Depending on your perspective, the advent of biosimilars is great, just ok, or terrible. Biologics have now been around long enough that they are beginning to fall off the “patent cliff,” which puts them at risk for losing market share. Unlike brand name chemical medications, which lose market share to generics after their patents expire, biologics don’t have a generic equivalent. They can, however, have a biosimilar competitor.
What are biologics?
Biologics are variations of proteins. They target the causes of disease, rather than treating symptoms. The process to develop a biologic, to run clinical trials to prove safety and efficacy, and to apply for approval from the U.S. Food and Drug Administration (FDA) is extremely complex and costly, which accounts for their high prices. Currently, there are biologics that are effective against many disease conditions, including diabetes, some cancers and several autoimmune disorders, such as rheumatoid arthritis, multiple sclerosis and Crohn’s disease.
The transition from biologics to biosimilars
With patents for many biologics approaching expiration, pharmaceutical manufacturers are beginning to focus on developing biosimilars, a response similar to that of developing generics when patents expire for chemical-based drugs. Biosimilars don’t duplicate biologics, but they are nearly identical to the original drug. Currently, Zarxio®, a biosimilar to the cancer therapy Neupogen®, and INFLECTRA™, a biosimilar to Remicade® for treating rheumatoid arthritis, are the only two biosimilars approved by the FDA. With the patent for the immunosuppressant Humira® due to expire at the end of the year, experts expect a new biosimilar will soon be on the FDA-approval path.
Under the Patient Protection and Affordable Care Act (ACA) of 2010, an abbreviated licensure pathway was established for biosimilar products if data show the product is highly similar to an already-approved biologic product. The section of the ACA that covers this pathway is also referred to as the Biologics Price Competition and Innovation Act of 2009 (BPCI Act). This pathway could potentially mean significant cost-savings for manufactures of biosimilars who, at this point, do not have to complete costly clinical trials or a lengthy approval process.
Will biosimilars make a difference?
The jury is out, however, whether the advent of biosimilars will actually make a difference in drug pricing. Some industry experts estimate the cost of a biosimilar will be 15-35 percent less than the original biologic because of product-development cost savings.
Others, however, have noticed that manufacturers of biologics that are approaching patent expiration have been raising their prices to increase revenue before having to face a biosimilar competitor. For example, Humira’s list price has increased eight times over the last three years — an increase of 73 percent, which makes the annual treatment cost $49,362.
With biosimilar manufactures planning to price their products just below their biologic counterparts, these artificial pre-patent-expiration price increases will certainly increase the cost of biosimilars.
“By the time a biosimilar for Humira goes on sale, it will probably cost well above what Humira charged before its cost began rising rapidly,” says Jim Carlson, vice president of clinical-pharmacy services at OmedaRx, the pharmacy division of Cambia Health Solutions in Portland, Ore. “We’re not expecting to see anything close to the price relief we saw with traditional medicines when the generics became available.”
According to IMS Health, a prescription-drug data and consulting first, spending on biotech drugs nearly doubled over the last five years and accounted for 54 percent of the increase in prescription-drug spending overall since 2010.
What kind of results can we expect to see?
Health insurers and pharmacy benefits managers question whether biosimilars will have the same kind of dramatic effect on formularies and pricing that generics have had on chemical-based drugs.
Pharma manufacturers who see their biologics approaching patent expiration are hopeful that the FDA will soon issue rules about safety, naming, interchangeability and labeling of biosimilars as a way of leveling the competitive playing field.
Patients and providers eagerly await biosimilars in anticipation of cost savings for critical, sometimes life-saving, therapeutics and the contribution they can make to controlling the rising cost of healthcare.
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