Biosimilars and the future of pharmacy are common topics at CSI Specialty Group. Biosimilar pharmaceuticals are increasingly gaining prominence in conversations about the future of healthcare in the United States. Already widely accepted in Europe, biosimilars enable the European Union to save substantial amounts of money on healthcare.
Forecasts suggest a savings of $54 billion between 2017 and 2026 could be realized. However, attaining these savings will require shifts in both attitudes and adoption on the part of clinicians and patients.
Below, we break down how biosimilars stand to impact the American healthcare system, how patients can benefit from biosimilar advancements, and where pharmacy is headed through 2025 and beyond.
What are Biosimilars?
A biosimilar is a biologic pharmaceutical product that is highly similar to other branded and previously approved biological medicines. The FDA approves biosimilars according to the same standards of pharmaceutical quality, safety, and efficacy that apply to all biological medications. Biosimilars can be manufactured when the original product’s patent expires.
Biosimilars are not considered generic versions of biological medicines. The natural variability and extremely complex manufacturing of biological drugs do not permit an exact copy of the molecular micro-heterogeneity. Unlike small-molecule generics, biologic medicines typically contain a higher molecular complexity and are very sensitive to any variations in the manufacturing process.
Europe was the first region in the world to develop a legal, regulatory, and scientific framework for approving biosimilars. Since 2006, the European Medicines Agency (EMA) has granted marketing authorization for over 50 biosimilar medicines. It was not until 2015 that the FDA approved the first biosimilar for use in the U.S.
In 2013, the global biosimilars market stood at US $1.3 billion. Driven by the patent expiration of some of the largest biologic drugs, the next decade is expected to see sales of $35 billion.
Biosimilar Adoption in the U.S.
The Hatch-Waxman Act (1984) encouraged the manufacture of generic drugs by the pharmaceutical industry and established the modern system of government generic drug regulation in the U.S. However, the adoption of generics was slow at the time. Conflicts brewed between brand manufacturers and generic companies, while divergent information was common in the market. This was confusing to patients and providers and slowed the uptake of these lower-cost alternative medicines.
Large biologics can now slow the progression and have significant symptom improvement for diseases such as psoriasis, Crohn’s disease, and many other debilitating illnesses, including rheumatoid arthritis, cancer, and anemia.
As of December 2019, 25 biosimilars were approved by the FDA. However, only 10 of those are commercially available in the U.S., and several approved biosimilars will not become available until 2023 due to existing patents and other legal matters.
More importantly, there are hundreds of biosimilars in the pipeline. These medicines, when readily available, will help create a reduction in costs in the healthcare system, which will allow for further innovation going forward.
Impacts on the US Market
In 2017 biologic medicines made up 2% of U.S. prescriptions but 37% of Americans’ drug spending. Adoption of biosimilars in the U.S. could save the healthcare system more than $54 billion between 2017 and 2026, and significant savings have already been seen in 2019. The industry is currently focused on improving communication and information sharing to providers and patients.
Patients may not see the same price reductions with biosimilars as was seen with generics. However, industry analysts expect to see between 15%-30% discounts over the existing brand name products that are on the market today.
More and more physicians and physicians’ groups, such as Jeffrey Patton, MD, chief executive officer of Tennessee Oncology and president of physician services for OneOncology, have cited the tremendous potential gains to be made through biosimilars in terms of cost savings to patients and the system as a whole.
Three primary challenges exist to bring biosimilars to the marketplace.
Regulatory policies and guidance
Navigating through FDA requirements and procedures can be complex and confusing. Decisions still need to be made on how to name and label biosimilar products. The good news is that the American Patients First Blueprint has made it a priority to make biosimilars available to patients.
Confusion among patients and providers
Providers and patients are not entirely clear on how biosimilar adoption is actually taking place. And providers may still be unsure how to integrate biosimilars into their clinical practice and how to avoid unclear information on safety and efficacy.
The concept of interchangeability may be the most significant hurdle to overcome. Interchangeability legally allows a pharmacist to substitute a biosimilar for a brand name product. Almost every state has adopted a policy regarding interchangeability, but there is still more work to be done.
Misaligned incentive and fail first strategies
Payor reimbursement models currently focus on the short-term bottom line. However, the adoption of biosimilars will require a long-term perspective.
Typically, fail first strategies are required by managed care organizations based on rebates from the brand manufacturers. Fail first strategies involve guidelines, pathways, and algorithms that oblige a patient to take a less expensive but equally effective product first before moving on to a more costly or toxic product with higher potential side effects.
However, based on current contracting and rebate models, a payor may require the patient to use a brand product before a biosimilar, even if the biosimilar may be less expensive to the patient downstream. The existing model may be good for the payer and the manufacturer, but may not be as beneficial in the long-run for the patient.
Therefore, from a system standpoint, an optimal long-term balance will need to be reached among payors, manufacturers, patients, and total healthcare costs in the U.S.
What the Future Holds
With 10 approved biosimilars on the market and many more on the way in the next five years, the future looks bright for biosimilars and the potential cost savings they could provide to the U.S. healthcare system.
The first approved biologic in the country now has about a 50% share of the market. And in 2023, two of the most prominent biologic drugs in the world will see new biosimilar competition moving forward.
Adoption of biosimilars in the U.S. may not be happening as fast as it did in Europe, but by no means should that be cause for alarm. The healthcare industry needs to nurture and create the biosimilar market to pay for future innovation, including even more cures for diseases that may evolve in the next five to 10 years.
One thing seems clear. In Washington, there is total alignment across party lines to approve biosimilars and help providers and patients take advantage of these products when they come to market. And a strong impetus from both the current administration, as well as the department of HHS, has committed to accelerating the adoption and approval of biosimilars.