PHARMAC secures significant savings for DHBs on biologic drug

December 8, 2014 7:55 AM

A new agreement for a high cost biologic drug will yield considerable savings for District Health Bodies (DHBs) over the next five years, says PHARMAC.

Infliximab is a monoclonal antibody, one of the so-called `targeted drugs’ used to treat auto-immune conditions like rheumatoid arthritis, inflammatory bowel diseases, and psoriasis. It is a high cost drug used in hospitals, with current spending in the region of $15 million per year and growing rapidly.

The Pharmaceutical Management Agency (PHARMAC) is the New Zealand Crown agency that decides, on behalf of District Health Boards, which medicines and related products are subsidised for use in the community and public hospitals. Director of Operations, Sarah Fitt says PHARMAC, New Zealand saw an opportunity to reduce the price of infliximab following expiration of the patent and subsequent launch of biosimilar brands overseas, and the likelihood these would become available in New Zealand. PHARMAC called for proposals from suppliers of infliximab, including suppliers of infliximab biosimilars.

“Biosimilars become available once biologic drugs come off-patent, go through a robust safety and efficacy assessment by regulators like Medsafe, and provide significant opportunities for PHARMAC to reduce costs, widen access, and release funding for reinvestment by DHBs,” says Sarah Fitt.

Sarah Fitt says the decision continues PHARMAC’s work in managing the rising costs of biologic medicines – those made of, or from, living organisms – through competition from biosimilars. Biosimilars are competitor products to biologic medicines.

PHARMAC was able to secure a 30% reduction on the list price currently paid by DHBs plus additional savings through confidential rebates arrangements with the supplier.

“The competition from biosimilars provided an opportunity for us to significantly reduce DHBs’ spending on infliximab,” says Sarah Fitt.

“We have secured, through an agreement with Janssen, continued supply of the incumbent brand – Remicade – at a significantly lower cost that will yield savings of more than $25 million over the next five years. While savings will be made, there will be no impact on prescribers  or patients who will stay on their current brand.”

“This is the first time we have run a competitive process for a monoclonal antibody medicine, and we are very pleased with the outcome.”

The price reduction on infliximab comes into effect from 1 January 2015.


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