Cost Savings, a Boon to Biotechs, Both, or Neither?

I was watching a You Tube recording of speakers at a recent meeting sponsored by IBD Horizons. Anita Afzali, MD, Co-director of the IBD program at University of Wisconsin’s Harborview Medical Center, presented her arguments for a cautious approach to extrapolation of autoimmune biosimilar agent use in inflammatory bowel disease. One of her concluding slides caught my eye.

Since the testing and approval of biosimilar agents is specifically geared towards demonstrating similarity in analytical characterization and noninferiority in clinical trials, the obvious singular reason for their existence is lower cost. The cost savings associated with the 2 biosimilars marketed to date have not been impressive, both of which being launched at only a 15% discount in wholesale average cost (WAC). In fact, most payers are treating them as new “me-too” brands, not critical medications that save vital specialty drug dollars. True, the manufacturers of Inflectra®, Zarxio®, and Basaglar® (a follow-on biologic) have gotten some contracting wins, but no one is claiming that these few products will significantly affect the cost curve. In fact, this may not occur until multiple biosimilars of the same originator drug are introduced. Only then, may competition reach a critical mass for significant cost savings.

Dr. Afzali’s point, however, was that without these anticipated cost savings, from the payer’s and—more importantly—from the patient’s perspective, “biosimilars will be a multibillion industry to profit insurances [sic], shareholders, and the biotechnology industries, in an abbreviated pathway generated by the Congress and FDA.”

I’m not sure that payers will really profit from it, because they may hesitate to cover, and certainly not strongly encourage, a biosimilar that does not produce savings. Therefore, it is unlikely that Pfizer’s Inflectra will attain blockbuster status without steep discounts or rebates. With more than $8 billion in annual US revenues for adalimumab, however, who is to say that the result wouldn’t be 4 or 5 biosimilars with drug sales exceeding $1 billion? What manufacturer would pass on that opportunity (especially when the cost of bringing the drug to market will be less than $1 billion)? This rosy future for the biosimilar industry can only happen, though, if the medications are approved, reach the market quickly, and patients can (and wish to) access them.

It is clear from Dr. Afzali’s presentation that physicians like her will not jump at the chance to use biosimilars approved on the basis of rheumatoid arthritis clinical studies to treat Crohn’s disease. That level of comfort will only come with time and experience. The problem is, biosimilars may not have a great deal of time, if the payers and patients are not convinced of the cost savings.

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