Overcoming challenges in the US biosimilars marketplace
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By Jacquelyn W. Chou, Jacqueline Vanderpuye-Orgle
The pathway for biosimilars approval and regulation in the United States (US) was created in 2010 with the enactment of the Biologics Price Competition and Innovation Act (BPCIA).[i] The premise was that biosimilars, intended to be a less expensive alternative to originator biologics, could help mitigate drug expenditure growth. With US biologics treatment rising, biosimilars have been viewed as having the potential to lower healthcare spending. The competition that biosimilars will pose to originator drugs in the marketplace is expected to increase patient access to biological products and lower prices, with some estimating a reduction of $54 billion in direct spending on biologic drugs from 2017 to 2026.[ii]
The case for biosimilars is not as straightforward as just potential cost savings. Reflecting the complexity regarding information about biosimilars in the marketplace, a number of “myth vs. fact” type pieces have been written by manufacturers, providers, media, and other healthcare related groups. Building on the demystification pieces that currently exist, we would like to focus on some challenges that remain for the biosimilar market, now that many of the basics are better understood, and suggest policy recommendations for the consideration of key healthcare stakeholders.
Challenge 1: Ensure robust competition for biosimilars and their reference biologics
The development of biosimilars requires substantial manufacturing infrastructure and complex processes, making the related costs expensive (with some estimates over $250 million) in comparison to that of small molecule generic drugs (i.e. $1 million-$2 million).[iii] This manufacturing complexity can lead to additional time and cost in the regulatory process.
While the US biosimilars market is still in its nascence and some aspects of regulation are still being resolved, innovation appears to be encouraged where there is a level playing field for companies to compete. With the right regulatory framework, companies with the experience, expertise, commercial infrastructure, commitment to biosimilars, and support services can be successful in developing and launching high-quality biosimilars while helping to ensure that physicians and patients can confidently adopt their biosimilar medicines. The uptake of biosimilars cannot be expected to mirror that of generics, as the price discount relative to the originator product is not as large. Nevertheless, policies that provide greater predictability for biosimilars developers and reward high-quality, reliably supplied biosimilars will help provide more choices to patients. For instance, the current average selling price (ASP) model for the reimbursement of biosimilars supports the adoption of biosimilars. Zarxio (filgrastim-sndz), the first biosimilar on market in the US, saw its market share grow in just one year and institutions, such as hospitals and cancer centers, had the time to evaluate formulary decisions.[iv]
Recommendation: Encourage the development and implementation of policies that support a robust and competitive biosimilar market, including separate billing codes and payment rates, which reward quality and don’t interfere with level playing field competition.
Challenge 2: Ensure a reliable supply of high-quality biosimilars
The existence of a vibrant US biosimilars market may hinge on manufacturers having a reliable and sustained supply. Further, drug shortages which are typically driven by quality issues can have major impacts on patient health outcomes.[v] Thus, it is imperative to encourage development of high-quality drugs. Biologics, including biosimilars, tend to involve a much more complex manufacturing process than small molecule drugs, and are therefore more susceptible to manufacturing and/or quality issues that may contribute to drug shortages. For this reason, a robust regulatory framework, including stringent GMP standards, must be in place for all biologics to ensure high-quality, reliably supplied products are available for patients.
Recommendation: Incentivize manufacturers who provide reliable manufacturing and supply of high-quality drugs to enter and remain in the biosimilars market with supply-side rewards, such as exploring and increasing access to alternative types of financing for research and development.
Challenge 3: Harmonize the naming convention for biosimilars
Though distinguishable names for biologics have not been adopted globally, evidence suggests that distinguishable names help with pharmacovigilance and reduce medication errors.[vi] Biologics are inherently more sensitive to manufacturing changes and handling conditions, and thus must be tracked and traced appropriately in a multi-source marketplace.[vii] Ultimately, emphasis should be placed on ensuring product tracking for safety and effectiveness surveillance as well as patient access to potentially cost-saving treatments. While the FDA has provided guidance on non-proprietary naming in the US that distinguishes among all biologics, the Federal Trade Commission has recently suggested this approach might discourage competition.[viii] Though the implementation is still in its early stages, preliminary evidence suggests that distinguishable naming supports safety surveillance, which can promote healthy market competition.[ix] [x]
Recommendation: In both the US and global markets, accurate product traceability should be prioritized. In regions where prescribing and tracking is done using nonproprietary names, incorporation of a distinguishable suffix into the nonproprietary name may be a straightforward way to assist in product tracking, promote the development of a more robust evidence base, and help pave the path for increased confidence and biosimilars uptake.
