ALC - State Insurance Programs Oversight Subcommittee
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- October 2, 2026
Senator Jimmy Hickey, Jr
Unverified
2:47
OK everyone we'll we'll call this meeting to order. the first item on the agenda is Grant Wallace if you
won't come come forward we have a review of annaitus healthal solutions contract Mr. Wallace if you'll just introduce yourself and you can begin Grant Wallace, director of
Speaker 6
3:09
the employee benefits division and office of property Risk. we are bringing this contract we went over it last month but
Speaker 8
3:17
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 $11.5 million 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 Navidus that resulted in approximately 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 programme that should anticipate a
roughly $12 million benefit to the plan in this first year. the 2nd and 3rd 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 any
Senator Jimmy Hickey, Jr
Unverified
4:43
questions in regards to this? just one so the the extra years
there they're optional you'll you'll have to bring those
before this body though before you move forward is that correct
Speaker 8
4:56
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 year3 to get those exercises well so that would run through you all as well. great work thank
Senator Jimmy Hickey, Jr
Unverified
5:18
to have a motion for review? have a motion to have a second
have a second all in favor sayy aye any oppose? OK, that motion will carry is that all you have? all right thank you.
OK members the next item on the agenda is we're gonna have a presentation fromcific Research institute, Mr Wayne Weingarten. I believe that he'll be on the screen so we can start that whenever we're ready all glad to have you sir can you hear me thank you so much for having me. really
Senator Jimmy Hickey, Jr
Unverified
5:55
would just introduce yourself so we'll have it for the record and then you can begin your
Wayne Weingarten
Unverified
6:01
presentation. absolutely and I hope you can see the the presentation up on the screen now so my name is Wayne Weingarten. I'm
Speaker 19
6:07
a senior fellow in business and economics and as well as the director of theenter for Medical Economics and innovation at the Pacific Research Institute which is a free market think tankba in Pasadena, California. OK well that was great now we're looking at you at this moment
Senator Jimmy Hickey, Jr
Unverified
6:21
so I don't know if you have a way that you can switch over to your
presentation at this point. don't know either earlier when
Speaker 23
6:35
it helps if you share your screen you should be able to see it now there it is thank you sir
Speaker 19
6:47
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 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 there's a chemicalbased medicines and the idea of having exclusivity com
followed by competition which 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 and biologics are different because they're not chemicalbas they're developed either from or are living organisms to the biological and that's where the name comes from
and when we look at a lot of our advancements in you know autoimmune diseases like you know psoriatic arthritis or psoriasis or cancer, Crohn's disease. all of those have been kind of leap forwards in treatment from biologics. Biosimilars they have the same role as generics do in terms of the chemicalba medicine they bringing 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 been56 billion dollars savings that's crossed the whole healthcare system. and typically what we've seen is within5 years and it takes a bit of time within5 years you get about52% price savings just to kind of very quickly you know looking at some of the medicines you can see that we're looking at for immunology and
those are the diseases like autoimmune you're talking about 2025% different between the lowest cost buyerim 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 we're looking at Eate alpha the difference is only3% and that's worth a quick second to discuss. there are instances where there's very little difference between lower cost buyer similar 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 it's 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. So 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 buy a similar competition we see not only humana's price come down but there's about almost an 80% discount on the lowest cost buyer similar. 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 about30% of biologics currently can face competition by similar account for about 24% of that volume which is about7% of the total volume and when we're looking at the savings opportunity we're not looking at the70% and that's a huge opportunity for additional
savings. there's a lot of complications in terms of the market and and and there's some issues that 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 biosimilar share of this portion of the pie the30% in order to to generate savings. That was a basic research question and we had to take a macro perspective you know initially we thought it would be great to go through each state's books but that
would just the 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 how much is this allocated to state insurance health plans how much is this on drugs versus biologics 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 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 about52% so what would happen if by implementing these policies we accelerated everything to52%.
not in five years but immediately. that for Arkansas would generate $8 million. in the kind of more kind of ro aggressive scenario there were some programs that were prioritizing biosimilars and we saw they get up to about 81% of the share very very quickly. under that scenario you will 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 having discounts play out bottomttom line is and we can discuss this if you would like but the 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 wall it caps the savings eventually biosimilars because the lower price will 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 and this is across the country you can save money by policies that prioritize buyers similars you know you put the caveat when they're lower cost and and that does in fact save money and that's what we found in very happy to to answer any questions you may have.
