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The Economic Impact of Biosimilars on Healthcare

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By: Devika Kapuria, MD

          Biologic drugs, also defined as large molecules, are an ever-increasing source of healthcare costs in the US. In contrast to small, chemically manufactured molecules, classic active substances that make up 90 percent of the drugs on the market today, biologics are therapeutic proteins that undergo production through biotechnological processes, some of which may require over 1000 steps. The average daily cost of a biologic in the US is $45 when compared with a chemical drug that costs only $2. Though expensive, their advent has significantly changed disease management and improved outcomes for patients with chronic diseases such as inflammatory bowel disease, rheumatoid arthritis and various forms of cancer. Between 2015-2016, biologics accounted for 20% of the global health market, and they are predicted to increase to almost 30% by 2020. Worldwide revenue from biologic drugs quadrupled from US $47 billion in 2002 to over US $200 billion in 2013.

The United States’ Food and Drug Administration (FDA) has defined a biosimilar as a biologic product that is highly similar to the reference product, notwithstanding minor differences in clinically-inactive components, and for which there are no clinically meaningful differences between the biologic product and the innovator product in terms of safety, purity and efficacy. For example, CT-P13 (Inflectra) is a biosimilar to infliximab (chimeric monoclonal antibody against TNF-α) that has recently obtained approval from the FDA for use of treatment of inflammatory bowel disease. CT-P13 has similar but slightly different pharmacokinetics and efficacy compared to infliximab. With many biologics going off patent, the biosimilar industry has expanded greatly. In the last two years alone, the FDA approved 4 biosimilar medications: Zarxio (filgrastim-sndz), Inflectra (infliximab-dyyb), Erelzi (etanercept-szzs) and Amjevita (adalimumab-atto).

Unlike generic versions of chemical drugs (small molecules that are significantly cheaper than their branded counterparts), the price difference between a biosimilar and the original biologic is not huge. This is due to several reasons. First, the development time and cost for biosimilars is much more than for generic medications. It takes 8-10 years and several hundred million dollars for the development of a biosimilar compared to around 5 years and $1-$5 million for the generic version of a small molecule drug. With only single entrants per category in the US, biosimilars are priced 15-20% lower than their brand name rivals, which, though cheaper, still amount to hundreds of thousands of dollars. By the end of 2016, the estimated global sales from biosimilars amounted to US $2.6 billion, and nearly $4 billion by 2019. Estimates for the cost savings of biosimilars for the US market are variable; the Congressional Budget Office estimated that the BPCI (Biologics Price Competition and Innovation) Act of 2009 would reduce expenditures on biologics by $25 billion by 2018. Another analysis from the Rand Corporation estimated that biosimilars would result in a $44.2 billion reduction in biologic spending between 2014 and 2024.

In the United States, a regulatory approval pathway for biosimilars was not established till the Patient Protection and Affordable Care Act of 2010. However, biosimilars have been used in Europe for over a decade, and this has led to the development of strategies for quicker adaptation, including changes in manufacturing, scaling up production and adapting to local healthcare policies. These changes have led to a competitive performance of biosimilars in the European market, with first generation biosimilars taking up between 50-80% of the market across 5 European countries, with an expected cost savings of $15 to$44 billion by 2020. One example that demonstrates a significant discount involves the marketing of Remsima, a biosimilar of Remicade (infliximab). In Norway, an aggressive approach towards marketing of Remsima was adopted with a 69% discount in comparison to the reference product. After two years, Remsima has garnered 92.9% of the market share in the country.

The shift to biosimilars may be challenging for both physicians and patients. While safety concerns related to biosimilars have been alleviated with post marketing studies from Europe, there still remains a significant lack of awareness about biosimilars amongst healthcare providers, especially about prescribing and administering them. Patient acceptance remains an important aspect as well, with several patients loyal to the reference brand who may not have the same level of confidence in the biosimilar. Also, like with generics, patients may believe that biosimilars are, in some way, inferior to the reference product. Increased reporting of post marketing studies and pharmacovigilance can play a role in alleviating some of these concerns.

In 2015, the FDA approved the first biosimilar in the US, after which, it has published a series of guidelines for biosimilar approval, under the BPCA act, including demonstrating biosimilarity and interchangeability with the reference product. This includes a total of 3 final guideline documents and 5 draft guidance documents. Starting in September 2017, the World Health Organization will accept applications for prequalification into their Essential Medication list for biosimilar versions of rituximab and trastuzumab, for the treatment of cancer. This program ensures that medications purchased by international agencies like the UNICEF meet standards for quality, safety and efficacy. Hopefully, this will increase competition in the biosimilar market to reduce price and increase access to medications in low-income countries.

Both human and economic factors need to be considered in this rapidly growing field. Increasing awareness among prescribers and patients about the safety and efficacy of biosimilars as well as improving regulatory aspects are essential for the widespread adaptation of biosimilars.

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Written by sciencepolicyforall

July 19, 2017 at 10:42 am

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