Challenge 4: Ensure appropriate clinical use of biosimilars
Reference products have a long history of market availability and use, whereas data for biosimilars is just now being generated. It is unclear what considerations physicians will prioritize when prescribing among the various biosimilar options and the degree to which providers will understand that clinical outcomes for originator biologics can be applied to biosimilars.[xi] To date, it does not appear that clinicians are making prescribing decisions driven solely by price, but that clinical and other considerations such as quality and reliable supply may also play a role.
Patients care about the efficacy and safety of the therapies they use, as well as ease of use, out of pocket cost, and supply reliability. Policies that require or encourage the transition of a patient from the reference product to a biosimilar should be evaluated on a product-by-product basis and with adequate consideration of the risks and benefits and takes into account physician and patient decision-making. This process should be informed by the data available. Additionally, in chronic diseases, patients who have become stabilized on a particular therapy after a process of trial-and-error may value maintaining the current treatment regimen and transitioning should be done in the context of supportive existing data for that product, with the physician playing a key role.[xii]
Recommendation: Work with organizations such as the Food and Drug Administration (FDA) and patient advocacy groups to develop consistent protocols that allow the aggregation and analysis of real world data to develop a robust evidence base and enable treatment decisions based on clinical outcomes and supplier quality.
Challenge 5: Ensure robust, fact-based education is provided to patients and providers
Physician and patient perception is a key consideration for the biosimilars market, particularly in disease areas, such as oncology, with relatively new biosimilar entrants. Patients and physicians alike need to be educated that an FDA-approved biosimilar is expected to be just as safe and effective as its reference product. Beyond that, sponsors may apply for an interchangeability designation, which is unique in that they are required to conduct additional studies to support a regulatory designation that allows the biosimilar product to be substituted for the originator product by a pharmacist (in certain states) without the involvement of the prescribing physician. FDA draft guidance describes the evidence FDA expects to support an interchangeability designation, and that guidance has not yet been finalized.[xiii] One potential approach to promoting market uptake of and confidence in biosimilars is outcomes-based agreements. For example, when Januvia® and Janumet® came to market, Merck and Cigna agreed to a contract in which Merck was compensated based on how well patients with Type 2 diabetes were able to control blood sugar levels.[xiv] If patients achieved blood sugar level targets, the discounts offered by Merck would increase by a pre-agreed amount, thereby providing an incentive to the payer for allowing access to the treatments. As a result of broader access to treatment, patients exhibited marked improvements in blood sugar levels and compliance after one year.[xv]
Further, payers and pharmacy benefit managers have the market power to lower net prices, but cost-savings are not necessarily passed on to patients.[xvi] Patient access to biosimilars and cost-savings for patients should be prioritized as cost-sharing has been shown to have a critical impact on consumer well-being.
Recommendation: The biosimilars market may be ripe for innovative pricing agreements and outcomes-based contracts. Assuming government price reporting limitations are first addressed, any cost-savings should also be reflected in patient out-of-pocket costs.
Establishing markets for future patients
While there are some potential challenges in the US biosimilars market, it is still early days — 16 applications to the FDA have been approved as of December 2018 and more are expected.[xvii] There are also some success stories, with certain markets demonstrating good progress for biosimilars and underscoring that the system works when the manufacturers compete effectively. Nonetheless, the policy changes we make today will help us further ensure the stability and sustainability of the biosimilars market in the future. Biosimilars are poised to make a big impact in the healthcare marketplace with potential economic and health benefits for patients. To ensure that we can capture the full potential of biosimilars, we need to carefully balance the economic considerations against appropriate regulatory standards that ensure patient well-being.
Financial support for this research was provided by Amgen, Inc. to Precision Health Economics. Jacquelyn Chou is an employee of Precision Health Economics, a health economics consultancy providing services to the life sciences industry. Jacqueline Vanderpuye-Orgle was a full-time employee of Amgen when this article was written and owns stock and stock options in Amgen.