Speaker 28
14:09
OK, thank you sir. OK, members you've heard the presentation any questions in regards to
Senator Jimmy Hickey, Jr
Unverified
14:21
OKpresentative Walker I think you're up first is that correct? or k s for me
Representative Steven Walker
Unverified
14:28
and I appreciate I appreciate it Mr Chair and I'm not in the healthcare so I apologize in advance for my ignorance but and I know healthcare's kind of
to me increasing at a faster rate than what we see with the rest of the market and so I'm I'm all for looking for ways to help lower our healthcare costs and I know Mr. Wallace does a great job with Evd on all this but I I just looking through what you submitted I've noticed that we use words like assumptions in here and then on I think on the slides4 through7 it shows the lowest price biosimilar 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 comparison so I'm assuming that that means that other states have not bought into this with their state rann programs and I'm just curious on why that might be or what's
causing other states to be hesitant if my assumption's true that whatever you can do to explain that
Speaker 19
15:54
and you're you're 100% correct in terms of we needed to make lots of assumptions and and that's just the when you're looking across all of the different states unnecessary thing to do. certainly you have the information that is not publicly available that you could go through and look exactly what
your spend is that type of information is just not and shouldn't be publicly available because you you could be then inadvertently revealing all sorts of private healthcare information and in terms of your kind of kind of position that the the the comparisons are inaccurate that's that is not correct. The data comes from the centers for medicare and Medicaid services we're talking with ASP average sales price that data is if you participate in medicare and
medicaid inart B you have to submit your prices net of all discounts to the government and that goes for the biologics and goes 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 buyoer similaril. We looked at the lowest cost biosimilar because that provides kind of the the largest gap between kind of you know the the 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 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 ofart D and intoart B where we do have better pricing data so I I I would say that these are kind of acute portrayals of kind of what the price gap is now in terms of your your suggestion in terms of why why haven't other states done that? and and this is kind of a 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 age to increase further just like we've seen with generics and so there's a lot of opportunities there so I would look at it more as an opportunity in terms of saving rather than what you know 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 pickup on certain drugs so that that I would say is the savings opportunity not necessarily a a sign of caution
Representative Steven Walker
Unverified
18:51
one follow up please yes sir could it could it be because I guess if they started phasing over to biosimilars it would reduce the amount of rebates and discounts they're getting that it would I guess in the short term effect cost savings and maybe in the long term but it's a lot of it's hypothetical so is it more of the cost reasoning than anything else on why states are reluctant to to move toward this
Wayne Weingarten
Unverified
19:21
but they said there's two things in that and that and that's really excellent
Speaker 19
19:26
point. 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 biosimilar 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 with
cru and you would save more but that's you know a gap which you you would be spending more but what we're actually seeing is the discount system and that it's a very unhealthy kind of market structure in the way it is the incentives are not aligned properly that is changing we're seeing if you go to a website called Drugannnels and they do an excellent job documenting this and they talk about the gross in that bubble because you have kind of these weird discount s 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 and these aren't directly in biologics but like Mark Cuban's pharmacy site and also to direct to consumer sales and the the the manufacturers selling you know or offering product direct to patients all of these are breaking down that rebate wall which means that the cost to kind of the state's having
to overcome that is in effect going away and and and many you know private insurers are actually negotiating with their Pbms to kind of change those systems to kind of get away from the 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 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 and that's something that we we is at the federal level as well people have been lobbying because that is a 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 seeing this out loud it also means perhaps you know why haven't other states done that you know and and this could very well be the impetus that's enabling that
Representative Steven Walker
Unverified
22:00
I appreciate you zooming in and thank you Mr
Senator Justin Boyd
Unverified
22:06
Mr Chair I just when we're done here I wanna visit with Mr. Wallace again please. OK
Senator Jimmy Hickey, Jr
Unverified
22:12
you won't you want him to come back down after we're finished with this
presentation? all right we'll we'll have that in the queue if you'll be ready whenever we get done with this presentation Representative Allen thank
Representative Fred Allen
Unverified
22:27
being here there is a difference between
biosimilars and genetic drugs can you explain the difference between the two? Yes, yes. so a generic drug, these are
Speaker 19
22:40
the drugs we've traditionally had for you know most of our lives they're based on the chemicals and so when you have kind of a what they would call a branded medicine so think of it like a statin and that is a chemical a 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 the 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 the CBS and you see you have Allegra for allergies and you'll have the CVS brand that's just the generic that happens with statins most you know like you said most of the chemical
market now is generics or small molecule that also refer to it when we talk about biologics and you refer to those as large molecules as well. those are not chemical formulations. Those are medicines derived either you derive it in a biological process or it is itself some sort of biological process and it should warn you you're giving a biology and chemistry me lesson from an economist. so please you you you know my my my knowledge in this does have its
limits but you you have these biological processes. those are more complicated and more expensive to develop and even within the the originator product, right? because all of these are biological processes. there are slight differences I mean they're imperceptible to to humans and they for an efficacious perspective and a safety perspective make no difference but because we're dealing with biological processes there there are slight
differences between those and in in each in succession batch and byson was compared to the original air doesn't impact safety, doesn't impact efficacy and they've been tons of studies US and Europee demonstrating that but they are biological processes. Now that because of biologic processes they're more expensive to create and it's also from a biosimilar perspective the 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 of cancer autoimmune disorders things of that nature. ol low yes sir go ahead but in isn't it true that
Representative Fred Allen
Unverified
25:23
if you change the cell mix or the nutrition or the environment that the drug is being manufactured in then the the dosage of the drug or the impact of the drug would be
different on the patient is that true? I'm not sure
Speaker 54
25:41
100% understand but there's quality control right so you're gonna make sure just like you know
Speaker 19
25:46
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 you would in effect change in medicine but there are you know that's what 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 in biologics you you're looking at that process and you have to do that process you know the the exact specific way so you know that that's a quality control
Wayne Weingarten
Unverified
26:25
issue and that in fact it it it is I think brilliantly managed to ensure the safety and efficacy of of the medicines thank you leten Bo,
Senator Jimmy Hickey, Jr
Unverified
26:37
let me ask you a question. we don't have any other questions in the queue. Do you want Mister Weingarten
Speaker 56
26:42
to stay on on or or can we let him go? How do you want to do that?
