Pfizer Inc. (PFE) Earnings Call Transcript & Summary

Thanks for joining us. Today, we have Robert Popovian, who is going to talk to us about some of his thoughts on how we increase access and adoption to biosimilars in the United States. But first, Rob, if you can give a brief introduction, background to yourself, and then we'll dive into a few questions. And of course, as audience members, if you have questions throughout the session, please type them in the chat box room, we'll do the best to respond.

Thank you, Steve. Thank you for having me participate in this session. My name is Robert Popovian. As you mentioned, I am formerly a Vice President at Pfizer's U.S. Government Relations Team. And now currently, I'm the Founder of Conquest Advisors, plus I have an appointment with Progressive Policy Institute as a senior health policy fellow, as well as I'm Chief Science Policy Officer at the Global Healthy Living Foundation. I'm a pharmacist with training and an economist with training. And my passion, as I always say it in my Twitter account and my linkedin is advocating for patients, for health care professionals and employers because they are the 2 folks that actually pay for or administer and help our patients in the everyday life. So happy to be here.

Well, great. So for -- obviously, this will be a more U.S.-focused discussion, given we're doing the U.S. version of this conference. And we did formally have biosimilars first approved in the U.S. in 2015, as folks will remember. And we've had success in the marketplace, but Robert, what are your thoughts on do we need greater adoption of biosimilars in the U.S.? Or are we at a good point? Or where do you see us in that biosimilar journey?

I think, certainly, Steve, we've made a lot of progress, right, from 2015, and I was in the early days with Pfizer. I was involved in the launch of Inflectra when it came to the market. And we've had quite a bit of success. I mean, there's been significant adoption in certain markets of the biosimilars, certain therapeutic areas. The supportive care stuff has been outstanding. There's been a lot of adoption in those. There's been quite a bit of movement in the oncology space with the newer products that have come out in the last 18 months or so into the marketplace. But there are still barriers for adoption of certain other ones, specifically related to autoimmune diseases and the drugs that are used chronically. And we still have not turned the tide against the adoption of those medicines in the marketplace. And it's going to be critical as we move forward to look at the entire market and not just the individual segments and try to address the market as holistically as possible. So that's why, I think, yes, we've had success. We've had great adoption in certain markets, but not in totality, and we need to do a better job in addressing those that have fallen on the wayside with regards to adoption.

And from your perspective, what would be the top 2 to 3 barriers against growing adoption in this market?

Yes. And it's important -- that's a great question because, frankly, when you look at the modeling that's been done with regards to the savings potential that biosimilars have in this marketplace, a lot of the savings come from adoption of biosimilars in the autoimmune disorders. In fact, if you look at the model, primarily you take out the savings from the autoimmune disorder drugs out of the equation, you're not going to see the savings that have been estimated by a variety of different sources in the marketplace. So where are the barriers, to be honest with you, starting with rebate contracting, which is a huge barrier because it's a way for the insurers and the pharmacy benefit managers to block access to lower cost alternatives. And we've seen this with other examples. It's not just biosimilars. There's been multiple examples of drugs being introduced in the marketplace in the last dozen years that are less expensive in price, but they have been blocked by the insurers and the pharmacy benefit managers, primarily because their point of view is for you to have access on the formularies, the number one thing they want is rebates. And when you bring out an alternative that is less costly and you're not going to rebate as much or maybe not rebate at all, that is not favorable to their business model, and therefore, they block access through being added to the formulary. So one is the rebate contracting has definitely played a role. The second thing is really, it's been an education, right? This is a market that has been around since 2015. The first drug was approved in 2015. So we're 6 years into it. We have to educate physicians, patients, pharmacists about what biosimilars are, employers, especially. Employers have had very little knowledge about this market, and they are the ones -- the linchpin, in my opinion, that can really turn the tide for the utilization of biosimilars because they're really the ones that underwrite a lot of the insurance in the United States, both on the private and the public sector. If you think about Medicare Part D, is primarily administered through the private insurance companies. But the employers have -- are the linchpin to really turn the tide and do a lot of the education. But education has also been a barrier, but we're getting there. And we want to get to a point that everybody is comfortable with the biosimilars. And I think we are there with majority of the health care professionals and patients and pharmacists and physicians and everybody else.

So if you believe we need to focus on employers and education as being the linchpin, as you mentioned, what are some initiatives that you see biosimilar companies taking to educate those employers? And are there additional, let's say, industry efforts, that the industry as a whole can do and maybe broader than just 1 company or 2 companies?

