In early June, the U.S. Food and Drug Administration (FDA) approved the first biosimilar version of Amgen’s Neulasta (pegfilgrastim), a biologic that is used to reduce the chances of infection in cancer patients whose immune system have been suppressed by chemotherapy. The new biosimilar, developed by Mylan and Biocon, is expected to launch as Fulphila (pegfilgrastim-jmdb) in the coming weeks. Analysts estimate that Mylan/Biocon could earn $100 million in U.S. sales by the end of 2018, and around $300 million in 2019.
Biosimilars are intended to be lower priced versions of biologic drugs, filling a role analogous to inexpensive generics for costlier name-brand small molecule medicines. However, there are important differences. Biosimilars and biologics are complex molecules made in living cells, where cellular variations and specific production conditions can affect the ultimate result, whereas small molecule drugs are the result of synthetic chemistries that can be readily duplicated with the right “recipe.” As a result, biosimilars can be difficult to develop, and a specific biosimilar can never be completely identical to its reference biologic. While only 11 biosimilars have now been approved by the FDA since 2015, the situation in Europe has been more favorable, with 44 approved biosimilars as of February 2018.
A major reason for the difference in approvals has been the regulatory climate in Europe versus the United States. The European Medicines Agency first established a robust, science-based regulatory framework for biosimilars in 2005, updating it on a regular basis since. On the other hand, while the Biologics Price Competition and Innovation Act of 2009 mandated the development of regulatory guidelines for biosimilars in the United States, the FDA has yet to provide finalized regulatory guidance. This regulatory uncertainty, combined with the lengthy and costly development of biosimilars, has slowed companies from attempting to introduce biosimilars in the United States. This situation is slowly changing, with a rising number of biosimilar drugs now under review and the pace of approvals expected to increase.
However, approval of a biosimilar does not mean that there will not be obstacles to its commercialization. Only three approved biosimilars have so far launched in the U.S., primarily because of legal battles with the makers of originator drugs. Those that have successfully entered the marketplace are Novartis’s Zarxio (filgrastim-sndz) version of Amgen’s Neupogen (filgrastim), as well as Pfizer’s Inflectra (infliximab-dyyb) and Merck’s Renflexis (infliximab-abda), both versions of Janssen Biotech’s Remicade (infliximab).
Once on the market, there have been further barriers to the products’ widespread adoption. Because a biosimilar may have subtle differences from its originator drug or from other biosimilar versions of the same biologic, physicians have been unable to use the therapeutics interchangeably. The result has been a certain level of unfamiliarity and distrust by physicians in regard to biosimilars, and thus hesitancy to prescribe them. This reluctance is likely to diminish as more data becomes available that supports the comparability between biosimilars and their reference products. And indeed, on June 15, Novartis’s Sandoz unit announced the results of two long-term Phase 3 studies showing that its products Zessly (infliximab), a Remicade biosimilar, and Erelzi (etanercept-szzs), a copy of Amgen’s Enbrel (etanercept), could match their reference products in safety and efficacy, and that exchanging the branded products with the respective biosimilars had no negative effects.
Another challenge to the use of biosimilars has been the result of past reimbursement policies. Payers have traditionally influenced biosimilar prescription rates based on how they rank biosimilars on their formularies, given the lack of interchangeability with the reference products. However, recently announced reimbursement changes in the 340B drug discount program of the Centers for Medicare and Medicaid Services may provide further incentive for biosimilar use, at least for a certain period following their launch. Under the new guidelines, biosimilars qualify as “new and innovative technology” that will be reimbursed at the average sales price of that product plus 6% for 2-3 years, while the innovator biologic will be reimbursed at the average price minus 22.5% — thus providing a financial incentive for biosimilar use by 340B-participating hospitals.
Ultimately, the increasing availability of biosimilars is expected to help lower healthcare costs, although likely not as much as generic drugs have done over the years. The long development timelines and complexity of manufacturing biologics leads to only a 15-30% price discount over their branded version, a small saving compared to that achieved by small molecule generics, which can be priced up to 85% lower than the original product.