Although the cost of branded drugs in the US tends to be much higher than in the rest of the world, there is a compensatory steep drop in price once market exclusivity ends. Thus in the US we see generic drug prices often reduced by as much as 90% or more, with uptake then rising accordingly. Nine out of ten drugs sold in America are generic.
It’s not a perfect system. Sometimes prices fall so low manufacturers lose interest. For example, a shortage of the cancer drug vincristine occurred recently when Teva stopped making it and then subsequently the sole remaining manufacturer, Pfizer, had a distribution delay.
But for the most part, the feast-and-famine cycle of the US market has been viewed as a success. In the early days of the Trump administration, then-FDA commissioner Scott Gottlieb made a point of clearing the way for even faster and more generic approvals, again with some apparent success.
Fiscal year 2019 saw the agency approve 1,171 generics, breaking its record of 971 the previous year, according to the FDA. First-to-market generics included medicines for opioid overdose, pulmonary arterial hypertension, breast cancer, seizures, depression and various infections. Generics saved the US healthcare system an estimated $293bn in 2018.
A decade ago, policymakers tried to use generics as an exemplar for fostering competition in the biologics market. The Biologic Price Competition and Innovation (BPCI) Act sought to turn biosimilars into the ‘generics’ of costly biologics.
That didn’t happen. Although to date the FDA has approved 25 biosimilars, only a handful have made it to market, and the level of price competition they have engendered has been negligible. They are viewed more as ‘me too’ drugs rather than as just-as-good alternatives to branded products.
In the US, biosimilars face a complex web of barriers: red tape, dubious litigation, anti- competitive contracting, fearmongering, and patient and practitioner misunderstanding – while in the rest of the world they are surging forward with great success.
Commitment issues
By most estimates, the US is about a decade behind the EU in terms of adopting biosimilars, with 90% of all global biosimilar sales occurring in EU countries, even though 60% of all biologic drug sales occur in the US. As of early 2019, the EU had approved 53 biosimilars for 15 reference drugs.
Not every European country is fully committed to fast-tracking biosimilars (France and Italy are holdouts), but most EU countries view them as safe and efficacious competitors to their reference products. Notably the biosimilar Renflexis (infliximab-abda) achieved a 70-80% price reduction to its reference product in both Norway and Denmark. Large biosimilar discounts have also been realised in the Netherlands, Poland, Spain and the UK.
The UK has been especially proactive with biosimilars. Three biologics there – infliximab, rituximab and etanercept –underwent an average price reduction of 40% when their biosimilars were introduced. After the launch of the biosimilar for rituximab, UK hospitals reportedly switched more than 95% of their patients to it in the space of just six weeks.
As prices in the US continue to spiral out of control, we can only look on with envy. Gottlieb, in remarks made at the release of the FDA’s Biosimilar Action Plan (BAP) last year, said that single entrant biosimilars in other countries lowered prices by an average 30% relative to the reference drug. When three or four biosimilars entered the market, that figure rose to 35-43%.
Based on those assumed savings, had all the FDA-approved biosimilars been successfully marketed, the US healthcare system would have saved $4.5bn in 2017, Gottlieb noted. One study suggests nearly $60bn in savings would be achievable over the next decade, but only if the US can figure out a way to overcome biosimilar market barriers.
Second best
One of those barriers is legal challenges, according to Lovisa Gustafsson, an assistant vice president at the Commonwealth Fund, a healthcare foundation. “The drug companies apply for new patents over and over again,” she said. “It leads to very long periods of exclusivity that are essentially monopolies during which the biosimilars can’t come to market.”
So, for example, AbbVie applied for 247 new patents for adalimumab and was granted 132, even though no significant changes had been made to the rheumatoid arthritis drug.
Jeremy Sharp, managing director of the consulting firm Waxman Strategies, sees patent litigation as the biggest roadblock to biosimilars reaching the market. “If you go through all the biosimilars the FDA has approved, a shocking number of them are in litigation,” he said.
“The drug companies are getting what they want out of this, which is a delay,” Sharp added. “It’s worth it to them even if they lose in the end.”
US courts have ruled that some of the patent suit settlements amount to ‘pay-for-delay’ deals, in which the maker of the branded drug is essentially paying a potential biosimilar or generic manufacturer to stay out of the market. The Federal Trade Commission (FTC), which has broad powers to regulate business practices, estimates these anti-competitive deals cost consumers $3.5bn a year, and they delay the availability of small-molecule generics by an average of 17 months.
Manufacturers also disseminate misleading information about biosimilars that sometimes constitutes fearmongering. Last year Pfizer petitioned the FDA to step in when a rival’s website stated that ‘the FDA requires a biosimilar to be highly similar but not identical to the [reference product]’, without qualifying that they must also have no ‘clinically meaningful’ differences from the branded drug.
Pfizer also cited a Janssen brochure that allegedly implied the biosimilar Inflectra is not interchangeable with Remicade and may pose a safety risk. Additionally, a YouTube video sponsored by Amgen questioned the safety of biosimilars.
It was widely thought payers would be the biggest champions of biosimilars, but that has not occurred either. Many branded products have managed to retain their market share by offering volume-based rebates or bundling other discounted products, and making those discounts contingent on purchasing the branded biologic. With most US biosimilars priced 10-20% lower than the branded product, it may still be cheaper for payers to stick with reference products, given these other inducements.
And finally there is the issue of interchangeability. In a move unique to the US market, the BPCI created two pathways for approval: an abbreviated one that offers faster access to the market, and a more rigorous process for biosimilars that wish to be considered ‘interchangeable’ with the branded product. As of yet, no drug has attained interchangeable status.
This has turned out to be a fatal flaw for biosimilars in the US, since what self-respecting American consumer wants to be stuck with a second-best product? 45 of the 50 state governments plus Puerto Rico have passed ‘anti-substitution laws’ that make it difficult to replace a branded drug with a non-interchangeable biosimilar. Insurance plans often mandate that
a patient must fail to respond to a branded drug before a biosimilar can be prescribed.
New and complex
In his BAP remarks, Gottlieb said the federal government would be taking steps to challenge the anti-competitive tactics of drugmakers, including new efforts to coordinate with the FTC.
According to Michael A Carrier, a distinguished professor at Rutgers Law School, “the FTC has played a leading role in challenging ‘pay for delay’ settlements for two decades”. The latest example involved Endo Pharmaceuticals paying Impax Laboratories $112m to delay selling a generic version of Opana ER. The FTC has also made legal arguments against the practice of denying drug samples to generic manufacturers that need them to conduct parity studies, Carrier said.
Others call for more involvement from equally relevant and powerful government bodies, such as Congress, the Centers for Medicare and Medicaid Services, the US Patent and Trademark Office and the US Department of Justice.
In addition to restraining anti-competitive practices, biosimilar proponents have suggested more financial incentives, such as cost-sharing policies or waiving co-pays, as well as educational programmes aimed at both practitioners and patients that emphasise the solid safety record biosimilars have accumulated around the globe.
Some just counsel patience. After all, it took a decade or so for small-molecule generics to take off, according to Bob Pollock, of Lachman Consultants, a 46-year industry veteran: “Healthcare providers and patients are being cautious. What else would you expect with something new and complex? I believe it will improve, but only after physicians see sufficient experience that bears out that biosimilars are as safe and effective as their brand name counterparts.”