ALC - State Insurance Programs Oversight Subcommittee
Video
Transcript
4 documents
Machine transcript
May contain errors. Verify important quotations against the official video.
About transcript accuracy
- Source
- Whisper
- Model
- ggml-large-v3-turbo.bin
- Processing date
- October 4, 2026
Senator Jimmy Hickey, Jr
Unverified
2:30
okay everyone we'll uh we'll call this uh uh meeting to order uh the first item on the agenda is grant wallace if you want to
come come forward i believe we have a review of an avidus health solutions contract mr wallace if you'll just introduce yourself and you can begin grant wallace director of the
Speaker 6
3:05
employee benefits division and office of property risk we are bringing this contract we
Speaker 8
3:10
went over it last month but we're bringing it back for you to this month there were some changes that we were requested to make and we've made those changes it is now a one-year term contract it is valued at 11 and a half million dollars but all the other provisions that we had discussed last month remain intact we were still able to shift the prior authorization and a review to
EBRX from Navitus that resulted in approximately a half a million dollars in savings for this first year. We have done integrated some medical claim drug claim review that's anticipated to be an additional half a million dollars in savings for this one year and then we are shifting to an employer group waiver plan from the retiree drug subsidy program that should anticipate a
roughly a 12 million dollar benefit to the plan in this first year the second and third year are optional which is how we were able to retain a lot of the existing pricing and provisions that we had originally agreed to in the three-year deal with this particular plan that we've got before you be glad to answer any questions any of the members have any
Senator Jimmy Hickey, Jr
Unverified
4:38
any questions in regards to this just one so the
the extra years are they're optional you'll you'll have to bring those before
this body though before you move forward is that
Speaker 8
4:51
correct absolutely the the appropriate the authorization on the amount was only for the one year so that automatically forces us to come back to get any additional money and then the terms and conditions to exercise those two and three We would have to come back for year two and year three to get those exercises well. So that would run through you all as well. Great work.
Senator Jimmy Hickey, Jr
Unverified
5:13
review. Do I have a motion for review? Motion. I have a motion. Do I have a second?
Second. I have a second. All in favor say aye. Aye. Any opposed? Okay, that motion will carry. Is that all you
have? All right, thank you. Okay, members, the next item on the agenda. is we're going to have a presentation from Pacific Research Institute, Mr. Wayne Weingarten. I believe that he'll be on the screen, so we can start that whenever we're ready. Hi, glad to have you, sir. Hi, thank
Senator Jimmy Hickey, Jr
Unverified
5:50
Yeah, if you will just introduce yourself so we'll have it for the record, and then you can
Wayne Weingarten
Unverified
5:56
begin your presentation. Absolutely, and I hope you can see the presentation up on the screen now. So my name is Wayne Weingarten.
Speaker 19
6:02
I'm a senior fellow in business and economics as well as the director for the Center for Medical Economics and Innovation at the Pacific Research Institute, which is a free market think tank based in Pasadena, California. Okay. Well, that was great. Now, we're looking at
Senator Jimmy Hickey, Jr
Unverified
6:16
you at this moment, so I don't know if you have a way that you can switch over to your presentation at this point.
Speaker 23
6:30
I'm sorry. I apologize. It helps if you share your screen. You should be able to see it now.
Speaker 19
6:42
There it is. Thank you, sir. Thank you. And I really appreciate the opportunity to present the findings from this paper. What our goal from this paper was is we wanted to look at how much biosimilars can specifically save state plans. And the reason is there's a lot of controversy going around in terms of what actually are the savings benefits.
And so we thought it would be kind of helpful to kind of review it. I thought it might be helpful just to kind of start at the basics in terms of the differences between really biologics and traditional medicines that the ones you typically get at the pharmacy counter. And those are chemical-based medicines. And the idea of having exclusivity followed by competition, which is what generics are, works. 90% of that market are generics. Generics are about $25 per script.
