British Columbia has become the first province to legislate a changeover to biosimilar drugs — a move that could save employers thousands of dollars on health benefits, according to experts.
“Once the companies bringing biosimilars see that the Canadian market is supporting them, they will bring more. and that will be an opportunity for even more savings. So, from an employer perspective, this is 100 per cent positive,” said Jim Keon, president of Biosimilars Canada in Toronto.
B.C.’s move was made in May and is intended to create opportunities for new drug listings and expanded coverage for patients. The changeover will occur over a period of six months and affect more than 20,000 patients with chronic conditions, according to the government.
Conditions affected include rheumatoid arthritis, diabetes, Crohn’s disease and ulcerative colitis. Patients are required to switch from their current biologic medicines to lower-cost biosimilars as of Nov. 25. Following that date, the provincial PharmaCare plan will only provide coverage of biologics in exceptional cases.
Biosimilars are representative of biologic medicines, but not identical. Biologics are injectable drugs constructed from living organisms such as bacteria or yeast, and are used to treat a variety of diseases.
Typically, biosimilars cost 25 to 50 per cent less than the original biologics. At present, there are 10 biosimilars approved for sale in Canada, according to the government.
“B.C. is leading the country by promoting the widespread use of biosimilars, which have been proven to work just as safely and effectively as higher-priced biologics,” said provincial Health Minister Adrian Dix.
“Biosimilars are a necessary step to ensure PharmaCare provides existing coverage for more people and funds new drugs well into the future.”
Biologics are collectively the most expensive cost on public drug plans, according to the B.C. government. Last year, the province spent $125 million on Lantus, Enbrel and Remicade — drugs treating chronic conditions such as diabetes, arthritis and Crohn’s disease.
By increasing the use of biosimilars, B.C. is expected to save more than $96 million over three years — funds that will be redirected to support additional drug listings and improved patient coverage, said the government.
Biosimilar medicines are an important measure in terms of managing costs, according to Keon.
“Switching or transitioning patients from original biologic treatments to their corresponding biosimilar medicines is the responsible choice for those who manage drug budgets.”
Less than two per cent of Canadian prescriptions were filled with biologic drugs last year, but the total cost represented 30 per cent of the country’s total prescription drug costs, according to the association.
“This is a policy whose time has come,” said Keon. “Canada and the U.S. are well behind Europe in the introduction and use of biosimilars.”
“It’s a good policy. It makes good sense fiscally,” he said. “We’ve seen, in Europe, much greater use of biosimilars. In Canada, the use of biosimilars has been very low, and especially on products that are used to treat chronic illnesses like rheumatoid arthritis, Crohn’s and colitis. It is very hard to have biosimilar use increase unless you take some wise, aggressive moves like B.C.”
While B.C. is the first jurisdiction in North America to legislate such a move, more jurisdictions — as well as insurance companies and private payers — are expected to follow suit, said Keon.
“It’s based on good science,” he said. “They did their homework in terms of talking to the groups that are affected.”
“We’re at the edge of a new dawn — a new era. Expanding patient choice with good quality medicines is really the key.”
Biosimilars are a critical ingredient to the overall sustainability of drug plans, according to Ned Pojskic, leader of pharmacy and health provider relations at Green Shield Canada in Toronto.
“As a country, we have not done a great job of ensuring that biosimilars get the necessary uptake needed to make that market sustainable and viable, and to ensure that plan sponsors, Canadian employers, get the savings they need from biosimilars,” he said.
“They are key to future sustainability. And I think they’re key to our ability to absorb some of these truly new, ground-breaking drugs.”
“That’s really what the story here is all about. If (you create a) sustainable market, you then ensure that you’re going to get more future biosimilars coming to market and driving competition, driving prices down, keeping things sustainable.”
Evidence on biosimilars in Europe shows patients can make the switch to biosimilars with no loss of safety or efficacy, he said.
B.C.’s decision is “absolutely smart,” said Pojskic. “I do expect other jurisdictions to follow. It’s a very logical direction.”
Effect on employers
While biologics have low utilization rates in Canada, they are “extremely expensive,” with patients prescribed the medicines costing employers thousands of dollars annually, said Keon.
The move towards biosimilars is good news for employers, and will be even greater if plan sponsors and insurance providers follow the government’s lead, he said.
“For employers, this (has) really good potential and is a really good opportunity. It’s employers who ultimately pay for their drug programs for their employees,” said Keon. “Using the biosimilars will provide savings and good quality medicines. It expands the patient choice, introduces more competition, and it’ll be a bit of a snowball effect.”
Thirty per cent of prescription drug costs are currently accounted for by biologics. While a portion is covered by public health plans, more than half of national spending is covered by private plans, he said.
“If you have a patient on a biologic as an employer, it can cost you tens of thousands of dollars. So, savings from a biosimilar will be very important.”
“The value for employers is improved coverage and benefits for their employees and patients,” said Keon. “This is an important initiative for employers.”
But private insurers will need to respond to the legislative change before this can truly be determined as good news for employers, said Pojskic.
Many patients within the province are insured through private plans for a period of each year before moving onto the provincial PharmaCare system, he said.
“B.C. has moved to transition all of their patients from Remicade, Enbrel and Lantus. Private insurance now has to do the same,” said Pojskic. “Because if you don’t do the same, what effectively happens is that those patients never satisfy their deductible, and then they stay with you for the whole year.”
While savings are expected to be substantial for both public and private plans, the impact will ultimately depend on how insurers respond, he said.
“They have to make the best choice for their clients, and I think different insurers have different perspectives of what that means.”
Advice for HR
As a result, B.C. employers will need to be proactive in speaking with insurance companies and providers for clarity on this issue, said Pojskic.
Working with insurers on the best way to respond and possible implications because of the changes is very important, he said.
While high-cost drugs affect one per cent of all plan members, the costs are substantial, said Pojskic.
“It’s highly cost concentrated. You’re impacting few people, yes, but the share of cost is huge,” he said. “That’s going to have a meaningful impact on your plan overall.”
As a result, employers will need to make choices in terms of which carrier is best suited to protect their dollars and keep costs manageable, said Pojskic.
“If you do nothing, you’re going to face more costs,” he said. “If you do something to respond, then you’re going to be facing less cost. It’s either more or less, but it won’t be the same.”
“You cannot keep status quo. You have to now do something; you have to respond. The question is ‘In what direction?’”
Education for affected employees and patients is also important, to ensure staff are aware of upcoming changes, said Keon.
“Education is really key in any switch that employers are going to do, but the savings will make it all worthwhile.”
The Canadian Life and Health Insurance Association said it continues to study the government’s announcement, stating it is too early to forecast the impact this will have on private plans.