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In the rapidly evolving biopharmaceutical industry, biosimilars have emerged as significant disruptors, offering cost-effective alternatives and increased patient access to expensive and advanced biologic therapies. 2024 marks the tenth-year anniversary of the introduction of biosimilars to the US healthcare system, and their impact has been profound. Thus, it is crucial to understand how biosimilars have strategically reduced healthcare costs, enhanced patient access to therapies, and forced manufacturers to navigate the competitive and regulatory landscape to maximize market share and profitability. Concurrently, we aim to explore the evolving landscape of biosimilars, providing a comprehensive overview of their current market dynamics and development, key drivers, and future trends. By understanding the current and future state of biosimilars, stakeholders in the pharmaceutical, biotech, and healthcare sectors can better navigate this complex and rapidly growing segment of the market.
Highlights in the Biosimilar Market
The first biosimilar approved in the US was Zarxio (filgrastim-sndz), developed by Sandoz and approved in March 2015. Zarxio has the same mechanism of action, route of administration, strength, and dosage form as Amgen’s Neupogen, which is used to treat neutropenia associated with chemotherapy. Since then, a further 56 biosimilars have received FDA approval, with 12 of those approved in 2024 as of the end of July (1). While just over half of the approved biosimilars are cancer treatments, there is a growing number of approved biosimilars for autoimmune diseases. This rapid expansion of biosimilars in the market has resulted in substantial cost savings for patients. Since the launch of Zarxio, biosimilars have been estimated to have saved patients more than $23.6 billion, with average sales price for biosimilars 50% lower than the reference brand biologic price at the time of the biosimilar launch (2).
Humira's Market Resilience despite Biosimilar Competition
Humira, a blockbuster drug with annual sales exceeding $20 billion at its peak, saw its exclusivity expire in 2023, leading to the development and approval of 10 adalimumab biosimilars. Despite this explosion of biosimilars, Humira has maintained a dominant market share of 96% as of February 2024 (3) (though their market share has declined to 81% following formulary list changes from PBMs in April which we will cover shortly), in stark contrast to Avastin and Herceptin, whose market shares declined to 40% following their biosimilar introduction (4). This varying degree of market capture illustrates how biosimilar adoption should not be considered any guarantee. Hence, it is imperative to explore the factors that influence the appetite for biosimilars.
Despite this explosion of biosimilars, Humira has maintained a dominant market share of 96% as of February 2024
Impact of Indication on Biosimilar Uptake Rates
Biosimilar uptake seems to vary significantly between oncology and non-oncology indications. As previously highlighted, Humira (non-oncology) has maintained a higher market share compared to Avastin and Herceptin (oncology) despite the introduction of their biosimilars. To further exemplify this, Rituxan and rituximab biosimilars are one of the few biologics that targets both oncology and non-oncology indications. A study assessed the utilization of rituximab reference biologic and its biosimilars across oncology and non-oncology indications and found that the rate of dispensation of rituximab biosimilars for oncology was greater than its non-oncology counterpart, and that the drop in dispensation for the rituximab reference biologic in oncology occurred roughly two quarters earlier than in its non-oncology use (5).
An underlying cause for this discrepancy could be attributed to clinical considerations. Biosimilars that target oncology indications, such as bevacizumab (Avastin) and trastuzumab (Herceptin), seem to have a relatively swift adoption not only due to the high cost of cancer therapies and the urgent need for cost-effective alternatives, but also the acute nature of the disease and the prospect of frequent switching between treatment options. However, non-oncology biosimilars, such as adalimumab (Humira) which often target chronic conditions, have longer treatment plans and thus may face greater patient and physician resistance to switching to a biosimilar especially during the treatment plan over concerns with long-term efficacy, immunogenicity, and disruptions to the progress already achieved.
It is further worth noting that differences in reimbursement policies and payer practices, such as rebate and contracting dynamics, between oncology and non-oncology therapies further contribute to the varying uptake rate of oncology and non-oncology biosimilars. Thus, exploring the impact biosimilars have on providers, patients and payors is crucial in understanding the factors affecting the rate of biosimilar uptake.
Provider and Patient Perception
One key factor is provider and patient perception on the use of biosimilars. Even though biosimilars still go through rigorous clinical trial testing and post-approval monitoring standards set by the FDA, there is still an air of hesitancy towards the use of biosimilars amongst providers and patients. Research has shown that there has been an overall lack in positivity towards biosimilars amongst healthcare providers, healthcare regulatory practitioners, and patients with only 18.2%, 14.6%, and 23.5% showing positive attitude respectively (6). This lack of positive sentiment is further exacerbated when comparing provider and patient perception towards generics which stands at a positive sentiment of 64% and 69.8% respectively (7,8). While generics have been around for a longer period of time, which may lead to its more positive sentiment with providers and patients, it is still crucial to increase the awareness of biosimilars and advocate for their use to ensure patients and their care teams have all the necessary information to best guide their treatment plan not only from a clinical, but a financial perspective as well.
