• Article
  • November 30, 2016

How Biosimilars Can Impact a Children's Hospital Pharmacy Spend

National trends indicate specialty drug costs are on the rise. Here's how children's hospitals are curbing the costs of these drugs for the hospital employee population.

Specialty drugs or biologicals, products derived from living organisms, are used by less than 3 percent of CHA's Pharmacy Benefit Management (PBM) program members. However, these drugs account for 30 percent to more than 50 percent of the total drug spend for children's hospital employee populations.

This is also a trend the U.S. Food & Drug Administration (FDA) is seeing nationally. To combat this growing cost, the FDA is approving specialty drug competitor products when the original biologic patents expire. These biosimilars are intended to produce similar clinical results, with some experts predicting medication savings of $110 billion by 2020 in the U.S. and Europe.

At the end of 2015, QuintilesIMS (formerly IMS Health) reported 41 biosimilars under development for four key specialty drugs: Humira, Enbrel, Remicade and Rituxan. Humira and Enbrel are generally used for auto-immune disorders; Remicade manages Crohn's and ulcerative colitis; and Rituxan is often used for more serious immune disorders and some cancers.

Currently, these specialty drugs disproportionately drive the current CHA PBM collective drug spend. Over the last 12 months, CHA PBM participating member hospitals spent $12 million on Humira, the most heavily used pharmacy benefit specialty drug, and $8 million on Remicade, the most heavily used medical benefit specialty drug. The FDA has approved two biosimilars as replacements for these drugs, which are expected to reduce specialty medication costs by about 10 percent to 15 percent.

PBM members should begin seeing reduced costs in 2017 due to use of the biosimilars. Additionally, in January 2017, one of CHA's PBM partners will make a formulary substitution from Lantus, currently one of the most expensive and heavily used insulins, to the new biosimilar Basaglar.  

As PBM formulary preferences and biosimilar use increase, CHA will help hospitals remain up-to-date on this emerging market trend. 

An FDA overview for consumers is a good initial resource. 

For more information, watch a recording of the webinar Biosimilars: Trend Influencers & How They May Affect You.