So I will start with the industry because I'm very familiar with the biosimilars forum that you're familiar with. It's a coalition of pharmaceutical companies that are developing biosimilars in the marketplace. And the biosimilars forum, I was part of the Board for many years. And they've done an outstanding job of reaching out to employer coalitions such as Pacific Business Group on Health, to Eric, which is the ERISA -- individual employers that are under the ERISA plans. So they've done a great job of reaching out to them, partnering with them. In fact, they sponsored a study and worked with Eric that did a study and looking at employer savings regarding to biosimilars. And the study was very promising that, in fact, employers would have saved millions of dollars if they had more aggressive adoption of biosimilars in the market, specifically focusing on the autoimmune disorders. So I would say, as a coalition, as member companies through biosimilars forum, we've done a lot of work. They've done a lot of work now reaching out to employer groups. And individual companies have done also a great job of reaching out to individual organizations and companies that they work with, employers that they work with. Every company usually in the pharmaceutical segment has a designated number of individuals that work with employers in the marketplace to larger employers. And they've been reaching out to them for the last 5 years or so, trying to educate them and getting them on board. And -- but it's a process, and it needs to be done. So we've done a lot of work through the coalition with the biosimilars forum and individual companies are also engaging with individual employers as well.

Okay. And from a structural perspective, right now biosimilars are treated as separate drugs which leads to some of the formulary rebate issues you mentioned. There's no such thing as a generic tier, like you would see on the small molecule side.

That's right.

As products get developed, do you see a role or a way that formal interchangeability will impact adoption of biosimilars and break some of those barriers that you were mentioning earlier on formulary decision-making?

So interchangeability, the first thing we need to do is understand what is interchangeability and what it is not, right? What it is not is not a designation that's lacking because of safety or efficacy. Just because the product may not have an interchangeability designation doesn't make it equal as biosimilar and doesn't make it less effective or less safe. So let's put that aside. That's something that's been used by certain parties to provide misinformation about biosimilars. So that's not what the interchangeability is meant to do. Interchangeability is really a regulatory designation by the FDA that was put in when you were around. You worked on biosimilars at the same time when ACA came around, and really was instituted because they wanted to provide pharmacists the ability to interchange biologics with a biosimilar without having to get the consent of the physician. So that's all it is. It's a regulatory designation that is intended to guide the pharmacist's ability to substitute at the point-of-sale whether or not to have to contact the provider. Having a interchangeability designation allows the pharmacist to do that without having to provide the information -- to get the consent of the provider and the prescriber. So that's all it is. And that's why a lot of times, the interchangeability designation is misinformed, information that gets out is misused. And especially when it's inserted into areas where they're talking about substitution of non-pharmacists sort of dispensed biologics, and that has to do with most of the biosimilar market, which is they are the ones that are administered by prescribers in their offices or in hospitals and so on and so forth. There's only a limited number of biosimilars right now in the market -- actually not in the marketplace right now that are really dispensed through the pharmacy at the retail setting to the patient. More to come. Obviously in 2023, we will see a slew of them coming out. But right now, majority of the biosimilars are infused in physician offices and hospitals and interchangeability designation really doesn't play a role in that.

I think that's a very important point because we hear a lot about interchangeability, and that only really matters when a pharmacist is making the prescription decision.

Absolutely.

And as you just pointed out, it doesn't impact the vast majority of biopharmaceuticals or biosimilars being used in the country. And so I guess that swings us back to the whole education and aspect that you mentioned earlier. However, if we're going to have individual branded products, will we ever be able to move away structurally from the rebate PBM dilemma that you brought up at the beginning of the talk because that was, as you mentioned, the biggest barrier to how do you get the use -- adoption of biosimilars?

And I want to make sure that it's clear. The rebate issue is not only significant in the retail pharmacy segments, but also in the medical benefits area. The drugs that are administered in physician's offices are highly rebated. They're highly contracted. There are fees involved and everything else. So ever -- a lot of people misunderstand that topic, too, because they assume rebate contracting only occurs in the retail pharmacy level in drugs that are dispensed in the pharmacy and through a PBM. That's not true. Actually, a lot of rebating does take place with drugs that are in the medical side of the benefits. So if we had multiple drugs into the market, does this address the issue? Absolutely. Competition is going to eventually work, and this is going to be a market that's going to be having multiple drugs come into the market. But still, Steve, it's penalizing to see the data. So about a year ago, JAMA published an article funded by the Arnold Ventures, actually, which was very interesting because they looked at Part D formularies. And in that, about 3/4 of the formulary, and this is very important, in one instance, had a brand name drug favored as a tier within the formulary compared to a multisource generic medicine.

Okay.

So in other words, yes, that theoretically, as you get more competition in the marketplace with multiple drugs coming out in the same classes, that you can then suppress the prices to a point that the PBM cannot turn a blind eye or insurer cannot turn a blind eye and they have to get away from this rebate contracting that's blocking everything. But there's evidence that, that doesn't occur necessarily all the time. And we just need to be vigilant and again, goes back to the education. Educate people about this policymakers about the rebate contracting issue and how it provides misincentives in the marketplace that doesn't allow pharma companies, branded or generic, to come out with medicines that are lower priced than the market because price competition doesn't exist, it's really rebate competition right now.