The Role of the ‘Interchangeability’ Status in Biosimilar Adoption
A further barrier for biosimilars is contingent on whether the biosimilar of choice is designated as ‘interchangeable’. This designation allows patients to switch to a biosimilar from a reference biologic at the pharmacy without the need for a prescription. To attain an interchangeable status, biosimilar manufacturers must navigate a web of federal and state regulations and additional clinical studies. Out of the 57 FDA-approved biosimilars, 14 have the interchangeable designation (9). However, interchangeable biosimilars are not superior to non-designated interchangeable biosimilars in any circumstance. Some biosimilars are better suited to be ‘interchangeable’ based on where they are dispensed. Since biologics and biosimilars are typically administered either by injection at a pharmacy or intravenously by a healthcare professional, designating biosimilars as interchangeable, particularly for those administered at the pharmacy, could ease the substitution process.
Navigating Payors and Pharmacy Benefit Managers (PBMs)
Given that biosimilars provide cost-effective alternative to its reference biologic, it is crucial to understand where payors and PBMs play a role in the distribution and access of biosimilars. However, before exploring the role of payors and PBMs, we must first look at how biosimilars are often priced.
A dual-pricing tactic has been deployed in numerous biosimilars over the past couple of years by the likes of Boehringer Ingelheim, Amgen, Biocon, and Viatris. This strategy involves the release of a branded biosimilar and an identical unbranded biosimilar each with its own unique pricing strategy (10). The branded biosimilar is priced at a higher wholesale acquisition cost (WAC), whilst the unbranded biosimilar is priced at a lower WAC. Biosimilars with a higher WAC have a smaller discount compared to their reference biologics, whereas those with a lower WAC provide a larger discount. This pricing tactic caters to different payors: price-sensitive plans like Medicare and Medicaid prefer the lower WAC biosimilars, while PBMs and commercial plans, who have rebates to consider, may prefer the higher WAC biosimilars to maintain their margins (11). This dual pricing approach significantly influences the uptake of biosimilars by catering to the varying economic incentives of different payors.
Further, formulary restrictions imposed by PBMs further complicate the landscape for biosimilars. PBMs play a critical role in determining which medications are covered by insurance plans, and their formulary decisions can significantly impact the accessibility and uptake of biosimilars, regardless of the needs of the providers and patients. While Medicare and Medicaid programs tend to accept all biosimilars, it is more common for commercial payors to favor reference biologic or high WAC biosimilars (4).
As it stands, PBMs hold most of the power when it comes to access of medication. In November 2023, CVS Caremark announced a major reshuffling of preferential drugs on their formulary starting January 2024. 25 medications were removed and 30 were added, and many of these were swaps of reference biologics for competing biosimilars (12). While CVS has continued to expand access to biosimilars, this raises the question of how much power should PBMs have. By determining what biosimilars are available for their patients, PBMs do not only limit the decision making of providers and patients, but directly impacts the commercial success and uptake of a biosimilar.
To learn more about the role of PBMs in the larger scope of the Healthcare Industry and Drug Supply Chain, we encourage you to read our blog post on PBMs here.
Undeniably, there is growing pressure for PBMs to act in the best interest of the public, and recent months have shown that. In January 2024, CVS Caremark announced the removal of Humira from their major national commercial template formularies starting April 2024, opting for the inclusion of Humira biosimilars (13). As a result with the ten biosimilars that are currently on the market, US Humira market share has declined from 96% to 81% (14). This shift reflects a broader change in PBMs’ perception of biosimilars, recognizing the importance of their role to provide cost-effective treatments and improve patient access, and in ultimately affecting the wider uptake of biosimilars.
Impact of the Inflation Reduction Act on Biosimilars
The Inflation Reduction Act (IRA) will significantly shape the future of biosimilars, impacting market dynamics, pricing, and accessibility. One provision that directly impacts biosimilars is the increased reimbursement for biosimilars in Medicare Part B. Most Part B drugs are reimbursed at 106% of the drugs Average Selling Price (ASP); however, the IRA has increased this reimbursement to 108% for biosimilars in hopes of incentivizing providers to make the switch. This provision ultimately allows increased reimbursements of biosimilars for a period of 5-years until December 2032 (the provision allows biosimilars to adopt this increased rate of reimbursement no later than December 2027) (15).