Senator Justin Boyd
Unverified
26:49
before I bring Mr Wallace down. Thank you Mrir. No, I, 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.
Senator Jimmy Hickey, Jr
Unverified
27:09
OK. Well then Mr Weingarten, we appreciate your presentation to us and being with us today. thank you sir. I appreciate 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. Grant Wallace, director of the employee benefits
Chair
Unverified
27:29
division and office of property Risk. OK, Senator Boyd you recognize sir? Thank you Mr Chair. I appreciate it. Mr Wallace, thanks
Senator Justin Boyd
Unverified
27:35
for coming up here and and giving me an opportunity to ask some
questions so are we already doing biosimilars within state employee and public school teacher plans absolutely we bring you all
Speaker 8
27:48
biosimilars quite regularly in the formulary makeup. I honestly I can't think of a month that hasn't gone by that at some point some bi o s im il ar has not been part of that conversation when we're doing the formulary review and we're looking at the
Senator Justin Boyd
Unverified
28:03
lowest net cost for the plan and employee when we are plan member
Speaker 8
28:11
and the plan when we make those decisions sorry I didn't mean to cut you off but absolutely 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 about generic drugs or
Senator Justin Boyd
Unverified
28:43
biosimilars we have actual real science that shows that quality isn't going to decrease but what we'll do decreases price due to competition right so that we are looking
Speaker 8
28:53
at that to make sure that we're getting the lowest cost biosimilar I think we take Huirra for example there are now tens of biosimilars that are out there in the Huira 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 do you
Senator Justin Boyd
Unverified
29:20
have any estimate about how many millions of dollars you've maybe saved the members in the state
Speaker 8
29:26
thank you for thank you for asking that question. I want specifically focus on Humiya 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 saved35 hold on I wanna make sure I get my number right.35.3 million
dollars since we made that move so let me
Senator Justin Boyd
Unverified
29:48
make sure I understand this right. We've saved over35 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. keepep it up thank you and we're looking at Skyrisi andrenvoke
Speaker 8
30:01
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 if not a little bit better thank you for asking that and highlighting that Senator Johnson you have a
Senator Mark Johnson
Unverified
30:17
question for Mr. Wallace 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 to keep our rates down and affordable for our members do you have all of the legislative authority you'd 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
Speaker 64
30:50
thank you for that question I want to be I always want to be careful
Speaker 8
30:55
when I'm asked what should the legislature do or not do in this instance I 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 there is not necessarily a price difference to the brand. so you don't necessarily want to give up your rebates initially you want time things correctly so we don't wanna head you know tie our hands by any legislation that would force us to immediately do it or or 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
y'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
Senator Mark Johnson
Unverified
31:59
manner. OK and thank you that answers my question and reassures me thank you
Senator Jimmy Hickey, Jr
Unverified
32:04
Mr Chairman sir thank you Senator Johnson. OK, thank you senator. I mean don't do that Mr Wallace. yeah I wouldn't want to do that to you OK members do we have any other business come before us? 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
Speaker 12
Speaker 17
Wayne Weingarten
Unverified
Speaker 19
Speaker 21
Speaker 23
Speaker 28
Representative Steven Walker
Unverified
Senator Justin Boyd
Unverified
Speaker 48
Representative Fred Allen
Unverified
Speaker 54
Speaker 56
Chair
Unverified
Senator Mark Johnson
Unverified
Speaker 64