Biosimilars: the Big Picture
In the midst of wrangles over biosimilars naming and interchangeability, let’s not forget the key benefit – putting the brakes on the growth in biologics expenditure.
Joshua Cohen |
In 2010, the Affordable Care Act (ACA) established an abbreviated regulatory pathway for biosimilars. The pathway was based on regulations included in 2009 legislation on biosimilars – the Biologics Price Competition and Innovation Act (BPCIA). The BPCIA essentially does for large-molecule biosimilars what the 1984 Hatch–Waxman Act did for small-molecule generics, and the regulatory pathway is widely expected to speed the development and marketing of biosimilars in the US (1). In March 2015, the FDA approved Zarxio (biosimilar filgrastim), which is the first product to successfully complete the new regulatory pathway.
A lot of the current buzz surrounding biosimilars has to do with legal and regulatory wrangling on patent litigation, nonproprietary naming, and patient/prescriber notification laws. The importance of these issues notwithstanding, I believe they are detracting from what should be intriguing stakeholders across the spectrum of the biopharmaceutical sector: biosimilars will increase treatment options for patients and providers, and may slow the growth in biologics spending.
In the US, the annual growth rate of biologics expenditure is outpacing small-molecule drugs three-to-one, and biologics are expected to account for over 20 percent of overall pharmaceutical spending by 2016 (2). It behooves policymakers to examine what biosimilars might do to bend the biopharmaceutical cost curve by introducing a modicum of competition among biologics.
By 2016, IMS Health estimates that $64 billion worth of biologics will be off-patent in the US and European markets (2). Top targets for biosimilars include recombinant insulin, human growth hormone, erythropoietins, tumor necrosis factor inhibitors, and monoclonal antibodies targeting cancer and autoimmune disorders. Nevertheless, how the commercial prospects for biosimilars will play out in the US is uncertain. In Europe, where a regulatory pathway was established in 2006, market uptake has been slow, partly due to lack of familiarity and safety concerns among physicians and patients, but also inconsistent payer policies. Similar challenges will likely confront biosimilar developers in the US (3).
There are reasons to believe, however, that adoption of biosimilars in the US may face less of an uphill battle. Successful uptake is chiefly a function of price, payer policies, and acceptance by physicians and patients. In the US, lack of price controls on originator biologics may imply a larger price differential between originators and biosimilars. This, in turn, could lead to payers aggressively incentivizing use of biosimilars, analogous to policies adopted for traditional generics. US payers have successfully promoted sales of small-molecule generics by differentiating patient cost-sharing on the basis of generic versus on-patent status. Furthermore, payers have leveraged state laws regarding automatic pharmacy substitution of brand-name drugs with generics. Given the high rate of generic penetration in the US, it is plausible that there will be greater acceptance of biosimilars by physicians and patients. Moreover, FDA’s explicit endorsement of therapeutic interchangeability will facilitate biosimilar substitution once products are designated as interchangeable.
Market competition will also play a role in driving biosimilar sales and corresponding cost savings. Competition will come from originator biologics, second-generation biologics, and multiple biosimilars in the same therapeutic class. The number of competitors and the degree of competition will depend on the costs of development, manufacturing, and marketing. Market competition for small molecules has proven to be healthy for both the generic and brand-name biopharmaceutical industries. Until now, a biologic’s loss of a patent has not led to ‘generic’ versions of biologics. As a result, this has extended de facto monopoly pricing of originator biologics indefinitely. In my view, subjecting biologics to market competition is essential for a vibrant and financially sustainable biopharmaceutical sector.
For more reactions to the first US biosimilars approval, see “The Big Break for Biosimilars” at tmm.txp.to/0315/bigbiosimilars.
- K. I. Kaitin (Ed), “Biosimilars Entering the U.S. Market are Likely to Face Multiple Challenges", Tufts Center for the Study of Drug Development Impact Report 17(2) (2015).
- IMS Health, “The Global Use of Medicines: Outlook Through 2016” (2012). www.imshealth.com
- J. P. Cohen et al., “Barriers to Market Uptake of Biosimilars in the US”, Generics and Biosimilars Initiative 3(3), 107–114 (2014).