Actually, generics in this country cost less than generics anywhere else in the world. So competition works. When we talk about kind of a lot of the affordability issues, what we're talking about is biologics. Now, biologics are different because they're not chemical-based. They're developed either from or are living organisms, so the biological, and that's where the name comes from. And when we look at a lot of our advancements in autoimmune diseases like, you know, psoriatic arthritis or psoriasis or cancer, Crohn's disease, all of those have been kind of leap forwards in treatments from biologics.
Biosimilars, they have the same role as generics do in terms of the chemical-based medicine. They bring in competition, and that competition lowers prices. When you see studies looking at how much they've saved, the Association for Accessible Medicines, that's the National Trade Group for Generics and Biosimilars, they found as of 2025, there's been $56 billion savings. That's crossed the whole healthcare system. And typically what we've seen is within five years, and it takes a bit of time, within five years, you get about 52% price savings.
Just kind of very quickly, you know, looking at some of the medicines, you can see that when you're looking at for immunology, and those are the diseases like autoimmune, you're talking about 20%, 25% difference between the lowest cost biosimilar and the originator or reference biologic. Looking at, apologize, looking at the oncology drugs, which is for cancer, you can see these, you've seen significant price discounts around 90%, 90%.
Supportive drugs is the things like make cancer treatments less or more tolerable, less unpleasant. You can see that ranges from almost 80% to when you're looking at epitene alpha, the difference is only 3%. And that's worth a quick second to discuss. There are instances where there's very little difference between a lower cost biosimilar and the originator. And there are some instances where the originator is cheaper. But the price of the originator now compared to where the prices were prior to competition is significantly lower.
So in other words, the originator is kind of competing like a biosimilar. So even where you see in current instances where biologic, the originator, costs less, they now have come down significantly in price because of competition. It's also, I thought, worth looking at Humira, which used to be the best-selling drug in the world. It's just been opened up to biosimilar competition. We've seen not only Humira's price come down, but there's about almost an 80% discount on the lowest-cost biosimilar.
All of that goes to show that biosimilars cost less and are of the same quality. So if you have the same quality but a less costly product, it should save money. And in fact, that's kind of what we've seen. Looking at the market, right, by volume, about 30% of biologics currently can face competition. Biosimilars account for about 24% of that volume, which is about 7% of the total volume. And when we're looking at the savings opportunity, we're not looking at the 70%. And that's a huge opportunity for additional savings.
There's a lot of complications in terms of the market, and there's some issues we really don't have time to get into today, but we didn't want to raise those. So we just wanted to estimate how can we increase the biosimilous share of this portion of the pie, the 30%, in order to generate savings. That was a basic research question, and we had to take a macro perspective. Initially, we thought it would be great to go through each state's books, but that was just the differences across states made that prohibitive.
So what we ended up doing is taking a kind of a top-down approach. We looked at total spend and said, okay, how much is this allocated to state insurance health plans? How much is this on drugs versus biologists? And kind of brought that down so we can come up with an estimate. where we said it looks like about $20 billion is being spent by state plans, and that does include local employees in most states. In Arkansas, it was about $186 million. That's what the current spend is. So how can we increase that share?
And what we found is policies that prioritize kind of biosimilars on the formulary have been successful at increasing the share and, in fact, bringing in more lower-cost medicines. We ran two scenarios. One, what if we could accelerate just to the current average share, right? Where right now you're talking about 52%. So what would happen if by implementing these policies, we accelerated everything to 52%, not in five years, but immediately? That for Arkansas would generate $8 million.
In the kind of more kind of aggressive scenario, there were some programs that were prioritizing buyersimilars, and we saw they get up to about 81% of the share very, very quickly. Under that scenario, you would get about $16.4 million worth of savings in Arkansas. Now, you know, recognizing there is a lot of confusion in terms of these issues because of tactics like rebate walls and how do discounts play out. Bottom line is, and we can discuss this if you would like, but the current kind of discounting system is changing.
So those obstacles aren't the obstacles that they used to be. Plus, and this is very important, that when you have a rebate, well, it caps the savings eventually by a similar because the lower price will generate more savings. But most importantly, when you have the higher cost biologic, employees are spending more out of pocket. So what you're really doing is imposing a higher cost of employees, which then harms the employee. But the bottom line is based on our research, and this is across the country, you can save money by policies that prioritize biosimilars.
