How the Biosimilars Market is Taking Off in the US

Innovative brands need to revisit their biosimilar plans to ensure they can maximize their time over the competition

Kevin Baruzzi

Kevin Baruzzi

Managing Director, Advisory

Ben Doran, MSc

Ben Doran, MSc

Vice President, Intelligence & Insight

Introduction

There has been a recent boost in the popularity of biosimilars in the US, with the FDA approving 28 biosimilars for use in the US market. Although the initial launch of biosimilars did not have a significant impact, it is a fast-growing sector, with nearly 20% of the market converting to biosimilars each year.

As a growing trend, the pressure is on for the market to face the realities of biosimilars more quickly. Companies are successfully securing regulatory approvals, and biosimilars are becoming a more popular choice as payers and physicians grow more familiar with them, especially in the oncology market. Buoyed by this success, companies that have perfected a manufacturing process for one biosimilar will seek out more molecules that can be produced using a similar approach. Prescient’s view is that biosimilars can be disruptive for pharmaceutical companies, creating an increasingly competitive marketplace and forcing discounts across some of the most complex molecules.

While not all biosimilars have the same impact, their presence is being felt and pharmaceutical companies need to develop strategies to respond proactively to the shift in the landscape.

In this blog post, we aim to provide an overview of biosimilars: What they are, why they exist, the key regulations that manufacturers must consider, why the market has suddenly become so attractive and the key considerations for originators.

What are biosimilars?

Biologics are complex macromolecules with primary, secondary and tertiary structures and myriad post-translational modifications that affect the pharmacology, immunogenicity and efficacy and safety of the molecule. Biosimilars can be relatively simple peptides, but the biologics that are reaching LoE are becoming increasingly more complex, such as monoclonal antibodies.

Mammalian cell lines are used to produce monoclonal antibodies, and the biological product is considered to be the manufacturing process. Even minute changes in the upstream or downstream manufacturing process can affect the structure of the final product, and therefore its biosimilarity. The benefits of biologics that have been seen to date by patients treated with originator molecules have fundamentally changed the SoC for many indications, making these agents attractive therapeutic modalities. As a result, many of the top-selling drugs are biologics, and the complexity and investment required to manufacture and develop a biosimilar means there is an attractive industry opportunity for capable companies to compete in large markets.

Pharmaceutical companies may develop biosimilars as a means of entering the market, offering a choice of treatments to physicians and patients and a competitive point for payers. The difficulty (and cost of entry into the market) increases with escalating complexity, but there is still a strong business case for doing so in many instances, particularly as approval is an all-but-sure bet, assuming stringent technical standards are met.

Regulations around biosimilars

Biosimilars must conform to the specifications of the original molecule they imitate; therefore, manufacturers and regulators adopt a highly scientific approach based on the FDA’s definition of the reference product:

“(A) that the biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components; and (B) there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity, and potency of the product.” (1)

To comply with the above regulations, biosimilar manufacturers take the approach that biosimilars only need to be:

“as similar to the original product as the original products are to themselves”. (2)

Therefore, it is necessary to procure numerous originator batches from the US and EU and analyze their critical quality attributes (CQAs). The most important attributes are to be determined first, followed by testing for equivalence or fit within a specific quality range.

Once there is confidence in the overall “fingerprint”, the manufacturer will then proceed through non-clinical and clinical development and reduce residual uncertainty (see diagram below).

This technological accomplishment was once considered a gargantuan task, especially considering that biosimilar manufacturers regularly implement process improvements. Today, the concept is proven and multiple high-quality biosimilars with competitive product profiles and potentially lower cost structures than originators have been approved.

Biosimilars succeed in the EU first

There are a number of points to recognize about biosimilars, not least that their impact depends on the geography in which they are released.

In the EU, there are more tender markets and fewer legal concerns over patents, which drives price competition more so than in the US. As a result, biosimilars have the potential to claim a greater portion of the EU market, eventually affecting the process.

For instance, approval of a biosimilar for the rheumatoid arthritis drug Humira led to an almost overnight price drop of 80% for the originator. Britain’s NHS was able to negotiate this new deal as the market suddenly became much more competitive.

While the EU experience may not seem relevant to that of the US market, it is worth highlighting that real-world evidence generated in the EU could be used, in part, to help raise confidence in the biosimilar ahead of its potential US launches.

Indeed, the key controversy is the slow biosimilar market formation in the US and the potential impact on the biosimilar industry. Many large players have publicly deprioritized biosimilar development in the past; however, the tide is rapidly changing.

