What Does Success Look Like in the Biosimilar Arena?

Can biosimilars be called successful if a minority are designated preferred products on formulary, but not all? What if the net-cost savings associated with a biosimilar is 30% lower, but not 60% than a reference biologic a few years postlaunch? Or the marketing of a biosimilar stopped the annual price increases of the reference drug? Would this be called a success?

biosimilar market

With the likely exception of reference-only manufacturers, we are all pulling for biosimilar manufacturers to bring their products to the marketplace as quickly as possible, gain a sufficient foothold or dominance, and sustain their sales over the course of time. This will go a long way to ensuring future competition for biologics facing loss of exclusivity, and therefore, future savings for health care systems, patients, payers, and purchasers. However, success may look a bit different from each of these perspectives. Saving money on expensive pharmaceuticals is everyone’s goal, but how this is achieved and the extent to which it is achieved can be viewed differently.

Payers’ Budgetary Benefits

From a payer’s viewpoint, biosimilar success means not only halting drug price increases but rolling back prices according to expectations. Those expectations fluctuate from one payer to another and from one drug category to another. In other words, a newly launched oncology biosimilar may be expected to result in 20% net price differences compared with year before. In a category where only one biosimilar is competing, payers may expect narrower savings. This may occur in the multiple sclerosis category, for instance.

Patients’ Cost Saving

Patients are more focused on lower out-of-pocket costs. From this perspective, patients look to their health plans, pharmacy benefit managers, and employers to construct benefit designs that emphasize lower cost shares when biosimilar medications are utilized, compared with their reference drug counterparts. This can only occur once payers fully embrace biosimilars and overcome contradictory incentives inherent in the rebate trap.

On the other hand, patient advocacy groups may be focused on increased access to effective biologic medications as well as lower cost sharing. They realize that increased access can only come with significant savings to the health system as a result of biosimilar utilization.

Physicians’ Indifference?

Ideally, physicians are (or become) agnostic about biosimilars, in that any incentives to prescribe branded reference products should be neutralized. Success may lie in reduced administrative time/costs associated with prescribing biologic agents: It may even be possible to remove certain prior authorization restrictions when biosimilars are prescribed. This, again, is not up to the physician—it is a decision by the payer.

Success for those in shared-savings practices or health systems may look a bit different. The lower-cost biosimilar offers a distinct advantage to these providers—the opportunity for improved savings, which can be distributed throughout the organization. What threshold level of biosimilar utilization that results in significant shared savings or bonuses is not yet known.

The US Health System: Better Access and More Innovation From Biosimilar Savings

The premise exists that greater biosimilar utilization will enable the overall health system to afford additional access to patients who would benefit from effective biologic therapies. The evidence is not yet available to support this hypothesis.

A stronger case can be made that the availability of lower-cost biosimilars, like in the case of generic drugs, allows the health system to afford innovative new medicines to treat an array of diseases. In some cases with multisource generics, prices dropped upwards of 80%. We haven’t seen that level of savings with biosimilars yet, but at the same time, the reference biologic costs so much more than conventional small-molecule brands—far larger monetary savings may be obtained with smaller discounts.     

Facets of the Manufacturers’ Prism

Manufacturers see success through a nuanced, multisided prism. First of course is the ability to attain approval by the Food and Drug Administration. Second are the barriers to launching the agent (e.g., patent litigation, supply chain).

Third is the competitive environment: Are you first to market or fifth to market? And what is the reference manufacturer doing contract-wise to retain marketshare? A significant part of this perspective is the question of salesforce effectiveness and expectations for securing their own marketshare.

Fourth, how are revenues derived from this biosimilar product going to change in the near future and beyond? This is a key question, as the entry of biosimilars to pretty much any drug category will reduce the total dollar size of the market. How accurate can your projections be? And related to this: How incentivized or committed is the drug maker to the post-adalimumab biosimilar pipeline?

We already know that payers believe biosimilars are successful in promoting competition and that they are essential to controlling biologic price hikes. Yet, their commitment to biosimilars seems tempered by reference product rebates. Anecdotally, patients are happy with biosimilars when they can get them, but if these products are not preferred, that will be difficult. In the next couple of years, we may find out quite a bit about manufacturers’ views and commitment.

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