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Creating a viable biosimilars market

Although the United States is still waiting for final practical guidelines from the Food and Drug Administration about the launch of biosimilars and the standards required to meet the threshold of interchangeability, the rest of the world seems to be barreling forward with the development and launch of these important medicines. By the end of this decade, a significant number of blockbuster drugs will go off patent, paving the way for biosimlar market entrance.

GaBI Online estimates that $50 billion to $67 billion in biologics will lose patent protection by 2020. In 2014 alone, such blockbusters as Herceptin (trastuzumab) and Erbitux (cetuximab) will be subject to biogeneric substitution, provided no further actions are taken to extend these patents. In India, the first biosimilar version of trastuzumab already was approved last November.

So much has been said about the cost-saving properties of biogenerics, but even roughly four years since the passage of the Biologics Price Competition and Innovation Act, manufacturers, pharmacists and government bodies are still uncertain about the viability and market impact of biosimilars.

A decade of savings

Government agencies, pharmacy benefit managers and payers have recently been seeking new methods of cost control for pharmaceuticals, and the use of biosimilars may offer a solution. PBM Express Scripts is a strong supporter of the biosimilar movement. They recently developed a report, entitled “Ten-Year Potential Savings from Biosimilars in California,” in which they used IMS and Express Scripts data to estimate the expected savings that would be produced in the state of California over the next decade as a result of the introduction of biosimilars for 11 popular biologic medications. According to the report, estimated sales in California represented 11% of the national total healthcare spend.

After adjusting for consumer price inflation, brand inflation, and biosimilar price discount and utilization changes, the Express Scripts report projected that from 2014 to 2024, California alone could save $27.6 billion dollars as a result of biosimilars. The report authors argued that improving the biosimilar pathway process would significantly increase the market viability of follow-on biologics. Although only 11 specialty drugs were examined for the study, Express Scripts maintains that “sales of each are large enough to warrant investment by biosimilar manufacturers, but only if the regulatory pathway is conducive to develop and seek approval for biosimilars while maintaining profitable business operations.”

The question of “meaningful competition”

Although Express Scripts is relatively confident about the fiduciary benefits of follow-on biologics, the Federal Trade Commission is concerned that biosimilars may not have the opportunity to provide any meaningful competition to high-priced specialty medications.

In a Federal Register brief, the FTC noted that the ability of biogenerics “to compete against reference biologic products will depend on whether they are allowed to have the same nonproprietary name.” The agency contended that a lack of agreement regarding the nomenclature for biosimilars could cast doubt about efficacy of the products and could thereby influence pharmacy substitution.

In addition, state laws barring substitution could affect “free market competition.” Market penetration could be compromised by state-level regulatory policies, and the FTC requested comment about whether a book for biosimilars akin to the FDA’s “Orange Book” would facilitate interchangeability. They also have been soliciting comments on biosimilar competition in countries with approval processes similar to that of the United States to find out if “... reference biologic manufacturers lowered their prices, offered discounts, engaged in enhanced marketing activities, or increased innovation or next-generation developments” in other countries.

Reaching market potential: Is it really possible for biosimilars?

According to IMS’ report “The Global Use of Medicines: Outlook through 2017,” from 2012 to 2017, spending on medicine will jump from $3 billion to between $20 billion and $25 billion in developed markets. Biologics will represent 19% to 10% of market value by 2017. Currently, biosimilars account for 0.5% of biologic spending in developed markets, but represent more than 10% of all biologic spending in emerging markets. This is likely due to less rigorous intellectual property protection in these particular areas.

So far, the biosimilar-like products that have been approved in the United States have been marketed through a Biologics License Application, not through the traditional biosimilar pathway. For example, tbo-filgrastim was approved in August 2012, but could not enter the market until Nov. 10, 2013, due to a patent-infringement lawsuit between Teva and Amgen. So far, the product has not enjoyed significant market penetration, and is treated like a competing brand, not an interchangeable product.

This example may provide a case study for how biosimilars may have to be marketed. Unlike generic small-molecule launches, biosimilar campaigns need educational marketing plans to ensure uptake. This back-end support could eat away at the 20% to 30% discount that biosimilars are expected to provide. Consequently, this could make biosimilars more expensive, and possibly as a result, less accessible to patients.

To view the article with charts, click here.
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