The authors would like to thank Dana Goldman for his insights on this article.
[i] Biologics Price Competition and Innovation Act of 2009, Public Law No. 111–148, 124 Stat. 119; 2009.
[ii] Mulcahy AW, Hlavka JP, Case SR. Biosimilar Cost Savings in the United States: Initial Experience and Future Potential. Santa Monica, CA: RAND Corporation; 2017.
[iii] Van Arnum, P. Biosimilars: Market Weaknesses and Strengths Biosimilars represent an emerging niche in the biopharmaceutical market, but how strong is their true potential? URL: http://www.pharmtech. com/biosimilars-market-weaknesses-and-strengths.
[iv] Sarshad, Michael. “Major Lessons Learned from Zarxio’s US Launch: the Start of a Biosimilar Revolution.” Generics and Biosimilars Initiative Journal. 2017; 6(4):165-173. doi:10.5639/gabij.2017.0604.035.
[v] Mica, A, et al. “Steps to Ensure Adequate Supply of Biological Medicines: Considerations for the Healthcare Provider.” Generics and Biosimilars Initiative Journal. 2013; 2(3):136-143. doi:10.5639/gabij.2013.0203.038.
[vi] Stevenson, JG, Green L. Biologics, Pharmacovigilance, and Patient Safety: It’s all in the Name. J Manag Care Spec Pharm 2016; 22: 927-30.
[vii] Ramanan, S. & Grampp, G. Drift, evolution, and divergence in biologics and biosimilars manufacturing. BioDrugs: clinical immunotherapeutics biopharmaceuticals and gene therapy 2014; 28: 363–72.
[viii] Statement of the Federal Trade Commission to the Department of Health and Human Services Regarding the HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs. 16 Jul. 2018. URL: https://www.ftc.gov/system/files/documents/advocacy_documents/statement-federal-trade-commission-department-health-human-services-regarding-hhs-blueprint-lower/v180008_commission_comment_to_hhs_re_blueprint_for_lower_drug_prices_and_costs.pdf.
[ix] Fuhr JP, Chandra A, Romley J, et al. Product naming, pricing, and market uptake of biosimilars. Generics and Biosimilars Initiative Journal. 2015; 4(2):64-71. doi:10.5639/gabij.2015.0402.015
[x] Romley J, Shih T. Product safety spillovers and market viability for biologic drugs. Int J Health Econ Manag. 2016 Dec 23. doi:10.1007/s10754-016-9208-2.
[xi] O’Callaghan J, Bermingham M, Leonard M, Hallinan F, Morris JM, Moore U, Griffin BT. Assessing awareness and attitudes of healthcare professionals on the use of biosimilar medicines: A survey of physicians and pharmacists in Ireland. Regulatory Toxicology and Pharmacology 2017; 88:252-261
[xii] Ratain, M. The Benefits and Drawbacks of Biosimilars. Clinical Advances in Hematology & Oncology 2015; 13(10)639-641.
[xiii] FDA, Draft Guidance for Industry, Considerations in Demonstrating Interchangeability With a Reference Product, January 2017.
[xiv] NEHI. “Paying for Value: Exploring Innovative Pricing Arrangements for Biopharmaceuticals.” NEHI Issue Brief. March 2012. URL: https://www.nehi.net/writable/publication_files/file/innovative_pricing_issue_brief_and_roundtable_final.pdf.
[xv] Carlson, J.J., Garrison Jr., L.P., Sullivan, S.D. Paying for outcomes: innovative coverage and reimbursement schemes for pharmaceuticals. J Manag Care Pharm, 2009; 15(8):683-7. doi: 10.18553/jmcp.2009.15.8.683
[xvi] Winegarden, W. The Economic Costs of Pharmacy Benefit Managers: A Review of the Literature. Pacific Research Institute. May 2017. URL: https://www.pacificresearch.org/wp-content/uploads/2017/06/PBM_Lit_Final.pdf.
[xvii] Biosimilar Product Information. U.S. Food and Drug Administration, U.S. Department of Health and Human Services. November 2018. URL: https://www.fda.gov/drugs/developmentapprovalprocess/howdrugsaredevelopedandapproved/approvalapplications/therapeuticbiologicapplications/biosimilars/ucm580432.htm.