There is a growing interest in the U.S. drug market around biosimilars—for providers, payers and consumers, these products hold hope for being a part of the solution to reduce drug prices.
Biosimilars, or a biologic medical product that is almost an identical copy of an original product, but made by a different company after an exclusive patent expires, are new to the western market. In fact, there are currently only seven medical biosimilar products existing in the U.S., four of which were launched in the past year. Plus, for any given reference product, there exist no more than two biosimilars—by comparison, there can easily be half a dozen generic drugs in a market at one time.
According to John Carlsen, vice president of Covance Market Access Services, a global contract research organization and drug development services company, there are several other biosimilars that have been approved by the Food and Drug Administration but are still pending approval to join the market.
Carlsen notes that for traditional drugs, pharmacy benefit managers (PBMs) and payers have primary control over the provider utilization and access to these drugs. But though they're still in the early stages, biosimilars have the potential to disrupt this system and change the dynamic.
Much of the future of biosimilars is riding on policy surrounding Medicare Parts B and D in traditional medical treatment and drug reimbursement.
“A lot on the commercial side is driven by rebates and set prices. There’s not a lot of visibility,” Carlsen said. “We have an average pay price through Medicare Part B.” Therefore, the payment rates and availability and rebates are different for each type of product.
But Carlsen says this is much different in other countries. According to a Covance Webinar in 2018, two of the countries with the largest expansion in biosimilars development worldwide are China and India. Specifically, India’s biosimilars market is estimated to reach $1.1 billion by 2020.
One of the biggest challenges for manufacturers is that these products will face hurdles to entering the market similar to those that a novel branded product would face.
This includes conducting landscape assessments to see what competitive issues may arise and working with the Centers for Medicare & Medicaid Services (CMS) on coding applications and engagement. Plus, once a biosimilar is on the market, the product will need support similar to any branded product.
“If anything, it’s reasonable to expect with any new product entering the competitor that the innovator may need to ramp up their resources in order to be competitive,” Carlsen said.
The Medicare Payment Advisory Commission (MedPAC) is in favor of changes to Medicare Part D, which would ultimately embrace the use of biosimilars. The commission said that changes would mitigate incentives of high-cost rebate drug and improve biosimilar availability.
Carlsen notes that pricing will one of the big drivers to success for biosimilars. He compares the entrance into the market to that of generics. And while payers and providers look and see the biosimilars in the formulary may cost them many for a quarter or two, it will ultimately lower the drug spend after a few years.
But is there anything that could threaten the future of biosimilars? Carlsen says the future of the Affordable Care Act plays an important role in the manufacturing of these products. If the ACA is completely repealed, it could jeopardize the future of biosimilars.
“This is a new and evolving market, with a lot of challenges,” Carlsen said. “Providers need to plan for that and be prepared with patient resources.”
Experts have expressed some concerns, however. Just prior to leaving his post in April, Food and Drug Admission Commissioner Scott Gottlieb said during a conversation at The Brookings Institution: “If you're a health plan and you adopt a biosimilar onto your formulary, you lose all the rebates. To offset the lost rebates, you have to be able to move enough market share to the biosimilar to take advantage of the discount the biosimilar is entering the market at to offset that lost revenue from the rebates. That is hard to do in this market because plans seem to have a hard time converting physicians and patients over to the biosimilars.”
He continued: “I think as the market develops and doctors gain more acceptance and comfort with biosimilars, and more biosimilars are developed against chronic therapy biologics where I think there will be more clinical comfort in converting patients over to them, this market will evolve and be very robust.”
And there are some analysts that fear biosimilars could do the opposite of intended and, in fact, raise payers’ costs, known as the “rebate trap.”
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Yale medical experts in a recent JAMA article pointed out that drug manufacturers currently rebate as much as 50% of the price to have their drugs offered as the preferred med on the formularies of pharmacy benefit managers (PBMs) and insurers. So if payers offer biosimilars as their preferred drugs, payers would lose a big piece of those rebates.
Currently, in the U.S., biosimilars reimbursement is dependent on which regulatory pathway is followed. All biosimilars of a given reference product share the same healthcare coding system code and average sales price payment rate. And the biosimilar version with the largest market share has the most influence on the weighted average sales price.
To date, Covance has developed 96 unique biosimilars in 152 individual projects.