Why Biosimilar Makers (incl. Insulin) Must Sell 2 Versions of their Copy-Cat Meds in USA

Recall that Adam Fein, who writes the Drug Channels blog, recently documented (see HERE for details) that Viatris (fka Mylan) and its biotech co-development partner Biocon, recently revealed that in spite of earning the FDA "interchangeable" designation for the insulin biosimilar of Sanofi's Lantus for the product Viatris branded Semglee that they would be using prescription drug rebates needed to bribe, errr ... secure PBM formulary placement. They will offer both a branded and un-branded version ... of a biosimilar. That's weird, but likely suggests what the U.S. biosimilar market will look like in the near future. 

FiercePharma documented the curious necessity for biosimilar makers to sell two versions of their products HERE. The curious necessity for a biosimilar manufacturer to sell two versions of biosimilars which involve little R&D is a peculiarity of the U.S. market. Viatris/Biocon finds it necessary to bribe PBM formulary managers with "rebates" hence it offers a rebated version of the product, and a cheaper, un-rebated version to avoid the PBM rebate trap. In order to get around that not-so-little rebate problem, Viatris will simply introduce a version of Semglee called Viatris Insulin Glargine that avoids the Rx rebate problem. Viatris labels the products "Insulin Glargine-yfgn" which is the search term patients should use on various coupon-generating websites/apps.

Offering two versions of the same product is also precisely what Lilly has done with its "authorized generic" (an FDA term) or "non-branded" version of Humalog called Lilly Insulin Lispro and what Novo Nordisk has done with its "unbranded biologic" version of Novolog called Novo Nordisk Insulin Aspart. The companies have two different NDC numbers for the same products to accommodate rebates necessitated by PBM's (or, put another way, a method to bypass the Rx rebates/bribes paid to PBM's to reduce patient prices).

As Lilly has revealed in its company quarterly investor presentations, Lilly Insulin Lispro has generated sales volume growth for the company and does so without massive rebates to PBM's of 74% or more (if rival Novo Novo Nordisk is being truthful).

Eli Lilly is already trying to work both segments of the diabetes market with its fast-acting insulins, Bernstein analyst Ronny Gal noted to FiercePharma in an e-mail. It's "primarily the high-price/high-rebate product which is selling," Gal added. 

Mr. Gal makes a somewhat questionable assertion, except when one looks at Humalog global sales of the product. The reason I say that is because of Lilly's Q2 2021 quarterly earnings investor presentation given on August 3, 2021. The following slide comes from that presentation: 

According to that in the graph on the right side, since June 2019 (not too long after Lilly Insulin Lispro was introduced across the U.S.), sales of the high-price/high-rebate product branded Humalog have been falling steadily, whereas Lilly Insulin Lispro has made-up the slack. Overall sales of both products have largely been flat. There's little doubt Humalog is still the biggest part of its overall sales, but the impression that the high-price/high-rebate product is the only part generating any sales growth is simply not validated by the evidence. Humalog sales are declining, while sales of Lilly Insulin Lispro are rising.

As Lilly's patents on that blockbuster product expire, we can expect Lilly to shift its marketing focus away from brand-name Humalog to Lilly Insulin Lispro in the U.S. instead. Lilly will still pay bribes/rebates to PBM's on Humalog, and occasionally win formulary placement, but it no longer needs to pay ever-higher rebates to achieve sales growth for a product whose patents have now expired, and as long as Lilly doesn't have many biosimilar competitors on the market selling for less money, Lilly can still capture those sales unless a rival like Sanofi (Euro API) finally reduces prices on its Admelog biosimilar which is very overpriced (even with a coupon, the price is $99/vial, twice what Lilly's Lispro sells for).

Meanwhile, Novo Nordisk is taking a slightly different tact: it is totally dependent on Rx rebates paid to PBM's to keep Novolog and Fiasp on insurance company formularies and to effectively generate sales. Patients and their doctors would not necessarily choose Novo Nordisk insulins, but by bribing PBM's with rebates, they become the preferred brand -- but it costs the company a large part of their sales. As I've asked before (see HERE for more), when will Novo Nordisk finally conclude that it can't afford to pay any more of its sales as PBM rebates? 

