Building a Better Market for Biologics: The US vs. Europe
The advent of generics has dramatically impacted the cost of small molecule drugs following the expiry of the patent protection for the originator therapeutics, with the cost of a small molecule generic often as little as 10% of that of the originator drug. This price difference results from several factors, including lower R&D costs, fewer and smaller clinical trials to simply confirm the drugs’ bioequivalence, and the increasing competition as subsequent generic versions of a molecule enter the market.
Biosimilars have been developed with the same goal in mind – to cut the often very high costs of biologics drugs by allowing “copycat” molecules into the marketplace, thus making the therapeutics accessible to more patients. Biologics, however, are much more complex to develop and manufacture than small molecules. They are produced in living organisms, or by mechanisms derived from living organisms, rather than being chemically synthesized. Thus, it is virtually impossible to reproduce the production processes exactly – an issue even for originator companies wishing to scale-up or move biologics production from one facility to another. For this reason, biosimilars can never be completely identical to the originator biologic. Therefore, in order to gain approval, biosimilar developers may need to provide more clinical data than generics manufacturers, including comparative clinical studies with the originator biologic to establish comparable safety, efficacy, pharmacokinetics, pharmacodynamics and immunogenicity.
This means that biosimilars must be priced to capture the added development costs and thus are not likely to achieve the same level of savings as their small molecule counterparts. Despite this, in the United States alone, some experts estimate that biosimilars could reduce direct spending on biologic drugs by $54 billion between 2017 and 2026.
While biosimilars approvals and market penetration has not occurred as quickly as experts initially predicted, the biosimilars market has been a growing success story in Europe. The European biosimilars approval pathway was put into place in 2003, leading to the first approval in 2006 for Sandoz’s Omnitrope, a biosimilar form of Pfizer’s Genotropin (somatropin, a recombinant human growth hormone). As of December 2018, 54 biosimilars have been approved for use in Europe. The European biosimilars market is currently projected to be worth as much as $9.2 billion by 2023, at a compound annual growth rate of 29% (2017-2023). Biosimilars and biosimilar competition have driven prices down by 70% or more; use of biosimilars in the top five countries in the European Union has potential to offer savings of more than €10 billion (around $11.2 billion) between 2016 and 2020.
The success in Europe has been ascribed to national guidelines as well as regional and local protocols that encourage product switching, along with prescribing quotas and targets for biosimilars. Some countries, such as the United Kingdom, have established frameworks such as gain-share agreements that encourage healthcare professionals to switch patients to biosimilars.
In the United States, the abbreviated biosimilars approval pathway set out by the Biologics Price Competition and Innovation Act (BPCIA) became active seven years after the European regulatory framework as part of the U.S. Government’s 2010 Patient Protection and Affordable Care Act (ACA). In March 2015, the Food and Drug Administration (FDA) approved the country’s very first biosimilar, Sandoz’s Zarxio (filgrastim-sndz), a biosimilar form of Amgen’s Neupogen (filgrastim). As of May 2019, just 19 biosimilars have been approved for sale in the United States.
The uptake for marketed biosimilars has also been slow in the United States, in contrast with the growing demand in Europe. A number of factors have driven this situation, including lack of incentives for physicians to prescribe biosimilars, rebates for originator biologics, and small co-pay differences. Added to this, less than half of the biosimilars approved in the United States are available to patients. Originator companies have delayed or blocked market entry for some approved products.
The FDA is tackling these challenges. In 2018, the FDA launched its Biosimilars Action Plan, which aims to improve the product development and approval process. The agency is looking to increase scientific and regulatory clarity and to improve understanding of biosimilars among patients, providers and payers. In addition, the FDA plans to support competition by reducing the ‘gaming’ and litigation from originator companies who attempt to delay the market launch of biosimilars.
And already, things seem to be changing. The lack of clarity for substituting biosimilars at pharmacy level has been a challenge, but the FDA has now finalized its guidance for biosimilar interchangeability, clarifying the studies required to allow pharmacy substitutions.
Despite all this, some analysts are suggesting that the idea of biosimilars should be forgotten, as there is more potential in savings (perhaps as much as $50 billion a year) in creating an independent body that sets biologics prices after the loss of exclusivity. But questions remain on the feasibility of such a body, especially in the US.