France's recent legislation that allows for biosimilar substitution is one of the latest and strongest signals that healthcare payers worldwide are prepared to take substantial steps to ensure the uptake of the next wave of biosimilars. Driving this behavior is the alluring healthcare savings on offer (which we estimate will exceed $14 billion in 2022 in the G7*), particularly from biosimilars of some of the most costly therapies in the next one to three years, at a time when nations around the world need to reduce drug budgets due to economic austerity.

Biosimilar detractors who base expectations of the performance of future biosimilar products on the relatively poor market penetration of the first wave of biosimilars (ESAs, G-CSFs and hGHs) in some European markets and the relative lack of concerted effort on the part of payers to promote them, are in danger of overlooking key emerging drivers which make drawing analogies with the past a risky prospect.

The next wave of biosimilars includes biosimilars of the most burdensome products currently occupying payer drug budgets, namely immune and oncology monoclonal antibodies. Payers therefore have a much greater incentive to drive the uptake of biosimilars than was previously true, even if difficult reform is needed at a national level.  Furthermore, delaying action isn't an option since population demographics in the mature markets mean that the number of patients requiring these biologics is only going to incease in the future.

Payers have also grown progressively more sensitive to pharmaceutical pricing since the economic crash of 2008 and resulting global economic austerity.  Cost-containment is widespread and the use of health technology assessments is on the rise. In Europe, risk-sharing schemes have often become necessary to gain market access and reimbursement for innovator medicines. It stands to reason that when given the option of a cheaper biosimilar, these price-sensitive payers will choose to favorably reimburse the biosimilar over the reference brand product.

Article 47 of the 2014 French Social Security Financing Law, which allows for limited pharmacy-level substitution, highlights how payers are increasingly willing to use measures to drive biosimilar uptake. French pharmacists will be able to substitute a branded biologic for a biosimilar when the following conditions are met:

  • The patient is initiating treatment (i.e. is treatment naïve)
  • The biosimilar belongs to the same similar biologic group as the prescribed biologic
  • The physician must not have prohibited substitution by marking the substitution as non substitutable

The actual implementation of Article 47 will be dependent on decrees from the French Council of State with several unresolved questions including how similar biologic groups will be drafted and how treatment-naïve patients will  be defined. These issues and others were discussed in-depth during Decision Resources Group. Biosimilars Advisory Service's 2014 Q1 webinar.

Even with the limitations imposed; these changes are a substantial shift from France's previous position which prohibited pharmacy-level substitution for biologics. The French government was explicit about what drove this change - healthcare savings. An impact study carried out before the legislation was passed singled out the high cost of immune and oncology biologics nearing patent expiry. The study estimated that the French state stood to benefit from savings of 50 million by 2017 through pharmacy-level substitution of biosimilars introduced under Article 47. Furthermore, Article 47 may just be the spearhead of French efforts to improve biosimilar uptake. The study discussed other non-legislative measures to increase biosimilar uptake that could yet be tried, including educating physicians on biosimilars and the publication of cost-effectiveness recommendations for classes of drugs including biosimilars by the French National Authority for Health.

In Europe, France isn't alone in looking to biosimilars to generate healthcare savings. The Italian Medicines Agency (AIFA) recently stated that physicians should consider preferentially prescribing biosimilars to treatment-naïve patients, if it generates savings for the Italian National Health Service. Furthermore, in Germany, there are ongoing discussions to enact additional measures to increase biosimilar uptake, including the use of increased quotas. The Norwegian government is even planning to fund a clinical study to influence physician prescribing behavior when it comes to biologics. This study will look to switch patients from the reference biologic to a biosimilar in order to improve physician and patient confidence in biosimilars, and to encourage the switching of patients already managed on the reference brand.

Most importantly, in the United States, the world's largest biologics market, an appetite to reduce drug expenditure is evident. It is not a coincidence that the abbreviated biologics pathway that allows the FDA to approve biosimilars was a result of the Affordable Care Act, which had the central aim of reducing the growth of healthcare expenditure in the United States. In fact, the U.S. government is seemingly still struggling with what the period of data exclusivity should be for innovator biologics. President Obama's proposed 2015 budget seeks to shorten data exclusivity from the current 12 years to seven years and prevent additional years of exclusivity being granted for formulation changes, all to ensure biosimilars are available earlier and the ensuing competition drives down drug prices.

The message is clear:  Innovators beware - biosimilars are coming and this time they might get more than a little help from powerful friends.

Anees Malik is a senior business insights analyst on of the Biosimilars Advisory Service team at Decision Resources Group.

* The United States, Japan, Germany, France, UK, Italy, and Spain.

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