opioid overprescribing, misuse and abuse. To start with, the company wants to see electronic prescribing required for all controlled substances.

During a press call, Express Scripts Senior Vice President and Chief Medical Officer Steve Miller noted that many opioid prescriptions are still paper-based and paid for in cash. Once filled, these prescriptions essentially get lost in the system.

"If you move to a system that requires electronic prescribing of controlled substances, you'll be able to identify those pharmacies that are overdispensing, those physicians that are overprescribing, and those patients that still need our help," Miller said.

Express Script also is urging that opioid prescriptions for acute pain be limited to a seven-day supply.

This proposal aligns with the results seen with the company's Advanced Opioid Management suite of tools, which launched in September. For plans participating in this program, the average days' supply per initial fill was reduced from 18.6 days to 7.5 days, and almost 96% of opioid prescriptions were filled for a seven-day or less supply.

Furthermore, the PBM is calling on states to improve and integrate prescription drug monitoring programs (PDMPs) and require prescribers to check these databases.

FDA's Opioid Policy Steering Committee is weighing whether a new national prescription drug monitoring system set up by the pharmaceutical companies is needed, or whether upgrades and improved connections among existing state PDMPs is a better option. (Also see "State Opioid Prescribing Databases Can Handle US FDA's Needs, Officials Say" - Pink Sheet, 5 Feb, 2018.)

Stable Spending Trends…

Prescription drug spending increased only 1.5% among Express Scripts' commercial clients in 2017, a record low trend, and drug spending decreased for 44% of commercial plans, the PBM said.

Amid the finger-pointing over which sector of the pharmaceutical supply chain is primarily responsible for the cost of drugs, Express Scripts took pains to explain that its utilization and management programs, which helped keep drug spending stable overall for commercial insurers, did not result in a shift of costs to the majority of individual patients. The average member out-of-pocket cost for a 30-day prescription was $11.24, a $0.12 increase compared to 2016.

Nevertheless, the PBM acknowledged that such aggregate data don't reflect the anecdotal experience of a patient who sees a sharp increase in their pharmacy bill, and this type of narrative is driving the pricing debate.

… But Opportunities To Address Pricing Concerns

President and CEO Tim Wentworth said he believes there is a growing bipartisan agreement in Washington on the need for targeted legislative and policy actions to help control the cost of drugs.

Pressed for specifics, Wentworth said he sees "receptivity" to allowing the use of more dynamic formularies in Medicare Part D so that when new drugs come to market in the middle of the year plans are able to change their formularies.

He also sees support for eliminating the "distorted incentive" to use reference biologics, rather than biosimilars, in the Part D coverage gap. (Also see "Part D Plan To Adjust Cost Sharing For Biosimilars Questioned By PhRMA" - Pink Sheet, 22 Jan, 2018.)

"What I'm seeing and hearing is that there is emerging consensus that brand drug manufacturers have exploited the regulatory loopholes for their own financial benefit and that the regulatory scales are tipped too heavily in … brand pharma's favor," Wentworth said. "We are urging Washington to act and commit to doing our part. Anything that allows us to create competition and drive better access is something that we're going to lean into."

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