Since the government passed the Biologics Price Competition and Innovation Act in 2010, which created the first pathway for biosimilar approvals, some believed that biosimilars would help provide a long-term solution to mitigate the cost and risk associated with specialty drugs. Over a decade later, this has not happened.
The first biosimilar was approved in 2015 and to date, about 44 have been approved for use. Let’s take a deeper dive into biosimilars, including what they are, factors that have caused their slow uptake, the market dynamics that could accelerate their growth, and, perhaps most important, the potential impact to plan sponsors.
What are Biosimilars?
A biosimilar drug is a biological drug that is very much like another biological drug (called the reference or originator drug) that has already been approved by the Food and Drug Administration (FDA). Biosimilars are composed of complex molecular structures that are derived from living organisms. To gain approval, they must be as safe as, work as well as, and work in the same way as the reference drug.
Biosimilars may be interchangeable or non-interchangeable. Interchangeable products may be substituted for the reference product without the involvement of the prescriber, while non-interchangeable products require the patient to obtain a new prescription written specifically for the biosimilar. In order to gain interchangeable status, the drug manufacturer must conduct studies to demonstrate that when patients are switched between the originator and the biosimilar, the products demonstrate identical efficacy. To date, only eight biosimilars have been designated as interchangeable by the FDA, and several are not yet on the market
Biosimilar Trends
Once a patient is on a reference drug and is stable and achieving a positive clinical outcome, prescribers are hesitant to switch them to a non-interchangeable biosimilar. A few other reasons biosimilars have been slow to gain adoption:
- Reference drugs have strong patent protection: Originator manufacturers have sought patent protection enforcement and have filed numerous lawsuits.
- Biosimilars are complex and costly: Biological products consist of large, complex molecules and are difficult to develop and maintain quality control. Development may take 5-9 years and cost more than $100 million.
- Big Pharma flexes its muscles: Brand-name companies have threatened to remove rebates on the “basket” of products they provide unless biosimilars are excluded.
- Biosimilars do not earn rebates: Pricing for the originator drug, including rebates, can be better than that of the biosimilar, which does not earn any rebates. As such, PBMs have been slow to put biosimilars on their formularies.
Conclusion
For plan sponsors and their benefit advisors, the clear implication is that they need to be thinking about their overall biosimilars strategy and understand how key biosimilars are being addressed in their pharmacy contract. They also should be cognizant of how the PBMs are handling biosimilars on their formularies. In some cases, a new biosimilar could be less expensive than the reference drug; however, there are likely to be instances where the reference drug price including rebates is less expensive than the biosimilar.
In the end, the introduction of new biosimilars for blockbuster specialty reference drugs should have a favorable impact on competition and will hopefully lead to lower net prices and savings for plans. While this would be a positive outcome for plan sponsors, we will need to see how things play out.