Okay. No. And that's a very good point. Do you see any policy initiatives coming out of Washington that will start to address biosimilar adoption? And for our colleagues that are joining us from outside the United States, we understand the U.S. reimbursement system is very, very complicated and very difficult to explain, but a lot of changes are driven at the end of the day through Medicare and Medicaid decisions that are made in Washington and then distribute to the private plans later on. So curious as you see anything coming out of DC that would start to influence this debate in the next short period of time?

So there's hope. Because in the last Congress -- now we have a new administration and new Congress. So everything has to be repeated again because everything sort of has run out of time. In the last Congress, there were several bills that were introduced that was going to help really develop -- further develop the biosimilars market. One was -- because remember, you need to provide incentives for everybody in the marketplace to adopt lower cost alternatives, right? So you have the patients, you have the physician, the prescriber, the provider and you have the insurance plan to be able to do it. So there were 3 legislations that were introduced that sort of like was trying to address the incentives of how to incentivize. So one was to eliminate out-of-pocket costs for patients, which is super important. Because one of the things that commonly happens with any drug and any drugs that are rebated or discounted or heavily contracted, the patient is not the one that sees those benefits. So the legislation was going to basically lower the out-of-pocket cost if the patient was on a biosimilar compared to a biologic. The second legislation was to really share the savings, the incentive for physicians to be able to say, look, if you prescribe a biosimilar instead of a biologic or utilize this, whatever savings happens, you will share in those savings. That's important because that's the model that Medicare is generally going towards, right? Remember the oncology care models and all these things are built around share to savings. And the third one is really to incentivize insurers, especially the Part D Medicare managed care plan. So it was sort of like to say, and the legislation was in a simple way to say it is that if you have a plan for better adoption of biosimilars, it will be one of the measures we look at in the Star system. And as you know, Star system is like the main measuring tool that a lot of Medicare Advantage plans get measured against. And there's now data in the Health Affairs article that came out last month that shows that patients with implants with higher Star ratings, number one, they're more satisfied, they leave less and they have better outcomes as individuals. So it was to incentivize the insurers to participate in the market. But the biggest rule, to be honest with you, that really needs to be implemented as the one that was done through the executive order, which the Biden administration has sort of frozen at this time, they're reviewing it, and it has to do with eliminating rebate contracting in the Medicare side. And really, that rule is going to be a sea change. Because if it happens, then it's sort of disincentivizes the insurers and the pharmacy benefit managers for contracting based on rebate dollars rather than the price -- net price of the medicine.

Right. And that's where we want to move to. So we have a little bit under 2 minutes left in this forum and fireside chat. If you could paint your vision for biosimilars, let's say, in 2025. So 4 years from now, we have many more biosimilars in the marketplace. How do you see this playing out? What is your prediction for what the market would look like 4 years from now?

I'm a true believer as an economist. I think that more market competition drives down prices. That's without a doubt. That's been proven over and over again. We just don't see it because of the contracting methodology that we have in the United States. They always mentioned to me back that, look, the fifth statin was priced higher than the fourth statin. How could you say market competition drive lower prices? That's because of the contracting technique we have. If we get rid of that, what we will see is that there's price competition and the better person wins. And that doesn't mean necessarily the biosimilars, Steve, that you and I have spoken in the past about, it could be the originator. If the originator decides to lower their net price and have a retail price that is significantly lower, then it's good for them. Let them compete in the market as well with the biosimilars. So I do foresee things coming to a head. And really, it has to do with addressing some of the underlying policy barriers that exist currently. But I'm very optimistic, and we have to be optimistic. And I'll leave this at the end -- for the last thing I have to say is that if we don't have better adoption of lower cost alternatives that reduce the savings on the pharmacy end. Because remember, the pharmacy is a budget, right? And if we don't have a way to reduce the pharmacy end, all of these new therapies, cell and gene therapies, rare disease drugs that are coming out, they're not going to have space within the benefit design to be fit in, and they're going to be blocked. So we're going to have these massive number of drugs coming into the market that are really game changers in certain disease areas that patients are not going to have access to because we just are unable to create enough room within the benefit design to be able to fit and pay for these new medicines.

Excellent. Well, thank you for all these wonderful thoughts and a very engaging discussion. I hope the audience found it helpful. And as we said before, Robert is around to answer questions in the chat box, and you can continue the questions off-line. And on behalf of Robert and myself, we hope you enjoy the rest of the biosimilars conference and Festival of Biologics. And we look forward to doing this in a more in-person version next year. Take care.

Thank you, Steve.