Let’s not Knock Innovation, but Biosimilars Exist for the Sake of Competition

A recent Twitter conversation between a blogging colleague of mine and a German advocate of precision medicine propelled this post: What is the real benefit of biosimilars? Does biosimilar development detract from efforts to produce innovative medicines? Is the main societal benefit biosimilar cost savings?

biosimilar cost savings

Biosimilar Development Is Separate From Innovation Development

The main reason that the Biologics and Biosimilars Price Competition and Innovation Act (BPCIA) was signed into legislation was related to cost containment. For biologics, there was no pathway for the evaluation and approval for lower-cost copies in the US health system, akin to the generic-brand name dynamic for conventional drugs. Adding competition has been the first and only point. The specialty drug trend had been rising rapidly, and the long-term estimates were frightening: Costs associated with specialty drugs like biologics threaten to eat 48% of the total drug spending pie in the United States by 2020.

Two factors were responsible. The first, increasing specialty drug utilization, has been especially difficult to address. The pipeline is congested with biologics. Medical societies are increasingly incorporating biologics into their guidelines and clinical pathways. Prescribers have grown more comfortable with these agents, and payers have limited tools at their disposal to put the brakes on their use.

The second, price increases, are well known and publicized. Without competition, drug companies tend to test what the market will bear, and to this point, they have borne quite a bit. Unlike in Europe, where the tender system of pharmaceutical purchasing has resulted in better cost containment, the US payers have been accustomed to stomaching large price increases through increased use of rebate contracts with price guarantees. But the overall costs continue to rise, as contracts expire and new ones are drawn up. Thus, the list prices for drugs like Enbrel® and Humira® have skyrocketed, with Humira’s more than doubling in a few years.

There is no evidence to say that biosimilar manufacturers would have engaged in the development of innovative new agents had they not devoted resources to this area. Indeed, pure-play biosimilar makers, like Coherus or Adello, were only introduced to produce biosimilars. Other makers, such as Samsung Bioepis, are joint ventures of existing manufacturers to do the same. Biogen recently raised its stake in Samsung Bioepis to nearly 50% of the company’s shares. This could be construed as a case of an originator company pouring $700 million into a biosimilar manufacturer, which could be using that money directly for other purposes. Finally, firms like Apotex, Mylan, Sandoz, and Hospira (now part of Pfizer) are heavily involved in generic drug manufacturing. Biosimilar development was a natural extension for them. Even big pharma players, such as Amgen, Merck, and Pfizer, are more commonly engaged in biosimilar marketing partnerships rather than purely R&D efforts (e.g., Amgen/Allergan, Merck/Samsung Bioepis, Pfizer/Celltrion).

One can also make an argument that pharmaceutical innovation is more evident at the drug discovery level. These days, big pharma seems less interested in pursuing drug discovery than in purchasing it.

The Societal Benefits of Biosimilars

The EMA and FDA biosimilar pathways were created to introduce competition that would lower drug costs. This in turn would make innovative biologic therapy available to more patients. Biosimilar cost savings could drive greater access to important drug technologies.

With the EU’s longer and more extensive experience with biosimilar medications, costs have indeed been saved. Although this has varied by country, it is undeniable.

In the US, with very limited economic experience with biosimilars (filgrastim and infliximab), savings figures are more theoretical than real. Although the infusion of a biosimilar into the new market may reduce wholesale acquisition price of the reference drug a bit, it will have a greater effect on net pricing, after rebates. And, of more immediate importance, the new biosimilar has the potential to halt further price increases for the originator product. This aspect of biosimilars cost savings cannot be overemphasized. Between the first adalimumab biosimilar approval and the initial availability of these products in 2023, the list price of Humira can increase upwards of 40% (or more, if Abbvie veers from its pledge to limit price increases). The initial price of the first adalimumab biosimilar will thus be much higher than if it was launched last year. On the other hand, adalimumab biosimilars will launch in the EU in October of this year, which should effectively lower cost products and limit their EU members’ exposure to future Humira price increases.

