For the past several years, I’ve anticipated our gatherings in San Diego at the Festival of Biologics USA meetings. The topics addressed, the speakers, the attendees’ side discussions all bring to focus the state of the industry and how it changes over subsequent Spring conferences. This year, it was all about biosimilar industry sustainability. There were at least 5 sessions (including one I moderated) drilling down on this topic. Below represents both my reporting from the meeting and some additional commentary.
An Opening for Contract Manufacturers into the Adalimumab Competition?
That infers several fundamental issues. One, is the cost of production. Sarfaraz Niazi, PhD, Professor, University of Illinois, reemphasized to me that once manufacturing begins, the continuing cost of production is miniscule. Therefore, based on the cost of production (and equipment like bioreactors are paid) alone, biosimilar manufacturers can earn a profit at very low prices. This of course, does not account for the overhead incurred by marketing, sales personnel, and all of the other necessities of pharmaceutical marketing. This point has direct business relevance to the crowded adalimumab market in particular. No one expects nine biosimilar manufacturers to remain in the adalimumab biosimilar competition beyond 2024. As noted previously, some have already signaled a move away or have delayed their launches. However, it does suggest that small companies seeking to purchase licenses (or rights) to the products may be able to do so at little expense. This may be particularly appealing to a contract drug manufacturing organization with experience in biologics production.
Lowering the Bar on Biosimilar Entry
To lower the cost of new entry into the biosimilar market, the need for (1) a global reference product and (2) simplification of the regulatory data package (the removal of the need for phase 2/3 human clinical studies) would go a long way to lowering the cost of biosimilar development. This would speed the path toward approval, ease recoupment on investment, and enable more companies to consider biosimilar development. Gillian Woollett, PhD, VP, Head, Regulatory Strategy and Policy, Samsung Bioepis and Kimberly Maxfield, PharmD, Pharmacologist, at FDA, both remarked on the deemphasis on human clinical trials and on the expanded influence of the analytical assessment in the 351(k) approval process. Dr. Maxfield outlined the FDA’s roadmap to the evolution of biosimilar approvals, which was unveiled in January 2024. Dr. Woollett indicated that the cost of biosimilar development would be far less if we adopted a global reference product for comparator purposes, which might yield savings of at least tens of millions of dollars. Sonia Oskouei, PharmD, Head, Global Biosimilars, Sandoz, reminded the attendees that opportunities still abound for biosimilar development: There are more than 90 clinical development programs underway at the FDA, and a high number of biologic reference products for which biosimilars are currently not being researched.
For the most part, biosimilar manufacturers are seeking large profits on these agents. They want sales revenues that will provide long-term cash flow for shareholders and future biosimilar (or other drug) development. Based on current trends, and depending on the molecule, that assumption may need to be modified. The data plainly show that this is not a very promising picture in the pharmacy benefit biosimilar category. After launch, net prices have dropped precipitously, and this is not simply a function of having 9 biosimilar makers entering the market within months of each other. The same may have occurred with only 5 competitors. When the clinical/safety outcomes are considered equivalent, the cost to patients is basically the same, the drug characteristics are not significantly different, the only way to overtly compete is on price. The drug price will fall, and fast. To the tune of 85% below the wholesale acquisition price within 6 months of launch for adalimumab.
The die has been cast for future pharmacy benefit biosimilar introductions, like ustekinumab. As much as an individual biosimilar maker wants a high net price at launch, the company’s executives know they can’t do this and remain viable in a competitive category. If one company talked to a competitor about the need to limit early discounts for the benefit of the industry, well, that raises the specter of collusion.
Can We Just Forget About Interchangeability?
The evolution in payer thinking, in regulatory (FDA) thinking, and in manufacturer thinking is that interchangeability has brought no value to the marketing of biosimilars, only confusion. Even FDA’s Sarah Yim has asked for Congress to pass legislation that assumes interchangeability for each of the newly approved biosimilars. This, however, would not clarify the question of biosimilar-to-biosimilar switches, which is supported by real-world evidence.
In any case, the FDA’s granting interchangeability to Sandoz’s Hyrimoz® of several different, less-frequently used adalimumab doses, without firm dates of exclusivity, may have been the last fork on this road. Not only does it raise operational issues at the dispensing pharmacies, but it creates more confusion. At this juncture, the road seemingly has no destination.
One panel discussion addressed the most important, practical question: Has the interchangeability designation and the subsequent use of automatic substitution raised biosimilar utilization significantly to date? The answer was clearly no. This has not occurred for the first pharmacy benefit biosimilar (insulin), it has no relevance for the medical benefit biosimilars (ranibizumab), and let’s not ask Boehringer Ingelheim whether it has helped Cyltezo® sales. The only caveat is that on the adalimumab side, anyway, an interchangeable version of the most commonly prescribed formulation (high-concentration, citrate-free) has not yet been launched. I’m not going to say that the jury is still out on this, but more than a decade after the passage of the Affordable Care Act, are we still pondering the value of interchangeability? The current proposals by the Biden Administration and in Congress to remove the interchangeability designation cannot be voted on, signed, and promulgated quickly enough.
PBMs, Transparency, and Provider Reimbursement (or Lack Thereof)
The biosimilar makers worry, quite rightly, that reimbursement transparency is not on their side. Pharmacy benefit managers (PBMs) continue to put their thumbs on the scale for rebates, favoring reference product Humira®. Thus, biosimilar makers account for a sliver of adalimumab utilization. There are hints that Sandoz is making some headway via its Cordavis agreement, but there is also much unknown about CVS Health’s commitment to using the unbranded form of Humira and how this might affect the additional dispensing of Hyrimoz.
Otherwise, there were no new insights as to a new PBM push for biosimilar use. This leaves me wondering whether it will be left up to government departments (such as Veterans Affairs) or employers to become the principal factors in biosimilar utilization. Presentations at the conference by influential health systems like Kaiser Permanente and Mayo Clinic underline their commitment to biosimilar value. Sameer Awsare, MD, Executive Medical Director, Permanente Medical Group, noted that Kaiser has been able to obtain 90% to 95% uptake consistently after only a couple of weeks postlaunch on its biosimilars.
Under the buy-and-bill system, provider reimbursement is definitely at a critical point. Dr. Barry Chester of Pfizer, and Dr. Oskouei both pointed out that the bump in physician reimbursement to average sales price (ASP) + 8%, mandated by the Inflation Reduction Act, is only a band-aid. The two-quarter lag in ASP reporting continues to put physicians at risk for losing money on lower-cost biosimilars, incentivizing them to purchase higher-cost reference products instead. The solution to this serious issue is not to extend ASP + 8% reimbursement to 2032, but rather to seek a more fundamental, shared savings-type approach that will underscore the value of the biosimilar alternatives.
