Searching for smart, safe news you can TRUST?

Support safe, smart, REAL journalism. Sign up for our Axios AM & PM newsletters and get smarter, faster.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Searching for smart, safe news you can TRUST?

Support safe, smart, REAL journalism. Sign up for our Axios AM & PM newsletters and get smarter, faster.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa-St. Petersburg news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Lazaro Gamio/Axios

There are only a handful of biosimilars available in the U.S. And one of the country’s biggest insurers is about to start disadvantaging one of them, in favor of its more expensive competitor.

Why it matters: Deals like this are part of the reason biosimilars — envisioned, roughly, as generic versions of complex and pricy biologic drugs — aren’t gaining a foothold. And that’s keeping prices high throughout the system.

Details: Udenyca is a biosimilar version of the cancer drug Neulasta. Its list price is 33% lower than Neulasta’s.

  • UnitedHealthcare will soon be redesigning its drug coverage so that it will only cover Udenyca after patients try Neulasta, and only if it doesn’t work for them.
  • "In some instances, like Neulasta, the original biologic product may be the lowest cost option as a result of our ability to drive down pharmaceutical manufacturers’ prices," United said in a statement.

That’s a big reversal from the way things work with traditional generics, when you have to fail on the generic before you can get the brand-name drug. Instead, patients will have to use the more expensive drug first.

How it works: United will give preferential treatment to Neulasta because Amgen, which makes Neulasta, offered a bigger rebate than Coherus, which makes Udenyca, a source familiar said.

  • Pharmacy benefit managers negotiate discounts in the form of rebates — part of which they keep as profits.
  • "The process highlights the cost savings that are being generated as prices decrease due to the increased competition created by biosimilar entry," Amgen said in a statement.

“Amgen will pursue any avenue they have to block out the competition and extend this monopoly,” said Denny Lanfear, the chairman, president, and CEO of Coherus.

  • Lanfear suspects that Amgen offered United bigger rebates across its entire portfolio of drugs to gain a competitive advantage. Udenyca is Coherus' only product, so it simply can't match the scale of such an offer.
  • Amgen says this is not the case and that the negotiation didn't involve any other products in its portfolio. The agreement "was the result of a competitive bidding process based on the price and value of Neulasta versus its competitors," Amgen said.

Between the lines: United is able to pass savings from this discount on to the insurers and employers it works for — which is, essentially, the way the system is supposed to work.

  • But patients' out-of-pocket costs are often based on drugs' list prices, so some will be paying more because of this arrangement.

The bottom line: Because biosimilars are a new class of drugs, these kinds of arrangements not only disadvantage one drug, but are keeping the whole category from catching on, critics argue.

  • "This isn’t going to put me out of business, but the problem is it's going to put the biosimilar industry out of business if it goes on," Lanfear said. "People aren’t going to commercialize in biosimilars. They’re going to go somewhere else.”

Editor's note: This piece was updated around 6am Monday with comments provided by Amgen. It was updated again around 9am Monday with comments provided by United.

Go deeper

Michigan board certifies Biden's win

Poll workers count absentee ballots in Detroit, Michigan on Nov. 4. Photo: Salwan Georges/The Washington Post via Getty Images

The Michigan Board of State Canvassers certified the state's election results on Monday, making President-elect Joe Biden's win there official and granting him the state's 16 electoral votes.

Why it matters: Republican Party leaders had unsuccessfully appealed to delay the official certification, amid the Trump campaign's failed legal challenges in key swing states.

Biden to nominate Janet Yellen as Treasury secretary

Photo: Photo by Alex Wong/Getty Images

President-elect Joe Biden is preparing to nominate former Fed Chair Janet Yellen as his Treasury Secretary, four people familiar with the matter tell Axios.

Why it matters: Yellen, 74, will bring instant economic celebrity to Biden’s team and, if confirmed, she will not only be the first female Treasury Secretary but also the first person to have held all three economic power positions in the federal government: the chair of Council of Economic Advisers, the chair of Federal Reserve and the Treasury Secretary.

2 hours ago - Podcasts

Bob Nelsen on AstraZeneca and his plan to revolutionize biotech

AstraZeneca and the University of Oxford on Monday reported promising efficacy data for their COVID-19 vaccine, which has less stringent storage requirements than the Pfizer and Moderna vaccines and may be distributed earlier in developing countries.

Axios Re:Cap digs into the state of vaccine and therapeutics manufacturing with Bob Nelsen, a successful biotech investor who on Monday launched Resilience, a giant new pharma production platform that he believes will prepare America for its next major health challenges.