You put the caveat when they're lower cost, and that does, in fact, save money. And that's what we found and very happy to answer any questions you may
Speaker 28
14:03
have. thank you sir okay members you've heard the presentation uh any questions in regards
Senator Jimmy Hickey, Jr
Unverified
14:16
to this okay representative uh walker i think you're up first is that correct
Representative Steven Walker
Unverified
14:21
works for me okay um i appreciate it mr chair um and i'm not in the health care so i apologize in advance for my ignorance but and I know health care is kind of to me increasing at a faster rate than what we see with the rest of the market and so I'm all for looking for ways to help lower our health care costs and I know Mr. Wallace does a great job with EBD on all this but I'm just looking through
what you submitted I've noticed that we use words like assumptions in here and then on I think on the slides four through seven it shows the lowest price vile similar and we compare it to the volume weighted average sales price and so it's not really an apple to apple comparison on the cost savings and so I guess my it leads me to my question with these assumptions and stuff it shows that there's not a lot of data I guess that could be used to give a closer closer comparison um so i'm assuming that that means that other states have not bought into this
with their state-ran um programs and i'm just curious on why that might be or what's causing other states to be hesitant if my assumption is true but whatever you can do
Speaker 19
15:49
you i appreciate the question and you you're 100 correct in terms of we needed to make lots of assumptions. And that's just when you're looking across all of the different states a necessary thing to do. Certainly you have the information that is not publicly available that
you can go through and look exactly what your spend is. That type of information is just not and shouldn't be publicly available because you could be then inadvertently revealing all sorts of private health care information. And in terms of your kind of position that the comparisons are inaccurate, that is not correct. The data comes from the Centers for Medicare and Medicaid Services. When you're talking about ASP, average sales price,
that data is, if you participate in Medicare and Medicaid in Part B, you have to submit your prices, net of all discounts, to the government. And that goes for the biologics can go to the biosimilars. So these are the actual prices that are being compared. We're comparing the prices for the originator to the prices of the lowest cost biosimilar. We looked at the lowest cost biosimilar because that provides kind of the largest gap between kind of, you know,
all the competitive products. If you use a slightly more expensive biosimilar, the savings would certainly be slightly less. That is 100% true, but the pricing data, because it comes from CMS, because it is the average sales price data, these are the kind of the price gaps on the different drugs where, again, Medicare Part B, Humira is not Medicare Part B, so that would be one exception to that rule, but everything else is part of Medicare Part B. And that is because these biologics, because of kind of there being biological processes,
not chemical drugs, are infused in a clinical setting, and that then brings them out of Part D and into Part B, where we do have better pricing data. So I would say that these are kind of accurate portrayals of kind of what the price gap is. Now, in terms of your suggestion, in terms of why haven't other states done that, and this is kind of a new issue, and virus in the competition is beginning to stand up, and we're having some obstacles going forward in terms of
we need the market share for buyers limits to increase further, just like we've seen with generics. And so there's a lot of opportunity there. So I would look at it more as an opportunity in terms of saving rather than when you say, why haven't other states done it? Some states are going to use it slightly more. Some insurance plans are using it more. We're seeing greater pick up on certain drugs um so that that i would say is a savings opportunity not necessarily a sign of caution um one follow-up please please yes sir
Representative Steven Walker
Unverified
18:52
um could it could it be because i guess
if they started phasing over to vile similars it would reduce the amount of rebates and discounts they're getting that it would um i guess in the short-term effect um cost savings and maybe in the long term but it's a lot of it's hypothetical um so is it more of the cost reasoning than anything else on why states are reluctant to to move toward this well
Wayne Weingarten
Unverified
19:17
they said there's two things in that and that's a really excellent point
Speaker 19
19:21
one and what you're talking about are rebate walls and and what would traditionally happen is a dominant biologic would set their discounts
based on volume so that if you slip below the volume you lose a huge amount of the discount Therefore, even though the buyer similar costs less because you've lost more discount than kind of would be associated with just that volume, you're not making up the savings right away. There obviously is a point where the lines would cross and you would save more, but that's a gap which you would be spending more. But what we're actually seeing is the discount system, and it's a very unhealthy kind of market structure in the way it is because the incentives are not aligned properly.
