Today marks a milestone for the U.S. biosimilar market: the FDA approved our first biosimilar, Sandoz’s Zarxio, five years ago, on March 6, 2015.
The biosimilar category holds incredible promise, and the market for these products is on an upward trajectory. But it’s been a long journey and biosimilars have faced hurdles at every progression point. Every innovator company has filed legal action in some form against a biosimilar manufacturer to protect its patents and brand position, so before biosimilars even have a chance to compete, they are generally saddled with legal fees or settlement expenses, which have become another cost of entry.
Once the early biosimilars made it to the market, they were generally met with lukewarm responses from providers, payers, and other health care stakeholders. For example, it has taken Zarxio nearly five years to gain more than 50% market share. Provider skepticism is expected with any new therapeutic category with a new approval pathway. But ambiguity around the term “biosimilarity” and disinformation campaigns by some innovator companies have sown doubt among providers and played into the category’s slow start.
The important payer community has largely stood on the sidelines, taking a wait-and-see approach before determining how to cover biosimilars. To date, no major payer has come out with a holistic plan or strategy for integrating these products into their coverage plans. With no real support from payers and an unconfident provider community, biosimilar naysayers have become more vocal.
Fortunately, there has been more momentum on the biosimilar front in the last six months than ever before. Of the 15 products officially launched in the U.S., more than half of them launched in the last year. And for the first time in the U.S., there are three biosimilars competing in both the Neulasta and Herceptin markets. Despite headlines that the biosimilar market has not delivered on its promise, the latter half of 2019 indicates that the market is heating up.
Competition is finally underway, and more market entrants are scheduled to arrive. More importantly, the second wave of biosimilar investment has begun. Five years ago, there were only a handful of manufacturers willing to take the risk and get in the game. Look at biosimilars now in the pipeline and studies in progress and you can see legacy brand manufacturers like Pfizer and Amgen, as well as generic manufacturers like Sandoz and Amneal, building biosimilar programs.
The fundamentals are now in place for a market economy to work and create value. We have seen the presence of biosimilars help keep a lid on innovator list price increases. And while pharmaceutical net prices — the price of products after manufacturer discounts and rebates — have been declining steadily, innovators have taken even sharper net price decreases once biosimilar competitors enter the market. In other words, the process is starting.
If regulators, payers, and manufacturers pave the way for increased competition, the U.S. could decrease direct spending on biologics by $54 billion through 2026.
Legislators and biosimilars regulators: table interchangeability
The FDA and the Federal Trade Commission are taking action to make sure that anti-competitive practices in advertising aren’t hindering consumer and physician confidence in biosimilars. Kudos to regulators on this stride forward, but there is more to be done.
To date, there has been too much focus on interchangeability. Interchangeability gives providers and pharmacists the ability to switch out therapies at their discretion, like when a pharmacist receives a script for a brand-name statin but fills and dispenses the prescription with a generic one. While interchangeability will someday become an important topic and manufacturers are investing in studies, it’s not a relevant regulatory topic right now.
That’s because the biosimilars on the market today are infused therapies that are administered by physicians and billed under the medical benefit. In other words, you can’t take these therapies by yourself or have them filled and dispensed at a retail pharmacy. Patients receiving physician-administered infused therapies have complex conditions and integrated care teams. The decision to switch (or interchange) these infused therapies does not happen in a vacuum; it requires thoughtful discussion between patients and care team members.
For now, until more self-administered products are covered under the pharmacy benefit and are available through retail or specialty pharmacies, focusing on interchangeability is a distraction.
In the meantime, legislators and regulators need to push for opportunities that support adoption and competition. The stalled Prescription Drug Pricing Reduction Act includes a policy change that would allow providers to get a higher reimbursement rate for biosimilars than for the reference products. This is a great start, showing that legislators are interested in pursuing market-based solutions to national drug pricing concerns.
Payers: give biosimilars a fighting chance
If biosimilars are given equal treatment as biologics in terms of coverage on insurance plans, it may lead to faster overall adoption, spurring competition and alleviating drug costs across biosimilars and biologics.
Yet we are seeing the largest health care plans in the U.S. simultaneously advantage and disadvantage biosimilars.
UnitedHealthcare, for example, has favored some biosimilars (like Pfizer’s Retacrit, Amgen’s Mvasi, and Amgen’s Kanjinti) over originator biologics for preferred status. In other therapeutic categories such as pegfilgrastim, however, UnitedHealthcare has favored brand name Neulasta over biosimilars. One could infer that these preferences were selected based on the rebate game — the dynamic that requires manufacturers to offer dollars to payers in order to receive formulary placement.
Biosimilar competition could increase access to both biosimilars and biologics for 1.2 million patients by 2025. It’s time that payers recognize the benefits of biosimilars and evaluate fair reimbursement and coverage for these products.
Payers should help create an even playing field for these products. More of them on the market provide physicians with more options to make the best clinical decisions for their patients. Sometimes the best clinical decision is keeping a patient on a successful biologic throughout their therapy; sometimes it is switching a patient to a biosimilar or starting a new patient on a biosimilar. That decision is best left to providers and their patients. Creating an even playing field simply means removing barriers in that decision-making process.
Manufacturers: keep your foot on the gas
Biosimilar manufacturers are still in uncharted territory. To differentiate biosimilars from existing biologics — and now from other biosimilars — manufacturers need to employ fully integrated, holistic strategies to drive adoption. This means providing wraparound services that address needs from the clinical trial and pre-commercialization stages through the full lifecycle of their products. For example, manufacturers should give providers and patients access to services to help navigate patient access and patient support programs.
While the terms “biosimilars” and “biosimilarity” are becoming more ubiquitous, there’s still a gap in understanding these products. According to a survey of physicians that my team conducted, only half (51%) of providers said they completely understand biosimilarity and even fewer (36% to 50%) had some understanding of issues like biosimilarity, the approval process, currently approved biosimilars and indications, and the biosimilar pipeline in the United States.
It’s important that educational activities aimed at providers be part of every commercialization effort. To satisfy payers, biosimilar manufacturers should provide clinical evidence and economic information that can help payers assess value and make reimbursement decisions.
The uptake of a biosimilar product relies on the acceptance and support of various stakeholders across the supply chain: payers, regulators, doctors, pharmacy directors, health systems, patients, and more. A biosimilar manufacturer must be thoughtful as it seeks to commercialize its product and engage these players early to familiarize them with the product ahead of its launch and to continue fostering these relationships after the therapy hits the market.
Stakeholders across the supply chain: team up
The supply chain has a duty and obligation to provide patients with access to biologics, whether they are biosimilars or their reference products. As biosimilars continue to launch, especially in the cancer therapy market, the U.S. can experience the full potential of these medicines. But distributors, payers, manufacturers, legislatures, and regulators must work together to empower the biosimilar channel through expanded access and competition.
If they do, the next five years for biosimilars will look a lot different than the first five.
Sean McGowan is the senior director of biosimilars at AmerisourceBergen.