Right now, Novo Nordisk is paying 74% of its gross sales as Rx rebates paid to PBM's. Will it stop when that reaches 99% or before it reaches that? There are currently at least 3 insulin aspart biosimilars now in development including Viatris/Biocon, Lannett/HEC, and potentially others from both Lilly and Sanofi (soon to be Euro API) though neither Lilly nor Sanofi have succeeded selling biosimilars if Lilly's Basaglar or Sanofi's Admelog experiences offer any proof. 

By comparison, I was only aware of one version of Insulin Lispro in development from Sandoz/Gan & Lee and because its parent company Novartis now wants to spin Sandoz off as a stand-alone company, so far, Sandoz has yet to launch any insulin biosimilars in the U.S. There is some talk among European socialists to buy Sandoz and make it a government-owned public company that makes biosimilars including insulin, but it's unclear whether that will happen or not, and if so when. It would appear the Gan & Lee partnership was designed to enable Sandoz to compete on rebates, too, although it seems certain that it will have to launch heavily-rebated versions and un-rebated versions, just as Viatris/Biocon is now doing.

Back to Viatris/Biocon Insulin Glargine. 

Last week, Walgreens issued a press-release (see HERE for details) that Walgreens will offer Viatris Insulin Glargine through the Walgreens Prescription Savings Club, a paid membership program that carries an annual fee of $20 per individual or $35 per family. Through that, Viatris Insulin Glargine will sell for $71.99/vial or $84.99 for a box of five pens through the Walgreens Savings Club. That IS a slight discount (particularly on more costly insulin pens) but the question is whether the savings is sufficient to justify paying an annual fee of $20 per individual and $35 per family? It might if you use other prescriptions which are discounted more than the regular prices would be.

Still, the Walgreens announcement was rather curious because the prices were roughly what Semglee had previously sold for with a manufacturer coupon directly from Viatris. It does raise the question whether it is even necessary to pay Walgreens a fee for its Prescription Savings Club, or can patients avoid paying Walgreens a fee and just use a Viatris coupon, or maybe get coupons from GoodRx or PBM-operated coupon app instead? One element I did notice is that the only coupons which seem to be available for glargine are costly insulin pens. Old-fashioned vials/syringes are vastly cheaper, but coupons for that are less available.

United Healthcare's OptumRx and its Optum Perks coupon website/app seems helplessly addicted to brand-name Rx rebates and does not offer any coupons on any discounted biosimilar insulins, but Cigna's Express Scripts certainly does on what appears to be the Express Scripts' National Preferred Flex Formulary, which tends to favor drugs with lower list prices over the high-list/high-rebate versions of many drugs and is available via the Express Scripts InsideRx Cash-Pay Pharmacy, but it does not appear that many employer plan sponsors have adopted the Flex formulary, though we don't have a clue if the company is even marketing it because Express Scripts benefits more with fat rebates. 

Still, Cigna's Express Scripts InsideRx offers discount coupons which appears to access that formulary (recall that I blogged about how I bypassed our own PBM to buy a less-costly generic hypertension drug for my spouse called eplerenone using InsideRx), and using InsideRx coupons will enable people to access Express Scripts discounts. For example, the InsideRx site says the cost of "Insulin Glargine-yfgn" is $85.75/vial or $108.89 for a box of 5 pens (incl. at Walgreens). It is slightly more costly than Walgreens Savings Club prices are, but is still less than the cash retail prices would be plus consumers don't have to pay Walgreens a fee to get the InsideRx/Express Scripts price. If they use an InsideRx coupon and order using Express Scripts Cash Pay Mail Order Pharmacy with an InsideRx coupon, the price is just $67.67/vial or $86.52 for a box of 5 pens. The price per vial is cheaper than Walgreens sells it for with a paid membership, but pens are not.

It seems very clear that in order to be a biosimilar player in the U.S., it has become necessary to secure different NDC numbers for a heavily-rebated (to PBM's) version, and a less costly version of the exact same medicine unless the FTC finally investigates PBM activity for illegal behavior, which could still happen once it does some research into the matter.

For patients, it is a new level of unnecessary confusion but every entity in the U.S. pharmaceutical distribution system likes it and wish to become the default method of payment. Still, so far, only Cigna's Express Scripts InsideRx coupon-generating website/app is offering discounts on Viatris Insulin Glargine-yfgn, but we could yet see some rival coupon-generating websites/apps introduce them in the not-too-distant future.