Movers and SHAKERS
Can Biosimilars Finally Be Successful in the US?
(Note: companies that could be impacted by the content of this article are listed at the base of the story [desktop version]. This article uses third-party references to provide a bullish, bearish, and balanced point of view; sources are listed after the Balanced section.)
Biologic drugs (biologics) are therapeutic agents extracted or partially synthesized from biological sources. Biologics include vaccines, monoclonal antibodies, and therapeutic proteins. These products are generally larger and more complex than small-molecule drugs. Biologics are a rapidly growing segment of the pharmaceutical industry. The biologics segment has experienced a dramatic increase in the number of products in the market over the last few decades. The percentage of biologics in total drug approvals increased from 19% in 1998 to 39% in 2017. In 2018, the US Food and Drug Administration (FDA) approved 59 medicines, seventeen (29%) of which are biologic products. At present, the majority (an estimated 70%) of top-selling drugs in the pharmaceutical industry are biologics.
Biosimilar products (biosimilars) are defined by their similarity to existing FDA-approved biologics. According to the FDA, a biosimilar is a product that has no clinically meaningful difference when compared to a commercially available biologic or “reference biologic.” Biosimilars can only be commercialized once the patent protection of the reference biologic expires. The biosimilars market is being supported by the FDA, which released the “Biosimilar Action Plan” to improve the efficiency of the approval process for these medicines. FDA has granted 24 biosimilar approvals up to date. As of February 2019, only 7 out of seventeen (41%) approved biosimilars were on the market. Despite the implementation of the “Biosimilar Action Plan,” the support received by FDA regulators has yet to translate into successful commercialization of these products.
Exhibit 1. Biosimilars approved by FDA
The most recent drug approval was for Pfenex Inc. (NYSE American: PFNX)’s PF708. PF708 gained approval under the 505(b)(2) regulatory pathway, with Forteo® (teriparatide injection) as the reference drug, for the treatment of osteoporosis in certain patients having a relatively high risk for bone fractures. In 2018, global sales of Eli Lilly’s Forteo were $1.6 billion, which gives an indication of the potential commercial opportunity for PF708.
Biosimilars Can Improve Public Health. The high cost of biologics remains a significant barrier to patient access and adherence. Biosimilars are likely to have a lower price than reference biologics. Industry experts expect price reductions to continue as more competing biosimilars are introduced into the market. These lower prices will cause a reduction in overall healthcare costs and could improve patients’ medication adherence, resulting in better health outcomes.
The First Biosimilar in the US Surpassed its Reference Biologic in 2018. Zarxio became the first biosimilar in the US to surpass its reference biologic medicine (Neupogen, filgrastim). Prescriptions of Zarxio accounted for more than 45% of units of short-acting filgastrim dispensed, which was the highest among competing drugs including Neupogen. Both drugs, Zarxio and Neupogen, are used to treat neutropenia. This percentage is an important milestone for biosimilars. Biosimilar competition in the filgrastim market has saved the US healthcare system an estimated $500 million in less than two years, which shows the potential of biosimilars in the US. This positive trajectory is expected to continue with the successful commercialization of additional biosimilars.
Biosimilars Action Plan by FDA. In July 2018, FDA released the “Biosimilar Action Plan” outlining four key goals: 1) streamlining the approval process, 2) improving regulatory clarity, 3) increasing educational efforts to improve understanding among stakeholders, and 4) collaborating with the Federal Trade Commission to address anti-competitive behaviors. The agency is using a streamlined approval and commercialization process for biosimilars.
Barriers to Market Entry Persist in the Biosimilars Market. Ongoing patent litigation is the major reason for delayed market entry. Most of the top-selling biologics belong to large pharmaceutical companies with major litigation power. The most notable case of patent litigation leading to the delayed entry of biosimilars involves Humira (adalimumab), the top-selling drug that reached $13.7 billion annual sales in 2018. Humira’s 2018 sales are more than double the second best-selling drug, Remicade ($6.5 billion). AbbVie, Humira’s manufacturer, filed over 100 patents on the product. It was discovered that 89% of these patent applications were filed after adalimumab was on the market, and 49% were filed after the first patent expired in 2014. This strategy is known as developing a patent thicket, creating a wall of patents to protect assets.
Biosimilar Prescribing Can be Deterred by Originators. Despite several approvals, only a few biosimilars have entered the US market. The market uptake has been suboptimal. One strategy employed by originator manufacturers is the negotiation of formulary exclusivity with payers to limit biosimilar uptake. For example, a biosimilar of infliximab (reference drug is Remicade) manufacturer alleged that the originator manufacturer entered into contracts with commercial payers to exclude biosimilars from drug formularies or include “fail first” provisions. Fail first provisions require a patient to have failed on the original product before a biosimilar could be reimbursed.
Low Levels of Awareness of the Efficacy and Safety of Biosimilars. A 2016 national survey conducted with US physicians in specialties that have high utilization of biologics found that 55% did not believe biosimilars were safe and appropriate for patient use. Similar studies have also shown that some patients have low levels of awareness of biosimilars and others have lingering concerns about inadequate efficacy and elevated safety risks of biosimilars that are not consistent with reassuring evidence about their clinical usefulness.
Biosimilars are poised to play a crucial role in curbing healthcare costs considering that several blockbuster biologics have come off patent over the past few years and more are approaching their patent expiry in the early 2020s. According to some estimates (Zhai et al., AMA Journal of Ethics, August 2019), biosimilars could reduce healthcare spending by $54 billion between 2017 and 2026. Clinical and real-world evidence shows that patients can safely switch from brand biologics to biosimilars without sacrificing any therapeutic benefit, however many physicians remain hesitant to switch. Industry, advocacy organizations, and government groups need to tackle this barrier by providing guidance and facilitating educational opportunities. Both the European Medicines Agency and the United Kingdom’s National Health Service have generated educational materials to help physicians educate their patients on biosimilars and have commercially successful biosimilars. Recent efforts to streamline the regulatory process (e.g. FDA’s Biosimilars Action Plan) are steps in the right direction.
- Zhai et al., AMA Journal of Ethics, policy forum “Why Are Biosimilars Not Living up to Their Promise in the US?”, August 2019, Volume 21, Number 8: E668-678
- GlobalData, ESMO 2019: The Case for Biosimilar use in Oncology, Clarifying Concepts and Allaying Fears, September 2019
- Cohen et al. “Switching Reference Medicines to Biosimilars: A Systematic Literature Review of Clinical Outcomes” Drugs. 2018; 78(4): 463–478.
- GBI research Global Biosimilar Pipeline and Market Prospects: Overcoming Production Complexities Through Risk Management and Quality by Design, 2017