Biosimilars Are Back: Plan Now or Prepare to Fail
The slow uptake of biosimilars in the US market may have lulled some pharmaceutical companies into a false belief that they present no threat to the status quo; this mistake could be expensive.
The launch of infliximab biosimilars in 2016 and 2017, which were among the first biosimilars to reach the US, did not go as expected. Unlike the success of biosimilars in the EU, very limited uptake was seen in the US, and HCPs kept a distance from the new products.
Originator biologic companies may feel they have had a lucky escape and that biosimilars, for whatever reason, are practically a non-starter in the US. Could this be a false sense of security? We decided to look at the facts.
Wave one: False start from 2016 to 2019
One of the big questions to ask is why biosimilars took off in the EU rather than the US. There are a number of factors.
First, single-payer healthcare systems in the EU make tendering of biosimilar contracts relatively simple, leading to immediate and significant uptake. By contrast, the US healthcare system is more complicated and less centralized, presenting a fragmented system where volume of use is a major determinant of willingness to contract. This created an environment where uptake was sluggish from the beginning.
Economic issues also came into play: Healthcare providers are reimbursed ASP +6% through Medicare Part B. This may incentivize prescribing more expensive originator products over biosimilars due to higher reimbursement, though it could result in a higher patient cost burden as well. While legislation that is currently being considered may change the reimbursement methodology, at the time of wave one, this was a significant issue.
Furthermore, biosimilar discounts at launch were not attractive enough to offset contracts and rebates being offered by originator companies, which already had long-established relationships with payers. In the EU, the availability of multiple biosimilars on the market put further pressure on originator brands to improve their offers, creating price gaps that were too good for some buyers to ignore.
Lastly, there has historically been an overall lack of awareness and confidence in biosimilars among the US healthcare providers and patients in comparison to those in the EU. The FDA has recently undertaken initiatives to increase education and awareness related to biosimilars, which may help overcome this barrier.
Wave two: Biosimilars slowly gain ground
The lackluster infliximab biosimilar launch in 2017 may have had originators breathing a sigh of relief. More recent launches, however, show the danger of taking your a watch-and-wait approach, as biosimilars are beginning to demonstrate greater success, with each subsequent launch having more of an impact on patient access.
As of January 2021, Amgen’s oncology biosimilars Mvasi and Kanjinti have captured ~35-40% of their respective market shares, closely approaching a majority share over reference products Avastin and Herceptin, respectively.
How did this happen?
Biosimilar manufacturers learned the lessons from their initial failure in the US market and adapted accordingly by adopting new strategies: Amgen, for example, treats its biosimilars as branded products to avoid being perceived as a “second-best” option.
Biosimilar manufacturers have also become more aggressive in their approaches to discounting to gain the upper hand in contract negotiations and displace originators from formularies. This aggressive approach can be observed in the recent launches of oncology biosimilars of trastuzumab and bevacizumab. In July 2019, Amgen and Allergan launched Kanjinti (trastuzumab-anns) at a wholesale acquisition cost (WAC) 15% lower than that of the originator, Herceptin. This discount was matched by Mylan and Biocon with the launch of Ogivri (trastuzumab-dkst) in December 2019. Pfizer then demonstrated the most aggressive WAC discount of 22% with the launch of Trazimera (trastuzumab-qyyp) in February 2020. Similarly, Amgen’s Mvasi (bevacizumab-awwb) was launched in July 2019 at a 15% WAC discount to the originator, Avastin, which was followed by Pfizer’s 23% WAC discount with the launch of Zirabev (bevacizumab-bvzr) in December 2019.
There are also clear benefits for pharmaceutical companies that have mixed portfolios of both biosimilar and originator products, as they are able to leverage HCP familiarity with the company and support services all while flexing their contracting muscles. While biosimilar discounts are often discussed in the context of reference product WAC, net prices may be the more relevant factor in practice, where rebates and exclusive contracts may come into play.
Outside of pricing, the trickle is becoming a flood, with familiarity of biosimilars among HCPs in the oncology and immunology areas only going in one direction: Up.
Finally, insurance providers are becoming enthusiastic: United Healthcare began to offer a select number of biosimilars as preferred products over their respective originators in late 2019, including Mvasi (bevacizumab) and Kanjinti (trastuzumab).
The lessons for originators
Originators need to read the land ahead and ask how to increase the value proposition of their products ahead of biosimilar competition.
One major area of importance to HCPs and patients alike is support programs: The temptation to move from an originator to a biosimilar could become much less attractive if an originator has created an end-to-end support ecosystem around its product and disease. Improving this offer is a vital component to remaining competitive in the face of biosimilar manufacturers, many of which may need to match such support if the companies are going to be able to compete. In other cases, HCPs may be apprehensive to make a switch if they are not familiar with a company and the support that will be provided.
Roche is one company that has seen off biosimilar competitors for Herceptin and ensured continued growth by successfully employing a “replace and extend” strategy and leveraging its historical success to transfer value to other products through innovation. Such innovation is achieved by developing new products or formulations to reshape the existing treatment paradigm or combining existing products with new therapy regimens to replace monotherapy as the SoC.
Originators should consider adopting new strategies in evolving their offerings, such as by enhancing their support systems or adding further value through the process, to increase their value propositions relative to that of their biosimilar competitors.
The road ahead
Originator companies should keep a watchful eye on two areas that will be fundamental to the continued success of biosimilars in the US: Regulation and legislation.
Biosimilar manufacturers are pushing to lower the high bar of efficacy data requirements, an approach that is already gaining momentum in some markets, such as the UK, which is implementing its own biosimilars review process through the MHRA. Lowering data requirements also decreases development costs and increases a company’s ability to compete on price. While other regulators are seeking to keep a global standardized process, if one regulator begins to lower requirements, others may follow suit. With the FDA trying to harmonize with the EMA, lower requirements in one region could see a domino effect elsewhere.
Politically, there is an appetite to reform healthcare, and biosimilars may prove to be an easy win; legislation has been proposed in the US congress (HR 8190) to allow insulin biosimilar products to receive automatic interchangeability designation upon approval by the FDA.
Such a move could be hugely significant in the insulin market where products are typically distributed in the retail pharmacy setting, and this may be just the beginning of unstoppable progress for biosimilars. There is bipartisan support for legislation that improves patient access and lowers healthcare costs, and biosimilars would be a major plank in any strategy that delivers on these promises.
Originator companies should also consider:
Originator companies that have not faced competition from biosimilars should check their status; if things seem peaceful now, it may be because they are in the eye of the storm.