Same drug, two different prices? Legacy PBMs play games with Humira biosimilars

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July 8, 2023

On January 31, 2023, Amgen released Amjevita, the first biosimilar for AbbVie’s Humira. This ended AbbVie’s 20-year monopoly for a drug with a sticker price of $90,000/year, and finally introduced competition to bring down drug costs.

While Amjevita is cheaper than Humira, its pricing structure is strange: it is offered at two different price points. There is a high-cost version ($85k/year) and a low-cost version ($40k/year).

Why would they offer a high-cost version? Why would anyone choose to use a more expensive version of the same drug?

The answer is that legacy PBMs have built their business models on harvesting rebates that pharmaceutical companies send them for enabling access to their drugs. Legacy PBMs prefer for their clients to pay pharma companies more up front and then get a larger rebate afterwards, because that enables them to retain some of that rebate, out of sight from their clients. So Amgen has offered this high-cost / high-rebate pricing option to satisfy legacy PBMs' appetites for higher rebates.

In deploying this strategy, Amgen is learning from the past “mistakes” of their fellow pharma companies. The low-priced market entry strategy has been tried by pharma, mostly without success. For example, Merck released two products in 2016-2017 with much lower sticker prices than any competitors (Zepatier and Renflexis). In both scenarios the products received very minimal uptake by the PBMs because there wasn't enough rebate for the legacy PBMs to retain.  This forced Merck to offer rebates on top of the already lower sticker price to receive any formulary access. 

This all seems crazy, but legacy PBM Optum Rx - for example - is explicit about this strategy in their recent February 2023 Formulary Update. In the excerpt below, they describe how they are excluding the low-cost Amjevita (on one formulary) and decreasing its preference (on another formulary), to push their clients towards the high-cost Amjevita.


This situation with Amjevita is a great example of the skewed incentives of legacy PBMs.  Because they are hooked on rebate take, they are pushing their clients to more expensive drugs.  The coming wave of Humira biosimilars is one more great reason to choose a PBM that is truly pass-through, so you can reap the full benefits of reduced cost for this drug category.

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A new type of pharmacy benefits manager, SmithRx is working to reduce pharmacy costs by reimagining the traditional PBM as a Drug Acquisition Platform built on transparent modern technology that aligns with the needs of our customers.