A Biosimilar Mainstay Faces an ASP Cliff

One of the great unknowns of the fierce competition in the biosimilar drug categories has always been what happens when a “pricing floor” is reached. How will payers react? We have heard often that payers may consider reimbursing only at a reference price level (not to be confused with a reference product), which represents the cost of the lowest-priced drug.

How would manufacturers react? They have intimated that it depends on how low the pricing floor goes. Can they still make a profit based on production, distribution, and marketing costs (and is that profit a significant contributor to the bottom line)? Have they earned back their research and development investment? Will they remain in the competition? Well, it seems we’re about to find out. We’re seeing this occur in the pegfilgrastim category today.

According to the Center for Medicare and Medicaid Services (CMS’s) latest average sales price (ASP) data, the numbers seem to have stabilized for the biosimilar competitors except for one. In July’s quarterly report, Sandoz’s product, Ziextenzo®, had an ASP of approximately $30.05 per 0.5 mg.

HCPCS CodeDrug NameUnitASP
J2506Neulasta0.5 MG74.948
Q5111Udenyca0.5 MG150.780
Q5108Fulphila0.5 MG96.464
Q5120Ziextenzo0.5 MG30.049*
*July data. The other medications’ ASP data are from CMS’s October 2023 quarterly report.

This follows a rapid decline over the previous two quarters; in CMS’s October update, this agent is no longer listed. An unsettling implication of this scenario is that ASP reporting is reflective of sales occurring two quarters ago. On that basis, it is possible that Ziextenzo’s net price today is well below this amount. At some point, the biosimilar’s price may reach the threshold below which CMS includes it in a package paid to providers, not as a separate line item (see also our previous blog on the Office of the Inspector General’s recommendation.)

The just-released Samsung Bioepis Biosimilar Trend Report Q4 2023 provides a graphic look at the situation (Figure). Back in December 2022, Sandoz experienced a dip in Ziextenzo’s net price, which has evolved into a cliff. Based on the October numbers, the pegfilgrastim biosimilar’s ASP (a proxy for net price) is 2.5- to 5.0-fold lower than that of its competition.

Ziextenzo was the third biosimilar pegfilgrastim to reach the market, and “as a result, Sandoz had significant competitive pressures with the need to meet various price points across different stakeholder groups to ensure that patients would have access,” stated Leslie Pott, Sandoz’s Vice President, Corporate Affairs North America in an Email to BR&R. “While the medical benefit challenges are not unique to Sandoz, Ziextenzo’s ASP has dropped significantly,” she confirmed. 

What Will Sandoz Do Next? 

In its current pricing situation, Sandoz would seem to have few options. Ms. Pott explained, “As a consequence of these steep discounts, our ability to provide meaningful discounts across the channel is restricted.

“As a result, we’ve had to adjust our pricing strategy and pull back in certain areas. We will continue to look for ways to create a sustainable environment for biosimilars and bring sustainable cost savings to the market.”

Sandoz completed its spinoff from Novartis last week, launching itself into the biosimilar world untethered from its parent for the first time. The pricing floor challenge faced by its pegfilgrastim product will no doubt test the mettle of its leaders, and serve as a caution to the entire biosimilar industry.   

(Note: This article was modified on October 12th to clarify a quote from Sandoz.)

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