Pfizer, Express Scripts Clash Over Biosimilar Formulary Placement

Pfizer VP blames rebate strategies of innovators for difficulty in getting biosimilars on formularies while Express Scripts official says it is all about net cost during House hearing on lowering Rx drug prices.

Pfizer Inc. and Express Scripts Holding Co. revealed a disagreement over the hurdles biosimilars face in getting formulary placement during a 9 May congressional hearing on prescription drug pricing.

Pfizer's Justin McCarthy, senior VP of the patient & health impact group, told the House Energy & Commerce's Health Subcommittee that innovator companies have blocked biosimilars from getting on formularies.

"We have had significant challenges getting biosimilars on formulary and these are much lower cost biologic products and we bring them at significant discount," McCarthy said.  "But because of rebate strategies of the innovator biologic it makes it very difficult for us to get on formularies."

"I disagree with that position," Amy Bricker, Express Scripts senior VP, supply chain," responded. She said Express Scripts considers the net cost of a biosimilar when deciding on formulary placement.

"As biosimilars come to market they have to bring value. They have to be less expensive, as you would expect a generic product to be less expensive than an innovator" product, she stated. "So, I would encourage manufacturers" to consider that as they are setting their list prices.

The hearing was the latest of several hearings that have been held on Rx drug pricing. Drug manufacturers and PBMs have been blaming each other for price hikes. But their disagreements were more muted at this hearing.

However, conflicts between the two emerged in comments on formulary placement. Amgen Inc. also had a misunderstanding with Express Scripts over its employees' access to Repatha (evolocumab). (See sidebar.)

'Rebate Traps'

McCarthy told the subcommittee that incentivizing the use of biosimilars is one solution to the high costs of medicines. In his written testimony, he said that in many cases, payers decline to include lower-cost biosimilars or generics in their formularies because they would risk losing the rebates they can get by covering higher-cost medicines. He said an anticompetitive contracting scheme that relies on rebates has been the primary barrier to the uptake of a Pfizer biosimilar.

"The centerpiece of the scheme is the 'rebate trap' that uses pricing penalties (i.e., the loss of significant rebates) to coerce insurers to enter into exclusive deals that cover the reference product while effectively blocking the biosimilar from coverage," he stated.

McCarthy was referring to Johnson & Johnson's contracts for Remicade (infliximab). Pfizer filed an antitrust suit against J&J in September 2017 alleging J&J has denied patients access to Inflectra (infliximab-dyyb), its biosimilar version of Remicade, through exclusive contracting with payers and insures and multi-product bundled rebates. (Also see "Pfizer v. J&J Sets Stage For Biosimilar Showdown Over Exclusive Contracts" - Pink Sheet, 20 Sep, 2017.)

Bricker noted that Express Script does not negotiate by bundle. "I look at the net cost of an individual product independently of all other products in a portfolio," she said.

McCarthy also criticized innovator companies for distributing misleading information about biosimilars. He said he has seen "misleading marketing practices that mischaracterize important elements of biosimilar criteria." Pfizer submitted a citizen petition to FDA last August asking the agency to issue guidance to deter innovator companies from suggesting that biosimilars are not as safe and effective as reference biologics. (Also see "Pfizer Wants FDA To Stop Sponsor Promos From Implying Biosimilars Are Inferior" - Pink Sheet, 28 Aug, 2018.)

From Rebates To Patents

Pfizer and Express Scripts also voiced disagreement on providing rebates at the point of sale. McCarthy said Pfizer is committed to converting all its rebates to point of sale discounts to benefit what patients pay at the pharmacy counter. Bricker criticized the HHS Office of Inspector General's proposed rule that would allow upfront discounts to be passed through to beneficiaries at the point of sale.

The proposed rule is "troublesome" because it doesn't address the cost of a product but rather where the value is being deployed, Bricker said. The proposal would revise the existing safe harbor against anti-kickback enforcement for drug rebates provided as part of Medicare and Medicaid reimbursement and replace it with a safe harbor that protects point of sale discounts. (Also see "No More Rebates: HHS Proposed Rule Revises Anti-Kickback Safe Harbor" - Pink Sheet, 31 Jan, 2019.) 

Pfizer and Express Scripts detailed their positions on the proposed rule in recent comments to the OIG. (Also see "HHS Rebate Reform: An Air Of Inevitability In Stakeholder Comments " - Pink Sheet, 22 Apr, 2019.)

Congress has intensified its focus on drug pricing, holding several hearings and introducing numerous bills. The House Judiciary Committee unanimously advanced four bills at a 30 April markup, including measures to prevent brand manufacturers from entering pay-for-delay patent settlements and to prevent them from using Risk Evaluation and Mitigation Strategies to avoid selling samples to generic manufacturers for testing. (Also see "House Judiciary Committee Advances Four Drug Pricing Bills, Although Changes Are Still Likely" - Pink Sheet, 30 Apr, 2019.) 

On 8 May, the House passed two bills, H.R. 1503 to provide greater transparency of information in FDA's Orange Book, and H.R. 1520 to include more information in FDA's Purple Book.

Another bill is targeting use of the patent system to delay generic and biosimilar competition. On 9 May, Sen. John Cornyn, R-TX, announced that he and Sen. Richard Blumenthal, D-CT, had introduced the Affordable Prescriptions for Patients Act, which would codify definitions of product hopping and patent thicketing within the US Federal Trade Commission. (Also see "FTC Would Get Green Light To Go After Patent Thickets Under Bipartisan Senate Bill " - Pink Sheet, 7 May, 2019.)