cost control

Amgen Move Gives Biosimilars Big Boost

Neil Minkoff, MD

Amgen is making a huge bet on biosimilars and helping to define the market.

The company announced that it is targeting 6 biotech blockbusters and will start selling them as  biosimilars in 2017. The initial targets: Avastin, Herceptin, Rituxan, Erbitux, Humira and Remicade. That’s over $40 billion in product. Even a small savings, like 15% to 20%, would result in a huge change in premiums.

It is still unclear what hurdles will need to be cleared from the FDA and/or other regulatory bodies, but a few other things have become very clear:

  • The biotech industry is starting to see biosimilars as more of an opportunity and less of a threat.
  • A large company like Amgen can bet on its qualifications and reputation to be a trusted manufacturer of biotech products introduced by other companies.
  • The more that companies like Amgen announce forays into the biosimilar space, the more that payers will be counting on price relief from specialty Rx products.

 It will be curious to see which company makes the next announcement and how aggressive it will be.

Neil Minkoff, MD, is medical director of MediMedia  Managed Markets and also an independent health care consultant.

Let's Be Reasonable

Steven Peskin MD

Though the title might apply to many aspects of our daily lives and the world as a whole, in this instance I am referring to how Medicare and other insurers interpret the word reasonable to make coverage and payment decisions. A recent editorial in the New England Journal of Medicine highlighted this enduring challenge for Medicare.

The authors begin with language from the Social Security Act:

No payment may be made. . . for any expenses incurred for items or services which . . . are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.

The editorial takes the point of view that a legislative fix is needed for greater specificity surrounding reasonable and necessary services for coverage and payment determination. My view is that more complete definitions of reasonable and necessary —  definitions that might include "cost-effectiveness" or "adequate evidence" as the authors advocate — are not a meaningful part of the solution to Medicare's looming insovency and to addressing unsustainable cost increases.

But the authors note that "some may hope that the federal government can simply delegate coverage decisions to other parties, such as accountable care organizations, while forcing patients to consider the value of technologies through increased cost sharing." 

These two approaches are the path to the practice of cost-conscious care by clinicians and to cost-aware care among consumers.

The ability of providers to challenge evidence-based decisions with additional or alternaitve evidence when the economic incentives support volume over value has circumvented and will continue to circumvent payer efforts to control overuse. Aligning the collective interests of clinicians and their patients away from overuse and toward appropriate  care is the road to affordable health care.

Steven R. Peskin, MD, MBA, FACP, is associate clinical professor of medicine at the University of Medicine and Dentistry of New Jersey–Robert Wood Johnson Medical School.