Without Policy Changes, a Stable Biosimilars Market "May Not Flourish"

A new brief from Avalere Health argues that, if a multi-source market for biologic drugs is to emerge in the United States, originator biologics and biosimilars must be able to gain market share commensurate to the value they offer to the healthcare system, and a variety of policy options are available to create the necessary conditions for true competition.

In Europe, where the first biosimilar was approved in 2006, say the authors, “competitive biologics have generally gained increasing market share over time,” and biosimilars now make up one-fourth of all biologics sales for product with expired EU patents. While uptake varies by nation, some biosimilars, like filgrastim, have achieved a market penetration of 60% to 80%, and price discounts for some of the earlier and smaller biologic drugs have ranged from 15% to 40%.

European nations have used a variety of policies to drive the biosimilars market; Norway and Denmark use a tender system that has resulted in a 70% negotiated discount for infliximab biosimilars. Germany uses a prescribing quota and provider education programs, which have resulted in 50% volume uptake of biosimilars. In the United Kingdom, where the National Institute for Health and Care Excellence conducts health technology assessments for drugs used in its national system, biosimilars have driven price reductions of 25% for infliximab, 18% for epoetin, and 8% for filgrastim. UK patient access has increased by 104% for filgrastim since the advent of biosimilars.

By contrast, Ireland, which has thus far not implemented proactive policies to encourage biosimilar use, has seen little associated uptake. The nation is now undertaking an effort to create a more sustainable environment for biologics, and it is encouraging physician-directed switching.

Other highly regulated markets have employed their own incentives and have seen degrees of success; Australia uses a system in which the Pharmaceutical Benefits Advisory Committee may designate biosimilars as being subject to automatic pharmacy-level substitution on a product-by-product basis. Individual switching, notes Avalere, has been limited in Australia, as patients have fixed co-payment amounts that do not incentivize nonmedical switches.

In Canada, public listing of biosimilars has been slow after product approval, and although payers encourage new patients to begin treatment with a biosimilar, few established patients are switching their treatments.

The Republic of Korea implemented a “ceiling price” policy in 2012, under which originator and multi-source products are reimbursed at a single rate that drops when a competitor enters the market. This policy has led to a decline in spending, yet biosimilar uptake has been low, as the system provides no incentive to switch treatments.

In the United States, with its young biosimilars market, market forces determine the price of biologics and biosimilars. Avalere says that, according to its background research, payers expect to achieve a cost discount if they are to cover a biosimilar product, and they expect approximately 15% to 40% savings to help offset the administrative costs of switching patients, implementing educational programs, and creating utilization management strategies. If the price of a biosimilar is too near that of the originator, there is little incentive to undertake a costly endeavor to educate prescribers, and contracting with reference product sponsors may further complicate competition.

The report concludes that, while the United States has a number of models on which to base its own policy framework, it must actively pursue lower costs and increased patient access, as competition will not succeed without adjustments to policy.

“International experience suggests that, absent the specific incentives to help biosimilars achieve market share in exchange for competitive prices, a stable multisource specialty market in the [United States] and other markets may not flourish,” say the authors.