That is changing. We're seeing if you go to a website called Drug Channels and they do an excellent job documenting this and they talk about the gross to net bubble because you have kind of these weird discounts where patients aren't benefiting from the lower prices, that system is going away. And so what that means is that rebate wall obstacle is in itself going away. And then also when you see, you know, and these aren't directly in biologics, but like Mark Cuban's pharmacy site and also it's a direct-to-consumer sales and the manufacturers selling, you know, offering product direct to patients.
All of these are breaking down that rebate wall, which means that the cost to kind of the states having to overcome that is, in effect, going away. And many private insurers are actually negotiating with their PBMs to kind of change those systems to kind of get away from the discount model and getting more to a net pricing model. And so the more you move your system toward that net pricing model, the less relevant that kind of rebate wall situation will be.
So undoubtedly an obstacle in the past, it does cap savings, it does impose higher costs on employees, has been a problem. And that's something that is at the federal level as well. People have been lobbying because that is an inefficiency that is harming all of us. That is going away, and that's a good thing, but it also means that the opportunity to generate more savings at the state level for state employee plans, that is arising. And, you know, saying this out loud, it also means perhaps, you know, why haven't other states done that, you know, and this could very well be the impetus that's enabling that.
Representative Steven Walker
Unverified
21:55
I appreciate you, Zimmerman, and thank you, Mr.
Senator Jimmy Hickey, Jr
Unverified
21:58
Chair. Yes, sir. Senator Boyd. Thank you,
Senator Justin Boyd
Unverified
22:01
Mr. Chair. When we're done here, I want to visit with Mr. Wallace again, please Okay
Senator Jimmy Hickey, Jr
Unverified
22:07
You want you want him to come back down after we're finished with this
presentation? Okay, all right, we'll Have that in the queue if you'll be ready whenever we get done with this presentation Representative
Representative Fred Allen
Unverified
22:22
mr. Wang garden for being here
There is a difference between biosimilars and genetic drugs Can you explain the difference between the two? Yes, yes. So a
Speaker 19
22:35
generic drug, these are the drugs we've traditionally had for most of our lives. They're based on the chemicals. And so when you have kind of what they would call a branded medicine, so think of it like a statin, right? That is a chemical formula. And so when you have competition come in, a generic manufacturer, and they call it generic because it's exactly the same, right?
You have a chemical kind of composition, you can have that formula, you can absolutely precisely copy that formula, and you have the exact kind of medicine just in generic form. And we see that, you know, when you go to the CVS and you see you have Allegra for allergies and you'll have the CVS brand, that's just a generic. It happens with statins. Most, you know, like I said, most of the chemical market now is generics or small molecules also refer to it.
When we talk about biologics and we refer to those as large molecules as well, those are not chemical formulations. Those are medicines derived. Either you drive it in a biological process or it is itself some sort of biological process. And I should warn you, you're giving a biology and chemistry lesson from an economist, so please, you know, my knowledge on this does have its limits, but you have these biological processes.
Those are more complicated, they're more expensive to develop, and even within the originator product, right, because all of these are biological processes, there are slight differences. I mean, they're imperceptible to humans, and they, from an efficacious perspective and a safety perspective, make no difference. But because we're dealing with biological processes, there are slight differences between those in each successive batch and biosimilars compared to the origin there.
It doesn't impact safety, it doesn't impact efficacy, and there have been tons of studies in the U.S. and Europe demonstrating that, but they are biological processes. Now, because of biological processes, they're more expensive to create, and it's also from a biosimilar perspective. They're more expensive to create, and they have additional FDA regulatory hurdles to account for the fact that they are not chemical duplicates, but are biological kind of derivations.
But, you know, again, these are the reasons we've been able to address issues like cancer, autoimmune disorders, things of that nature. Follow up. Yes, sir. Go
Representative Fred Allen
Unverified
25:18
ahead. But isn't it true that if you change the cell mix or the nutrition or the environment that the drug is being manufactured in, then the dosage of the drug or the impact of the drug would be different on the patient? Is that true?
