Has the promise of biosimilars been fulfilled?
Authors of a case study appearing in this month’s edition of Health Affairs call it “the best example to date” that biosimilars can successfully bring competition to biologic markets. But the researchers aren’t ready to declare the biosimilar debate over, as the real test will come when more copies of megablockbuster Humira arrive on the market.
The current study focused on the biosimilar market for the originator biologic trastuzumab, Roche’s targeted cancer therapy Herceptin, which lost patent exclusivity in June 2019. The first biosimilar, Amgen’s Kanjinti, hit the market one month later and more would soon follow.
“What’s unique about trastuzumab’s market is that it had several biosimilar entrants come in over a relatively short period of time,” explained lead author Alice Chen, vice dean for research and associate professor at the University of Southern California’s Sol Price School of Public Policy and a senior fellow at the Leonard D. Schaeffer Center for Health Policy and Economics.
Eventually, doctors were able to choose among six trastuzumab products (Chen and team tracked five). That’s more biosimilar competition than has been seen with some of the previous large molecules they’ve looked at, including those of originator biologics like Johnson & Johnson’s Remicade (infliximab) and Amgen’s pegfilgrastim, (Neulasta.)
There was quite a bit of uptake. Over a two-year period, Herceptin gave up roughly half of its market share to its emerging rivals. Prices fell dramatically on biosimilar entry, as well. Herceptin’s average sales price (ASP) declined 21% between second-quarter 2019 and second-quarter 2022.
The five biosimilar entrants not only entered with lower price points, but within three years, they saw declines on their ASP ranging from 28% to 58% of Herceptin’s pre-competition ASP. Even steeper discounts were seen on net price after rebates, which ranged from 15% to 46% of Herceptin’s pre-competition net price.
Despite strong brand loyalty to the first biosimilar, competitive pressure increased with subsequent entrants.
“This suggests that competition is working,” noted Chen. “The more biologics that reached the market, the more the price declined.”
An analysis by the Food and Drug Administration of the small-molecule generics market showed a similar dynamic: a certain discount when the first copycat enters, followed by progressively steeper price drops once multiple generics become available.
To be sure, Chen’s wasn’t the first case study to demonstrate the economic case for these drugs.
A 2022 analysis by the Association of Accessible Medicines showed that biosimilars brought down drug spend in the U.S. healthcare system by $7 billion in 2021. The savings came from offering – on average – a 50% discount off the price of the reference brand biologic, as well as by spurring corresponding reference biologics to shave their prices by an average of 25%, researchers found.
Other measures, meanwhile, have pointed to the fact that uptake has accelerated to an average share of 75% in therapeutic areas where biosimilars launched since 2019, versus 39% in areas where they arrived prior to that year. Although there was a slowdown in biosimilar approvals during 2020 and 2021 due largely to the COVID-19 pandemic, the rate of launches is expected to gain steam in the years ahead.
Still, some have argued that biosimilars won’t do enough to affect competition. In a 2019 paper, Peter Bach and others pushed back on the notion that biosimilars lead to substantial price reductions, due to what they saw as barriers to entry.
Among generic versions of small-molecule drugs, which are chemically based, competition pushes prices downward. However, the complexity of biologic drugs, which are made from living organisms, gives them a “natural monopoly,” Bach and colleagues wrote. The drugs are harder to reverse engineer and thus costlier to bring to market.
Indeed, the first wave of these products came up short. A biosimilar infliximab, for instance, entered the market at just a 15% list price discount versus Remicade. The two filgrastims that launched in 2013 and 2015 into the Neupogen market merely flattened Neupogen’s price trajectory.
Physicians’ lack of biosimilar awareness didn’t do much to quell early skepticism, nor did literature showing how the U.S. compares to its European counterparts in terms of adoption. That comparison is not a favorable one.
The latter is only partially true, though.
“Our own research has shown that, relative to some European markets we do equally well, and to others we do worse,” Chen said. “So the story is more nuanced.”
The trastuzumab biosimilar market displayed other important hallmarks of competition. Kanjinti had persistently large market share over the study period, suggesting a sort of first-mover advantage. Still, the other biosimilars were able to gain share, showing there’s plenty of room for other entrants.
The last area Chen and colleagues documented involved prescriber differences. Office-based prescribers wrote scripts for the biosimilars more often than did hospital-based physicians. Rather than trying other options, most of those who prescribed a biosimilar stayed loyal to Kanjinti.
Prescribing patterns, however, can change over time and – in the case of hospitalists – are often tied to institutional formularies, Chen noted. She also cautioned against interpreting the study too broadly.
“This is just one drug, one market,” she said. “It’s a physician-administered drug, which is typically insured under Medicare Part B, as opposed to an outpatient-prescribed drug in the Part D market.”
Then again, there’s another test market that could answer the biosimilar question more definitively: that of AbbVie’s Humira (adalimumab), the world’s best-selling drug. Humira lost exclusivity earlier this year, triggering the launch of Amgen’s biosimilar Amjevita.
Because adalimumab can be dispensed through both the Part B and Part D channels, pharmacy benefit managers (PBMs) and other intermediaries will play a bigger role in its distribution than is the case for trastuzumab. So far, seven biosimilar versions have been approved by the FDA.
Researchers will be watching carefully to assess their ability to bring competitive pressure. The involvement of PBMs, for one, could influence pricing. PBMs negotiate discounts between an insurer and manufacturer in a way that can create brand loyalty or manufacturer loyalty to a given drug.
These discounts, as the literature has shown, aren’t always passed on to consumers. That contracting and negotiation may alter the expected market dynamics away from simple price competition, as does the lack of transparency.
“If you don’t know what [the PBM] discounts are, then it complicates price in being the driving factor in increasing adoption of cheaper drugs,” Chen said.
As a sign of that opaqueness, Amjevita announced two different launch prices, enabling PBMs and insurers to capture high rebates on the biosimilar. This will dampen the price pressure that biosimilar products exert, the researchers wrote.
It’s unclear whether adalimumab biosimilars will produce similar price pressure on adalimumab as they have on trastuzumab.
“If we see similar dynamics for Humira – market-share and pricing declines, uptake of biosimilars increasing – it suggests biologic markets can have competition as the mechanism in lowering prices in a way that’s similar to the small-molecule market,” Chen said. “If we don’t, the question becomes, ‘Why not?’”
The dynamic will also give more thunder to biosimilars’ foes, who claim the biosimilar market isn’t working, that uptake is slow and that increased regulation is a surer path to staunching biologic prices.
“Our paper says there are cases where that’s not true,” said Chen. “It does seem like the biosimilar market can work. The extent to which they work for all biologics is an open question.
“I would love to know what happens with Humira’s market,” she added. Until then, “We’re in a wait-and-see pattern.”