Faced with the onslaught of high-cost specialty drugs a reality brought to the fore by the high-priced hepatitis C drug Sovaldi many plan sponsors no doubt heaved a sigh of relief at the first U.S. filing for approval of a biosimilar last month.
But for every shred of hope pinned on the ability of biosimilars to moderate the rising specialty drug trend, there's a counterbalancing dose of reality that gives payers pause when planning for meaningful cost savings from these biologic imitators.
Managed care pharmacists and benefit specialists were cautioned about the limitations of the biosimilar movement during a panel session at the Pharmacy Benefit University conference near Chicago in early August.
What made the discussion particularly topical was the announcement a couple of weeks earlier that Sandoz, the generic pharmaceuticals division of Novartis, filed the first U.S. license for a biosimilar under the FDA's biosimilar pathway. The approval process for filgrastim which references Amgen's neutropenia drug Neupogen is expected to take at least 10 months, said Stephen Cinchy, managing director of Monarch Specialty Group, a healthcare consulting firm.
The Affordable Care Act directed the FDA to develop a pathway for development of biosimilar versions of biologically produced pharmaceuticals. Although the guidelines are still in draft form, companies are free to pursue biosimilar development through what's known as the 351(k) pathway. This path is untested in the United States and greatly differs from the generic pathway for traditional drugs.
Because biologics are large, complex molecules that are manufactured in living cells, they cannot be copied identically, as is the case with traditional small-molecule drugs. Biosimilars must meet the standard of being highly similar to the originator product, with no clinically meaningful difference to the patient, explained Gary Okano, director of biotechnology engagement for Amgen.
Aside from defending Neupogen from biosimilar competition, Amgen is among the pharmaceutical companies racing toward biosimilar development to meet the demand for lower-cost specialty drugs. Amgen is pursuing biosimilar alternatives to high-profile rivals Humira and Remicade in the rheumatoid arthritis space.
Based on biosimilar products expected to launch through 351(k), and their impact on referenced branded drugs, Decision Resources Group's Biosimilars Advisory Service forecasts that healthcare savings will reach nearly $9 billion annually in the United States by 2022.
However, payers cannot count on the up-to-80-percent savings in drug costs they have experienced with generics. Because biosimilars face much higher costs of production including the requirement of clinical trials the projected price difference between biosimilars and their reference products are more in the 15 percent to 30 percent range. That's not to mention the expensive legal patent and market access battles that lie ahead.
Monarch's Cinchy told conference-goers that companies marketing the innovator products are ready to pull out the big guns to keep biosimilars at bay. The list of tools and weapons that they're going to be essentially assembling to respond to biosimilars is deep and wide, he said.
Plan sponsors can expect that companies will sweeten the rebate pot to protect the market share of innovator products. Many of the innovator products today have rebates, Cinchy said. If a biosimilar comes forward with a price discount, but no rebate, the net difference, if I push through a biosimilar, might be zero or something much less than the face value of that discount.
Meanwhile, companies are defending their branded specialty drugs by introducing new formulations which Cinchy termed bio-betters that make the drug more attractive to the patient, for instance, through less-frequent dosing.
There are other unknowns that constrain the potential of the biosimilar market, including safety concerns, the yet-undetermined naming convention for biologics, and whether states will pass laws to allow pharmacies to automatically substitute reference products with approved biosimilars.
In addition, getting patients to embrace biologic alternatives will take a huge educational effort, considering payers have struggled to get them to embrace generics. Physicians appear ready to prescribe biosimilars, according to Decision Resources Group. The majority of U.S. specialists that we've surveyed expect to use biosimilars, but the rate and depth of their acceptance is highly variable by specialty and even the specific biologics that they prescribe, said Kate Keeping, DRG senior director of biosimilars research.
Whatever the obstacles, the biosimilar train has left the station and is gaining speed. It may deliver plan sponsors from the imposing crush of specialty drug costs, and they will be sure to get on board so as not to miss any opportunity to tame costs that are rising by double-digit rates each year.
Follow Chris Lewis on Twitter @ChrisLewisDRG