3. Are FDA approvals speeding-up?
This is a work in progress. Approvals have been quite slow, with only 28 U.S. Food and Drug Administration (FDA)-approved biosimilars since 2015.4 We can reasonably expect faster progress on approvals going forward.
First, the FDA has been working to improve the efficiency of the biosimilar approval process.7 And drug makers have noticed a difference, with one observing that “…the FDA has been very supportive in facilitating the biosimilar approval process over the past two years.” 10
Also, this year the FDA moved about 90 additional molecules from the traditional drug approval pathway to the biologic drug approval category, including insulin, human growth hormone, and certain infertility products. This could lead to a major expansion of biosimilar products.6
4. Are there more market launches?
The news here is also mixed. Approved drugs need to actually launch into the market in order to make an impact. However, thanks to the patent woes described above, progress has been slow: as of December 2019, only 12 (of the 27 then available) were actually on the market.1
But 2020 has proved to be a stellar year for new biosimilars, with six new market launches. That means as of early December 2020, fully one third of all available biosimilars launched just this year.10
While these new launches are welcome, we should expect another pause due to various patent and legal maneuverings. An analysis by the Optum Rx pipeline monitoring team indicates that the next big wave of new biosimilar launches won’t hit until 2023.6
5. Are we finally getting to lower costs?
Yes. Getting more biosimilars launched onto the market – and especially more for each specific biologic originator – is the key to success. This is the same thing that happens with traditional drugs – it takes multiple generics in a class to dramatically drive down prices.
When only one biosimilar competes with an originator product, there is usually only a slight cost difference between them. But when multiple biosimilars enter the same class, that’s when we see price erosion.10 Several innovator drugs now compete with multiple biosimilars. For example, there are five approved Herceptin® biosimilars, four approved Remicade® biosimilars (three of which are available), and three approved Neupogen® competitors.11 (Note: There are technically two biosimilars of Neupogen. Granix® is another filgrastim formulation that competes with Neupogen, but is not considered a biosimilar because a biosimilars approval pathway had not been established at the time of its FDA submission).12
As a result, biosimilar adoption in these categories is increasing, and prices are dropping. Let’s look at the three versions of Neupogen. By mid-2020, these three accounted for nearly three-quarters of the unit market share in that category, while their average sales prices are 40% to 50% below Neupogen.13
In some cases, the mere presence of biosimilar competition might also help control prices. We know that adoption of Remicade biosimilars has been slow. But in a bid to retain market share, its manufacturer appears to have offered discounts and rebates worth about 45% off its average sales price since the biosimilars launched.13
Not all of this activity is readily apparent. For example, analysts noted that during Pfizer’s second-quarter (2020) earnings conference call, news about the company’s potential payoff from its COVID-19 vaccine seemed to overshadow Pfizer’s biosimilar business. Actually, Pfizer’s global biosimilar sales grew 36% for that period, for an annualized rate of over $2 billion.8
The net result is that we are beginning to see actual cost savings flow into the market thanks to biosimilars. The analyst firm Sanford Bernstein calculates that biosimilar savings now amount to $6.5 billion (annualized).13 And a new IQVIA report states “recent events suggest an inflection has occurred” and they expect biosimilars to generate substantial cost savings – up to $100 billion in aggregate – over the next five years.14
6. What work still needs to be done?
Integrating biosimilars into the health system presents a host of unique challenges. At a recent conference one cancer specialist identified 12 separate steps for implementing biosimilars into practice. These include educating providers, implementing electronic medical records (EMR), inventory management for the brand and biosimilar, financial authorization, prior authorization, payer approval and copay assistance/medication assistance.7 This kind of granular, painstaking work needs to happen in clinics across the country before we can truly say that biosimilars have become part of the fabric of health care.7
If it was too soon to determine whether biosimilars were succeeding in 2019, it may still be too early to claim success today. But as more biosimilars enter the market and competitive pricing begins to emerge, we can perhaps cautiously say now that the biosimilars approach is not a dead end. Of course we need more progress on many fronts, but at least the outlines of a way forward are apparent.
You can rely on Optum Rx to keep you apprised of notable new drug approvals, including biosimilars. These timely updates are designed to increase your understanding of the long and near-term pharmaceutical pipeline, while alerting you to any appropriate cost-saving strategies.