Biosimilars are starting to gain traction in the US, but challenges remain

While the biosimilars market in the US is somewhat behind that in the EU, it is now beginning to rapidly catch up due to self-funding patients and insurance companies applying downward pressure on prices, as well as new players entering the US market with products that have already been cleared for use by the EU regulators and have been real-world tested in the EU market. In such instances, approval in the US is almost a formality.

While we have started to see successes in the US, biosimilar manufacturers still face many hurdles: More regulatory designations than in the ex-US markets, legal protection around the originator patent estate, payer contracting (especially for drugs under the pharmacy benefit), reimbursement codes, patient services and state legislation around automatic substitution. These challenges have led many to believe there is a slow erosion curve in originator forecasts post LoE.

The greatest challenge to date is that the US market lacks the price sensitivity of some other geographies, and there have been fewer and less impressive discounts offered for biosimilars. While Humira’s 80% price drop in the EU may have received attention, discounts in the US have been a modest 15-30%, figures that have made it easier for originators to get close to the discounted prices by rebating.

As this graph shows, some drug prices are affected more than others and largely depend on the nature of the deals struck between drug companies and payers; however, despite the historical lack of price sensitivity, some biosimilars are starting to gain traction, especially in the treatment of acute diseases. (4)

*Q2’20 sales data through July 3, 2020; monthly rollup based on 4-4-5 calendar. With a launch date of July 6, 2020, AVSOLA data are unavailable at the time of comparison and excluded from the figure.

Source: OBU Customer Data Pack Weekly (IQVIA DDD + Chargeback).

Debates relevant for US biosimilars

Interchangeability – that is, the regulatory designation that will allow substituting a biosimilar for an originator during treatment – remains a theoretical possibility, though at the time of writing, no biosimilar has been licensed for this in the US.

The FDA states: “To support a demonstration of interchangeability, section 351(k)(4)(A) of the PHS Act provides, among other things, that a sponsor must show that the proposed interchangeable product ‘is biosimilar to the reference product.’ Where a product is first licensed as a biosimilar, that licensure may be referenced to support a showing for this statutory criterion for demonstrating interchangeability.” (3)

Again, not all biosimilars are equal in the hurdles they must overcome to reach the standard of interchangeability; the FDA gives an example of “products with a documented history of inducing detrimental immune responses may require more data to support a demonstration of interchangeability than products with an extensive documented history that immunogenicity does not impact clinical outcomes”.

The pathway to interchangeability for biosimilars requires additional trials; we anticipate that these will soon become a more common practice, creating opportunities for biosimilar manufacturers to differentiate from their peers and switch patients from originators to biosimilars for “non-medical” reasons where states permit.

However, the return on investment for an interchangeability study is in question. It is assumed that the automatic substitution opportunity is limited because of individual state legislation; therefore, the commercial opportunity to meaningfully differentiate from other biosimilars and instill confidence in physicians who would not otherwise prescribe a biosimilar is unclear.

Commercial models have been another area of considerable debate. Invest in a branded approach and go toe-to-toe with the originators and all the brand equity they have built over multiple years, or take a more generic approach focusing on key account strategies with a lean team.

Product strategy is another key consideration for aspiring biosimilar manufacturers looking to disrupt in ways not previously considered. Manufacturers must decide whether to invest in the product profile, explore new opportunities not pursued by the originator and/or leverage with a portfolio of novel therapies, including potential co-formulations.

Conclusion

The opportunities for new entrants in the US biosimilars market should make originators pay attention and consider their next moves as biosimilar entrants begin to accumulate, stakeholders gain confidence and prices or shares decrease.

For pharmaceutical companies with original molecules, awareness is increasing around the threat that they present in a market that is becoming more competitive. The response should be to return to the strategy of the drug life cycle to ensure an approach that maximizes the value of the drug remains, despite the new circumstances.

A major strand of such a strategy should be the patient experience and how to deliver value to the end user that goes beyond the composition of the molecule itself and potentially advances the SoC more broadly.

Sources

(1) BCPIA act (link).
(2) “The State of the Art in the Development of Biosimilars.” Clinical Pharmacology & Therapeutics, Volume 9, Number 3, March 2012 (link).
(3) FDA. “Considerations in Demonstrating Interchangeability With a Reference Product: Guidance for Industry.” (September 2020). (link)
(4) Amgen 2020 Biosimilar Trends Report (link).

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