Speaker 54
25:36
I'm not sure I 100% understand, but there is quality control, right? So you're
Speaker 19
25:41
going to make sure, just like, you know, if you change the chemical composition of a, you know, branded or generic medicine, you would change its impact. So certainly, you know, if you change the process, then you would, in effect, change the medicine. But there are, you know, that's where the FDA regulations come into play. That's kind of where the safety standards come into play to ensure that unlike on generics when you kind of patent or for branded medicines, when you're patenting the kind of chemical composition in biologics, you're looking at that process and you have to do that process, you know, the exact specific way.
So, you know, that's a quality control issue,
Wayne Weingarten
Unverified
26:20
and that, in fact, is, I think, brilliantly managed to ensure the safety and efficacy of the medicines. Thank you. Senator Boyd, let me ask you a question. We
Senator Jimmy Hickey, Jr
Unverified
26:31
don't have any other questions in the queue. Do you want Mr. Weingarten to stay on, or can we let
Speaker 56
26:37
him go? How do you want to do that before I bring Mr. Wallace down?
Senator Justin Boyd
Unverified
26:44
Thank you, Mr. Chair. No, I appreciate the presentation, and I just have
some specific questions about how we're managing things with state employees.
I think we're – despite my failed attempt at some legislation, it's been brought to my attention that maybe we're already doing a lot of this and we're doing a good job, and I just wanted to confirm that with Mr. Wallace. Okay. Well,
Senator Jimmy Hickey, Jr
Unverified
27:04
then, Mr. Weingarten, we appreciate your presentation to us and being with us today. Thank you, sir. I appreciate it. Thank you so much. Yes, sir. Mr. Wallace, if you don't mind making your way back to the table, I guess go ahead and introduce yourself again since we're second time, just to have it on record.
Chair
Unverified
27:24
Grant Wallace, Director of the Employee Benefits Division and Office of Property Risk. Okay, Senator
Senator Justin Boyd
Unverified
27:30
Boyd, you're recognized, sir. Thank you, Mr. Chair. I appreciate it. Mr. Wallace, thanks for coming up here and
giving me an opportunity to ask some questions. So are we already doing biosimilars within state employee and public
Speaker 8
27:43
school teacher? plans? Absolutely. We bring you all biosimilars quite regularly in the formulary makeup. Honestly, I can't think of a month that hasn't gone by that at some point some biosimilar has
not been part of that conversation when we're doing the formulary
Senator Justin Boyd
Unverified
27:58
review. And we're looking at the lowest net cost for the plan and employee when we are plan member and the plan when we make those decisions absolutely sorry i didn't
Speaker 8
28:09
mean to cut you up but absolutely uh the i want to be careful in the way that i answer this because i don't want it to feel like cost is driving decision making because it's not it's one of the factors in the decision making but absolutely we are looking for the lowest net cost drug when it comes to our formulary design that is the most
efficacy and has the greatest patient response. Right. But when we're talking
Senator Justin Boyd
Unverified
28:35
about generic drugs or biosimilars, we have actual real science that shows that quality isn't going to decrease, but what will do decreases price due to competition. Right. So that we are
Speaker 8
28:48
looking at that to make sure that we're getting the lowest cost biosimilar. I think we take Humira, for example there are now tens of biosimilars that are out there in the humair space and we
have designed our formulary to make sure that we're keeping up with that evolution and getting the lowest cost one on our formulary to where again we're resulting in the lowest net cost to not only the member but the plan
Senator Justin Boyd
Unverified
29:15
do you have any estimate about how many millions of dollars you've maybe saved the members in the
Speaker 8
29:21
state thank you for thank you for asking that question i want to specifically focus on humira because i think that's the best story that we have to tell of this particular situation that we're looking at in the move to from humira alone we have saved 35
hold on i want to make sure i get my number right 35.3 million dollars since we made that move so let me make sure i
Senator Justin Boyd
Unverified
29:43
understand this right we've saved over 35 million dollars we've done nothing that we believed decreased quality to our members so what i would say is that's good work thank you keep it up thank you and we're looking at sky risley and
Speaker 8
29:56
revoke we're doing that shift right now so we're still in the early phases of that and i would expect that one to be similar in the results uh if not a little bit better so thank you for asking that and highlighting
Senator Mark Johnson
Unverified
30:15
wallace yes sir you're recognized thank you Mr. Chairman. Mr. Wallace, that's a big number. And if that's just on one drug, then we're looking at some significant savings. And I know you're under a lot of pressure to keep our rates down and affordable for our members. Do you have all of the legislative authority you need and flexibility, might be a better word, to make those decisions in an interim when we're not in
session? And if not, what would you suggest we do in 2027 to make sure that you do? Thank
Speaker 64
30:45
you for that question. I want to be, I always want to be careful when
Speaker 8
30:50
I'm asked what should the legislature do or not do. In this instance, I really would hope that you would not do anything and let the free market work and let us do what we do, we can do, which is study, stay on top of these things and take advantage when market shifts happen very quickly and being able to manage that formulary in the same manner that we do.