Biosimilar cost savings can have real benefits in terms of improved access. Payers’ incentives to use biosimilars (if they are motivated to implement them) can result in lower patient cost sharing. For example, a fourth-tier biologic may be subject to a 20% cost share, whereas a third-tier biosimilar may carry a flat copay of $100. This can make a difference in terms of therapeutic choices available to patients.

In conclusion, the German correspondent is only partly right. Biosimilars are not innovative. They are highly complex, cost-control medications. Do they detract the focus of manufacturers from new innovative products? There’s no evidence of this. However, we are beginning to see limited evidence in the US of the societal benefits, namely cost savings, they can bring.

Trastuzumab Dosing May Be Given in Half the Time: Will Costs/Revenues Be Cut as Well?

An upcoming presentation at the annual American Society of Clinical Oncology (ASCO) meeting promises equal efficacy and much improved safety for patients with early-stage breast cancer receiving Herceptin®. This change in trastuzumab dosing from a 12-month to a 6-month regimen will have ramifications for patients, health systems, and manufacturers.

trastuzumab biosimilarA number of biosimilar drug makers are trying to be the first to enter the market for trastuzumab. Mylan/Biocon’s Ogivri™ (trastuzumab-dkst) is the only approved agent in the US, but it will not launch before 2019, owing to a licensing agreement with Roche. Amgen/Allergan is expecting word from the Food and Drug Administration (FDA) by May 28th on their own biosimilar version. Samsung Bioepis is also expecting a decision in the fourth quarter of this year. This new study could significantly lower anticipated revenues for these drug makers. The expected pricing pressures of the category (another 2 manufacturers are working through complete response letters from the FDA) will further add to lower revenue.

Trastuzumab Study Results: Half as Long Just as Good

This British study comprised over 4,000 women (median age, 56 yr) who were followed for more than five years. Patients were randomized to receive the originator trastuzumab for either six or 12 months, in addition to usual standard of care. The researchers found that the disease-free survival was 89.8% in the 12-month group compared with 89.4% for the 6-month group. However, the latter showed significantly fewer toxic effects of cancer therapy.

The wholesale acquisition cost for trastuzumab approaches $6,400 per month ($76,700 per 12-mo course). This may lower patients’ out-of-pocket costs, depending on how quickly they reach their cost-sharing maximums. Typically, women taking trastuzumab will be subject to a fixed copay (e.g., $300 per treatment) or a co-insurance (e.g., 20% or $1,280 per month) for this medication alone. Yet, even with the treatment duration being halved, some patients may reach their out-of-pocket maximums. This is the result of office visits, other medications to be taken, and other care related to the toxic side effects of chemotherapy.

Half the Duration but not Half the Costs

For payers and health systems, cost savings will be substantial, but not halved. Most of the costs will be incurred with the first 4 months of weekly therapy. After 12 to 18 weeks, treatments are stretched out to infusions every 3 weeks for the remainder of the regimen. For a 100-kg woman who would receive a total of 5,400 mg of trastuzumab over 52 weeks, this could be reduced to 3,666 mg over 26 weeks (–32%).

The real benefit, should these study results pass scrutiny of peer review and inclusion in practice guidelines, will be in the lower frequency of toxic adverse effects. According to its prescribing information, trastuzumab is associated with “left ventricular cardiac dysfunction, arrhythmias, hypertension, disabling 197 cardiac failure, cardiomyopathy, and cardiac death.” This can occur during therapy (causing discontinuation) or in the years after treatment is completed.

We hope that the good news represented by these study results for patients does not dissuade other manufacturers from seeking biosimilar trastuzumab approval.

