Ontario Drug Benefit Program Embraces Biosimilars

Ontario has decided to follow the lead of British Columbia, Quebec, New Brunswick, Nova Scotia, Northwest Territories, and Saskatchewan and introduce biosimilar reimbursement under its provincially-funded drug benefit program. Effective March 31, 2023, Ontario Drug Benefit (ODB) recipients will have nine months to transition from a defined list of originator biologics to the biosimilar version of the drug if they would like to continue to be reimbursed under the ODB plan.¹

Biosimilar: a biological product that is highly similar to and has no clinically meaningful differences from an existing approved reference biologic product.

As defined by the Pharmaceutical Company Merck,² the difference between an Originator Biologic, also referred to as a Reference Biologic, and a Biosimilar is that “biologics are complex proteins derived from living sources and are generally more complex than small molecule drugs, which are usually produced through a chemical process. A biosimilar is a biological product that is highly similar to and has no clinically meaningful differences from an existing approved reference biologic product. Due to the complex development and manufacturing process for biological products, a biosimilar is not required to be “identical” to its reference product, as is the case for small-molecule generics. Instead, a biosimilar is “highly similar” to the reference biological product, notwithstanding minor differences in clinically inactive components. Further, to achieve regulatory approval, there can be no clinically meaningful differences between the biosimilar product and the reference biological product in terms of safety, purity, and potency.”

The list of originator drugs under the ODB plan that will no longer qualify for reimbursement in nine months and the eligible biosimilars and indications covered are provided below³:

Today, the ODB plan is the first payor for any eligible ODB recipient. Under the new guidelines, if the recipient decides to remain on the current biologic drug prescribed, the ODB plan will deny the claim. The recipient may submit to a private health plan, if applicable, or they will be required to absorb the cost themselves.

What is the expected adherence to the required move to biosimilars?

To determine the impact of the biosimilar mandate under the ODB, we can look at the results from the first program to implement a change from biologic originators to biosimilars—BC Pharmacare.⁴ British Columbia was the first province to implement the change with three biologic drugs, Enbrel^®, Lantus^®, and Remicade^®, with five treatment indications transitioning to biosimilars. BC Pharmacare managed the transition via two transition phases:

• Phase one: Enbrel^®, Lantus^®, Remicade^® three indications
• Phase two: Remicade^® for two additional indications

73% of patients transitioned to a biosimilar during phase one, and 78% transitioned to a biosimilar during phase two. The remaining 27% who did not transition during phase one and 22% who did not transition during phase two either self-funded or submitted claims to private drug plans.⁵

Employer benefit plan impact

For employers who offer drug benefits to active employees, early retirees, or retirees over age 65, the ODB change can have a cost impact on the employee benefit plan. The claims for the eight biologics, where the ODB recipient does not want to move to the biosimilar, will result in the claim being covered under the employer plan. It is important to note that the cost exposure is for all insured ODB recipients, employees, and their ODB eligible dependents.

What can employers do to help manage the expected increase in drug costs?

There are many options employers can consider in limiting the impact of the transfer of the biologic drug cost from the ODB plan to the employer group plans, including managed formularies, coinsurance reduction, and annual drug maximums.

Canadian insurance company reaction

Currently, the drug plans under many carriers do not have a biosimilar formulary. The insurers tend to follow the province’s lead when establishing drug formularies. In reaction to the ODB change, we anticipate that the number of insurers offering a biosimilar formulary will increase over the next few years.

The impact of biosimilar formularies will protect the financial integrity of employer benefit programs two-fold:

• A biosimilar formulary that aligns with the provincial formulary will maintain the provincial Pharmacare plans as the first payor for the listed drugs, thus, avoiding any transfer costs
• For the population that is not Pharmacare eligible, we anticipate two formulary drug options that will provide additional savings for the under-age 65 population:
  1. Pharmacare formulary
  2. Tiered formulary where biosimilars are reimbursed at a greater level than biologics

The future

As more biologics and biosimilars are created and the conditions for which these medications are prescribed expand, we can expect provincial drug plans to continue to limit reimbursement to biosimilar drugs. With an aging population in Canada, the provincial drug formularies will become strained with cost burden and limited funding. The historical reaction of the provincial governments has been to transfer costs to the private sector; thus, we anticipate the risk of increased costs to private plans to continue in the years to come. As advocates for our clients, we will continue to work with the insurers to develop new plan management provisions that will allow employee benefit programs to remain financially viable and a fundamental portion of total rewards packages for Canadian employees.

Questions about these changes and how they might impact your plan? Talk to a Cowan consultant today.

Sources

1. GaBI. (January 20, 2023). Canada’s Ontario introduces biosimilars switching policy. Retrieved from URL. ↵
2. Merck. (April 2019). Public Policy Statement Biosimilars and Originator Biologics. Retrieved from URL. ↵
3. Seamo. (March 9, 2023). Biosimilar support fee code K900A. Retrieved from URL ↵
4. TELUS Health. (November 18, 2021). Drug Plans Decoded: Biosimilars Part 3. Retrieved from URL. ↵
5. TELUS Health. (November 18, 2021). Drug Plans Decoded: Biosimilars Part 3. Retrieved from URL. ↵