Biosimilars poised to bring savings — if they get to launch

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Biosimilars poised to bring savings — if they get to launch

By David Salazar - 11/16/2017
Getting biosimilars to market remains an obstacle course for manufacturers and could result in higher prices for consumers and less profits for retailers.

Even as more approvals roll in and industry officials talk about how biosimilars will bring significant savings in the coming decade, there is a concern that regulatory and reimbursement hurdles could prevent the industry from realizing the full savings of the less-expensive alternative to biologics.

In 2016, the market size of biologic drugs subject to competition from biosimilars was $3.2 billion, according to the most recent QuintilesIMS’ report on use of medicines. In the coming five years, the Danbury, Conn.-based QuintilesIMS projects that more than $30 billion will be up for grabs as biologic drugs lose patent protection. On a longer-term scale, an October analysis from RAND estimated that biosimilars could bring about a $54 billion reduction in direct spending on biologic drugs between now and 2026 — roughly 3% of the projected total biologic spending for that period.

However, these savings come with various caveats, including whether a biosimilar can make it to market without violating its reference product maker’s intellectual property rights and how much a biosimilar manufacturer will be paid for its products. These hurdles have real stakes, as slowdowns eat into the potential market for the products that offer a 10%-to-15% discount over their reference drugs.

The difficulty that has captured headlines since the first biosimilar was approved in 2015 has been the question of intellectual property and patent infringement on the part of biosimilar makers.

“What you see in a word is litigation,” said Chip Davis, president and CEO of the Association for Accessible Medicine, which includes the Biosimilars Council. “Less than half the number of biosimilars that have been approved in the United States by the FDA are currently on the market, and the reason for that is the other ones are still tied up in litigation.”

Though the Supreme Court in June allowed a biosimilar maker to provide its legally mandated notice of commercial marketing to the original biologic’s manufacturer while approval is pending — making it possible to immediately launch a biosimilar upon approval — subsequent cases have impacted time to market. In October, Humira maker AbbVie settled its lawsuit against biosimilar maker Amgen, delaying the biosimilar’s launch until 2023 and stipulating that AbbVie receive a portion of sales from Amgen’s alternative once it does launch.

Litigation, though, is not the only hurdle biosimilar manufacturers will need to overcome, as Sheila Frame, vice president of North American biopharmaceuticals at Sandoz — whose Neupogen biosimilar Zarxio was the first to launch in the United States — recently acknowledged in a post on the company’s website. The less headline-grabbing difficulties Frame identified are centered on regulatory initiatives that are impacting biosimilar makers.

Frame noted that regulatory murkiness with regard to both naming conventions and the interchangeability of biosimilars with their reference products remain. The FDA in April released its first draft guidance on interchangeability, but it has not yet said when it plans to issue a final one. Payment rates remain a sticking point, with RAND pointing out that Medicare has created a payment policy that sets a reimbursement price for biosimilars at a blended average sales price for all biosimilars that share a reference drug, plus a fixed percentage of the reference drug. QuintilesIMS data points to the effect the confusion, coupled with litigation tie-ups, can have on the biosimilars marketplace. Biologics that were eligible for biosimilar competition made up a $3.2 billion market in 2016, but biosimilars only brought in $300 million that year.

RAND noted that a revised payment policy could encourage biosimilar uptake, and it’s an idea that manufacturers espouse themselves.

“Unique reimbursement codes are necessary to foster a competitive marketplace and support direct and indirect cost savings that will make our health system more sustainable,” Shields wrote. “Additionally, we must put the patient at the center of the FDA’s guidance for naming and interchangeability to reduce confusion and unreasonable requirements that ultimately impact patient access.”