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Biosimilars unlikely to save costs as expected, experts say
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Despite being heralded as lower-cost alternatives to branded biologics, the approval of biosimilar therapies for chronic diseases is not likely to yield expected cost savings due to a number of state and payer policies, according to an opinion piece published in JAMA.
However, cost-savings may be attainable after key challenges to biosimilar substitution are overcome, the authors concluded.
First, state laws enabling automatic substitution of small-molecule generics have allowed them to gain market share without sales and marketing support, but such laws do not apply to biosimilars, according to Joseph S. Ross, MD, MHS, and Aaron Hakim, MS, both of Yale University School of Medicine.
“Even though biosimilars are considered highly similar to reference biologics, they may have minor variations in well-characterized, clinically active components,” they wrote. “Thus, there is no anticipated ‘automatic’ market growth for biosimilars. Patients will require new prescriptions to be switched from branded biologics to biosimilars.”
Further, patients and physicians are averse to biosimilar switching to reduce costs, and payers are therefore reluctant to promote the use of biosimilars by excluding branded biologics from formularies or enacting cost-sharing requirements. Remicade (infliximab, Janssen), for example, “has not been excluded from any large 2017 formularies despite the FDA approval of a biosimilar at a 15% discount to the wholesale acquisition cost of the brand,” they wrote.
Finally, “rebate traps” represent the most important barrier to biosimilar cost-savings, as they incentivize payers to prefer branded biologics, according to the authors.
“If a biosimilar manufacturer intends to upend the preferred position of the brand by offering a substantial price discount to the payer, the branded manufacturer can respond by withdrawing the rebate on the reference biologic,” which can cover as much as half of the drug’s list price, they wrote. Unless virtually all patients switch to the biosimilar, the payer’s total costs will then actually increase.
To help ensure the realization of savings from biosimilars, all states could adopt automatic substitution laws based on the FDA’s “interchangeability” standard, which “could bolster competition, lower prices, and increase biosimilar availability for patients,” Ross and Hakim wrote. Currently, only 21 states have passed such laws.
Additionally, physician society guidelines could recommend biosimilars as first-line agents like they have in Europe, where they do not require demonstration of interchangeability for substitution, which is supported by 10 years of data that suggest switching is safe and noninferior, they wrote.
Finally, they called for legislators to “demand greater transparency on how rebates influence therapeutic choice for patients.”
They noted that substitution of traditional generics once faced similar challenges, and that once biosimilars are viewed as appropriate substitutions for branded drugs, as generics are today, “the health care system will likely realize substantial savings.” – by Adam Leitenberger
Disclosures: Hakim reports he was previously employed by Great Point Partners, a health care investment company. Ross reports he has received research support through Yale University from Medtronic, the FDA, Johnson & Johnson, CMS, the Blue Cross-Blue Shield Association and the Laura and John Arnold Foundation.
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