The Biosimilar Opportunity

By Clive Riddle, April 1, 2016

Biosimilars hold considerable future opportunity for helping address rapidly rising prescription costs. They also hold considerable opportunity for pharmaceutical companies seeking to offer them, as well as challenges for pharmaceutical holders of brand drugs that they would impact.

PwC listed Biosimilars as one of their top ten health industry issues of 2016. They stated that “Finally entering the US market, biosimilar drugs have the potential to be as disruptive as generic drugs following the Hatch-Waxman Act of 1984. The first US biosimilar - Sandoz’s Zarxio, which prevents infections in cancer patients – received FDA approval in 2015, and entered the market at a 15% discount. At least four biosimilar applications are pending FDA review in 2016, with another 50 in the FDA review process.”

PwC also another challenge in that U.S> consumers don’t know what the heck a Biosimilar is: citing a survey in which only 17% of consumers chose a correct definition of Biosimilar when offered multiple choice answers.

Biosimilars are of course much further along the path in Europe, but in addition to consumer confusion and provider and purchaser lack of familiarity as well, there is of course continued regulatory morass as well as lobbying from pharmaceutical companies trying to protect specific brand drug turf. The NCSL (National Conference of State Legislatures) has a page dedicated to the topic of State Laws and Legislation Related to Biologic Medications and Substitution of BioSimilars.

In addition to monitoring and summarizing this activity, NCSL provides easy to understand background information. They tell us “Biologic medicines are much more complex than traditional chemically synthesized drugs. Biologics are manufactured from living organisms by programming cell lines to produce the desired therapeutic substances and consist of large molecules….Regulating biologics raises new issues for both state and federal policymakers. Because of their complexity, biologic drugs are much more difficult to replicate than the chemically produced generics for other drugs. The cell lines used and modifications in the manufacturing process affect biologic medicines. As a result, truly identical “generic” versions are currently virtually impossible to produce. However, once patents expire for the existing brand-name biologic drugs, “biosimilar” medicines can be produced, which is an occurrence that raises regulatory issues in the states. Currently, there is concern that traditional statutes regulating ‘generic drugs’ may be misapplied to new products that are not identical. This has led to a recent move to amend older state laws to address the medical and chemical characteristics of these ‘biologics,’ as well as any future generic-style ‘follow-on biologics’ or ‘biosimilars.’ “

This week the IMS Institute for Healthcare Informatics released a 36 page report: Delivering on the Potential of Biosimilar Medicines -The Role of Functioning Competitive Markets, telling us that “Greater acceptance of biosimilar medicines in a growing number of therapy areas and an active pipeline of 56 new products in clinical development are expected to deliver total savings of as much as $110 billion to health systems across Europe and the U.S. through 2020.”

IMS offer considerable research into Biosimilar adoption and issues in Europe, and counsels that “As these medicines also become available in the U.S., stakeholder education and incentives will play a vital role in ensuring biosimilars deliver their full potential.” Their report finding include:

• Considerable variations across the EU in payer policy approaches are limiting the biosimilar opportunity.
• Biosimilars use in the EU and U.S. may yield total savings of $56-110 billion over the next five years.
• Patient access to biologic treatments has grown by as much as 100 percent following the availability of biosimilars.
• Intensifying competition and greater choice are expected as new biosimilars reach the market.
• Capturing the benefits of biosimilar medicines requires a balance between controlling price and ensuring a sustainable, competitive marketplace.

IMS emphasizes the need for education and incentivization in order for Biosimilars to fulfill their potential.  They tell us that “Payers need to ensure that they are keeping themselves informed. The variation in policies adopted, as well as in biosimilar prices and uptake, across the EU, suggests that some payers do not understand the potential offered by biosimilar medicines. Physicians need to trust that biosimilar medicines offer a safe and efficacious alternative to original biologics…..Patients are expected to accept new technologies, about which they may have only limited information….Payers need to ensure that doctors see a tangible benefit to prescribing biosimilar medicines. Physicians need to understand that prescribing biosimilar products delivers clinical benefits across the market as a whole, and that the cost-savings that result from biosimilar uptake enable more patients to access needed treatment.”