Biosimilars Face Repercussions of Drug Pricing Debate

As more biosimilars gain FDA approval for marketing in the United States, and more manufacturers launch programs to develop additional competitive biotech therapies, concerns have emerged that continued growth in this area could be limited by mounting pressure to push down on prescription drug outlays. Even though payers and insurers anticipate savings from alternative biotech therapies, the threat is that aggressive cost-cutting measures could raise the demand for truncated biosimilar development, eroding the confidence of physicians and patients about biosimilar safety and efficacy.

FDA is aware that mounting rage over drug pricing could have repercussion for biosimilar development. Janet Woodcock, director of the Center for Drug Evaluation and Research (CDER), observed at a recent conference sponsored by the Biosimilars Council that gaining public trust in biosimilar safety and efficacy is key to building broad acceptance for these products, especially when patients are being asked to switch from a life-sustaining medicine that is working well. Woodcock emphasized the importance of requiring sufficient analytics and testing to convince prescribers and patients that new biosimilars are products that “can be relied upon.” FDA’s regulatory framework is based on a “totality of evidence” standard that she feels will help industry “earn the trust and confidence” of payers and prescribers.

FDA has approved three biosimilars for market, the latest just a week ago. As of the end of July 2016, six companies had announced the submission of at least nine biosimilar applications, and the agency is assisting with more than 60 biosimilar development programs. But pressure from Congress and payers to move biosimilars to market more quickly could jeopardize efforts by the agency and biosimilar developers to dispel concerns about immunogenicity and product switch raised by biosimilar critics. That could cloud public understanding of the scientific basis and rationale for this new pathway for facilitating patient access to critical therapies, Woodcock noted.

Revising formularies

Insurers and pharmacy benefit managers (PBMs) are responding to the emergence of biosimilars in the US market by devising strategies for encouraging prescribing to these less costly, but controversial therapies. CVS Health recently announced that it would add Sandoz’ Zarxio (filgrastim-sndz) biosimilar to its formulary, with preference over reference drug Neupogen. The Ohio Public Employees Retirement System has added a formulary tier specifically for biosimilars and generic specialty drugs, with a maximum $100 copay for biosimilars, compared to $150 for the reference product.  Reimbursement experts consider such approaches key to encouraging biosimilar uptake, as compared to monthly caps on all copays and pharma benefits, which then reduce financial incentives for using less costly therapies. At the same time, efforts to curb prices on innovator therapies could backfire because a more narrow gap between brand and follow-on products could limit potential profits from biosimilar development and marketing.

Sanford C. Bernstein financial analyst Ronny Gal expressed optimism at the meeting that the biosimilar market will grow notably in the next few years, as regulatory issues related to product naming, labeling, and interchangeability are solved, and extrapolation becomes more firmly established. Concerns about adverse events have diminished, as European authorities have become more comfortable with biosimilars. As more competitors enter biosimilar markets, Gal expects discounts will rise from the 30% range to more than 75% off the innovator pre-biosimilar prices. And, in the end, biosimilars may emerge as safer and more effective therapies than the innovator product due to the utilization of more advanced analytics and more efficient production systems.