The biosimilar ploy that could save billions in health care costs

This weekly column offers opinions on the latest pharmaceutical industry news.

As drug makers race to develop cheaper versions of complicated biologic medicines, some companies are pursuing a tactic that could prove a win for themselves, patients, and the health care system as a whole.

They are running studies designed to convince doctors and insurers that patients can be easily switched from expensive biologics — such as the arthritis treatments Humira and Enbrel — to so-called biosimilars, which are almost identical variants. Their goal is to encourage these kinds of switches without waiting for the Food and Drug Administration to decide whether a particular biosimilar has the exact same clinical benefit as its expensive, brand-name counterpart.

Standard FDA approval is good enough for physicians to write prescriptions, but only an “interchangeable” designation will enable pharmacists to substitute a biosimilar for a brand-name biologic without contacting doctors for permission first.

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Not wanting to meet the higher regulatory bar needed to prove interchangeability — or to wait on the FDA to outline requirements for achieving this designation in guidelines that are expected to be published later this year — more and more companies are eyeing switching studies as a shortcut to expanded market share.

Drug makers may not be able to get pharmacies to automatically dole out their biosimilars, as they routinely do for generic small-molecule drugs (which are chemically synthesized, unlike biologics, which are generally made of proteins or nucleic acids and manufactured in living cells). But by demonstrating that a biosimilar can benefit patients who are already taking a brand-name biologic, many companies believe they can win the hearts and minds of the medical community to more readily tap a larger patient population.

There is a lot of money at stake. Biosimilars are expected to cost 10 percent to 30 percent less than brand-name biologics and are forecast to lower the US health care bill by $44 billion over the next several years, according to a 2014 report from the RAND Corporation.

“The commercial implication [of biosimilar switching] is potentially quite large,” said Gillian Woollett, a senior vice president at the Avalere Health consulting firm. “The ability to compete and gain share across the entire market, all of which is then linked to a lower price, may change the economic paradigm entirely.”

Earlier this month, a drug maker called Celltrion noted at an FDA advisory panel meeting that it is running a switch study. The South Korean company already sells a biosimilar version of Remicade, a widely used antibody drug for treating rheumatoid arthritis, in Europe, Japan, and elsewhere. By showing that patients on Remicade can do just as well on its own drug, the company hopes to provide US physicians and payers “a level of assurance,” said Alex Kudrin, a Celltrion vice president.

Several other drug companies are also running these kinds of studies, according to Ronny Gal, an analyst at Sanford Bernstein. And even though just one biosimilar has so far been approved in the United States, the industry pipeline is growing. Michael Levesque, a senior vice president at Moody’s Investor Services, anticipates up to 10 regulatory filings this year.

A key unknown is how insurers will respond: Will they reserve the cheaper biosimilars for first-time patients or will they encourage people on pricey biologics to switch? And if they do promote switching, how much savings might be passed onto patients? As Levesque noted, “payers love data” and will want to see whether additional clinical evidence can influence prescribing.

Gal pointed out that some brand-name drug makers may fight back by threatening to withhold valuable rebates on their other products from insurers that choose to cover a rival biosimilar medicine. But by pointing to switching studies, he said, biosimilar manufacturers can argue that insurers would lose money if they don’t cover the lower-priced alternatives for both existing and new patients.

Ultimately, it might come down to simple math — for the insurers and biosimilar manufacturers alike.

“From a commercial perspective, you can’t really succeed in the marketplace without switching existing patients,” Gal said. “The battleground will be the patients.”

To tap into that patient pool, drug makers are pursuing this workaround that, as an upshot, could bring lower-cost medicines to more people than might happen otherwise. At a time when so many drug companies are being chastised for their pricing practices, this is a thankfully dissimilar scenario.

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