Further, while the implication of the IRA on Medicare Part D does not directly impact biosimilars, the redesign of the benefits of the plan will create ripple effects in the potential uptake of biosimilars. Figure 1 summarizes the changes the IRA has implemented to the stakeholders involved in Medicare Part D.
Figure 1. Full Breakdown of Costs for Medicare Part D Stakeholders at each Coverage Phase Pre- and Post-IRA (16)
Prior to the redesign put forth by the IRA, the benefits of Medicare Part D heavily favored Plan Sponsors who have a lower liability at the higher end of the coverage phase. The combination of no limit out of pocket costs for patients and higher liability from Medicare incentivized Plan Sponsors to encourage patients to reach the catastrophic phase as soon as possible. This resulted in unnecessarily high costs for both patients and Medicare primarily through maintaining high list prices for biologics and favoring high-cost reference biologics over biosimilars. However, the redesign of Medicare Part D Benefits increases the liability of Plan Sponsors by having high-cost shares in both the Initial and Catastrophic coverage phase. This shift and additional pressure are absorbed by Plan Sponsors who may potentially encourage patients to move away from higher priced biologics and favor biosimilars.
Looking at the European Union for Inspiration?
The European Union’s success in navigating the biosimilars space offers valuable insights for improving biosimilar uptake in the US. Since the approval of the first biosimilar in the EU in 2006 (nearly a decade before the US’s first biosimilar approval in 2015) European countries have implemented a range of strategies that have driven higher uptake rates (17).
Here are key differences in approaches to biosimilars between the US and EU (18):
Single Payer System and Calls for Tenders
Unlike the US’s fragmented healthcare market with many stakeholders and intermediaries, the EU has a single-payer healthcare system which eliminates the needs of PBMs and plan sponsors. As a result, the EU’s approach to biosimilar acquisition practices and pricing is different. Procurement of biosimilars in the EU is driven by tenders and are often awarded to the manufacturer who offers the lowest price. Given the breadth and complexity of the US healthcare system, it is extremely unlikely to revert to a single-payer healthcare system. However, could there be room to promote competition between biosimilar manufacturers by incorporating calls for tenders in the US.
Competitive Patent Landscape
The patent landscape in the EU is considerably different from the US. The combination of shorter patent durations of original biologics and weaker patent defense and barrier protections from manufacturers promotes competition from multiple biosimilars and allows biosimilars to reach the market sooner. This raises the question of whether there is a need to revisit the patent landscape in the US that maximizes benefits for all stakeholders involved.
Removal of the ‘Interchangeable’ Designation
The FDA designation of ‘interchangeable’ biosimilars for the US market, does not have an equivalent in the EU. It can be inferred that this special designation adds a layer of complexity that does not benefit any of the stakeholders involved, but rather adds further confusion and misunderstanding. Accordingly, as part of President Biden’s budget proposal for fiscal 2025, he had looked to remove the interchangeability status in hopes to increase and streamline biosimilar awareness and uptake. If the proposal is accepted, all biosimilars are deemed interchangeable with their reference product upon approval (19).
The View from the Crow’s Nest
It is evident that there is a significant tailwind propelling biosimilars to wider adoption in the US. With recent regulatory changes aimed at reducing the cost of healthcare, biosimilars are likely to play an important role in achieving that. Whether directly through encouraging patients and their care teams to switch to biosimilars or the mere threat of biosimilars reeling in the cost of reference biologics, it is certain that biosimilars will continue to gain market share. In particular, changes proposed from the Inflation Reduction Act places greater liability on plan sponsors that would encourage them to increase the utilization of biosimilars over their reference biologic counterpart. PBMs and Brand manufacturers have also began shifting their focus on biosimilars, evident through the changes put forth by CVS Caremark in early 2024, and in July 2024 Boehringer Ingelheim’s partnership with GoodRx to sell their Humira biosimilar at a 92% discount on their platform (20). These dynamics collectively ensure that the value of biosimilars are being realized and that their use will continue to grow and play an important role in the outlook of the US Healthcare system.
Lastly, with 12 blockbuster biologics having biosimilars in the pipeline (21), their market influence and how best to navigate new market entrants is crucial to maximize the lifecycle management of both biosimilars and their reference biologics. As the biosimilar landscape continues to evolve, stakeholders must remain adaptable and informed to leverage the full potential of these cost-effective alternatives.
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