Payers’ Expectations for Biosimilars Reflect a Conflicted Environment

Hopeful but not enthusiastic. Preparing but not anticipating. Those are the impression one gets when speaking to medical directors and pharmacy directors of health plans, insurers, and pharmacy benefit managers about biosimilars today. Although savings associated with biosimilar use have been limited so far, one recently released survey of these payers revealed expectations that seem to reflect today’s environment.

payer expectations of biosimilarsIn December 2017, executives from the TPG-National Payer Round Table (NPRT) obtained 77 responses to their Web-based survey (a 31% response). At that time, only eight biosimilars had been approved (Pfizer’s Ixifi™ [infliximab] was not yet approved by the Food and Drug Administration). Thirty-nine percent of the respondents were from national plans, 27% were from regional organizations, and the remainder were from local health plans.

Fifty-three percent of the respondents indicated a willingness to permit biosimilar use for all originator-approved indications, regardless of the FDA’s approved labeling. Twenty-five percent expected a biosimilar to be the only product covered on formulary. In order to enhance conversion and uptake, nearly half (48%) believe that the biosimilar will be associated with lower cost sharing than the originator. This could come in the form of a separate biosimilar tier, with a fixed copay or percent co-insurance that is significantly lower than that for the originator drug.

Uncertainty About When and How Much 

The study results were released as a poster at the 2018 annual meeting of the Academy of Managed Care Pharmacy last week. In an interview with Biosimilars Review & Report, Richard A. Brook, MS, MBA, Senior Vice President at TPG-NPRT, said, Health plans generally expect their costs to go down with the use of biosimilars. However, a lot of uncertainty remains as to the timing and magnitude of these savings.”

Indeed, some of the respondents were quite cynical about the savings seen in 2018. Forty-five percent believe there will be less than 10% savings from biosimilars overall this year. A further 16% do not anticipate any savings from biosimilars. The picture brightens significantly when the timeframe is moved two years out—by 2020, 29% believe savings will exceed 20%, and 47% think that savings will be 10% to 20%. Only 2% think no savings will be accrued. This is likely in line with expectations that etanercept, pegfilgrastim, and some oncology biosimilars will be available for use by 2020.

Evidence to Support Zarxio Use Presented at AMCP

Two posters presented at the Academy of Managed Care Pharmacy bolstered the case for moving away from the use of the originator filgrastim product Neupogen®.

In a study from Magellan Rx Management, Scottsdale, AZ, the researchers grouped both Zarxio® and Granixzarxio® together as alternatives to the originator filgrastim in the granulocyte-colony-stimulating factor (G-CSF) category as supportive oncological care. They studied the effect of a step edit, requiring the use of either Zarxio or Granix first, and its effect on utilization trends and cost savings among 2.7 million covered lives.

The step edit was implemented in October 2016 and the results for the fourth quarter of 2016 were compared with utilization and cost data from the first three quarters of that year. In terms of utilization, the marketshare of Neupogen dropped from 18% in early 2016 to only 2% by the third quarter of 2017. As expected, the drop in utilization occurred just after the step edit was introduced a year ago. The combined marketshare of Granix and Zarxio jumped from 9% to 21% over that time, but the dominant player in the G-CSF space, Neulasta® (pegfilgrastim), maintained utilization, rising from 73% to 77%. Over the one-year period since the step edit was introduced, the authors calculated a cost savings of $662,278; the cost savings in the quarter after the policy change was $106,980, or approximately 8% of the total spent for the G-CSF category.

The authors noted that the cost savings were calculated using wholesale acquisition cost (WAC) not average sales price (ASP), and manufacturer discounts or rebates were not considered in the estimates.

The second poster, sponsored by Sandoz, was a retrospective claims analysis of the incidence of febrile neutropenia in patients receiving chemotherapy who were treated with Zarxio or Neupogen. This study covered 13 months of claims (from Optum) from 162 patients taking Zarxio compared with 3,297 receiving Neupogen. The groups did not differ significantly in terms of demographics, insurance, or tumor type.

The researchers found that the incidence of neutropenia (in addition to fever and/or infection) was nonsignificantly greater in those receiving the biosimilar compared with the reference product (2.3% vs. 1.7%, respectively).

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.