There is part of this that we're seeing when biosimilars come to the market, there is not necessarily a price difference to the brand. So you don't necessarily want to give up your rebates initially. You want to time things correctly. So we don't want to tie our hands by any legislation that would force us to immediately do it or get us in a box that we couldn't navigate out of because the market changes or anything like that. But, no, I do respect and appreciate the desire to assist us, and I will definitely be coming to you all if there is something we need to get us in a better position to negotiate on these or take advantage of market releases in a more timely manner.
Senator Mark Johnson
Unverified
31:54
Okay, and thank you. That answers my question and reassures me. Thank you,
Senator Jimmy Hickey, Jr
Unverified
31:59
Mr. Chairman. Yes, sir. Thank you, Senator Johnson. Okay, thank you, Senator. I mean. Don't do that. Mr. Wallace. I wouldn't want to do that to you. Okay, members, do we have any other business to come before us? Okay, seeing none. With that, we're adjourned.
Agenda
A. Call to Order
B. Review of Action Approved by the State Board of Finance
C. Presentation of the Pacific Research Institute (PRI) Study titled “The Biosimilar Savings Opportunity: Prioritizing Biosimilars Will Generate Significant Savings for State Employee Health Plans” [Exhibits C1-C2]
D. Other Business
E. Adjournment
Documents
Speakers
Senator Jimmy Hickey, Jr
Unverified
Speaker 6
Speaker 8
Senator Jimmy Hickey, Jr
Unverified
Speaker 8
Speaker 12
Senator Jimmy Hickey, Jr
Unverified
Speaker 17
Senator Jimmy Hickey, Jr
Unverified
Wayne Weingarten
Unverified
Speaker 19
Senator Jimmy Hickey, Jr
Unverified
Speaker 21
Speaker 23
Speaker 19
Speaker 28
Senator Jimmy Hickey, Jr
Unverified
Representative Steven Walker
Unverified
Speaker 17
Speaker 19
Representative Steven Walker
Unverified
Wayne Weingarten
Unverified
Speaker 19
Representative Steven Walker
Unverified
Senator Jimmy Hickey, Jr
Unverified
Senator Justin Boyd
Unverified
Senator Jimmy Hickey, Jr
Unverified
Speaker 48
Representative Fred Allen
Unverified
Speaker 19
Representative Fred Allen
Unverified
Speaker 54
Speaker 19
Wayne Weingarten
Unverified
Senator Jimmy Hickey, Jr
Unverified
Speaker 56
Senator Justin Boyd
Unverified
Senator Jimmy Hickey, Jr
Unverified
Chair
Unverified
Senator Justin Boyd
Unverified
Speaker 8
Senator Justin Boyd
Unverified
Speaker 8
Senator Justin Boyd
Unverified
Speaker 8
Senator Justin Boyd
Unverified
Speaker 8
Senator Justin Boyd
Unverified
Speaker 8
Chair
Unverified
Senator Mark Johnson
Unverified
Speaker 64
Speaker 8
Senator Mark Johnson
Unverified
Senator Jimmy Hickey, Jr
Unverified