The AAM’s Chip Davis examines the roadblocks to greater adoption of biosimilar drugs in the USA, and why they need to be removed to potentially save billions of dollars and increase patient access to lifesaving medications.  


In a nutshell: competition brings prices down across the board

Biologic drugs have the potential to transform healthcare, but only if they are accessible and affordable for patients. A pair of white papers from AAM’s Biosimilars Council details the anti-competitive tactics and perverse market access barriers that are interfering with the transformative potential of biosimilars—the lower-cost competitors to the biologics that have established market dominance.


The first white paper (download it here) highlights the ways that patent abuse blocks access to biosimilars. Brand-name pharmaceutical companies create patent thickets to delay competition and discourage development of biosimilars to their products. These patent thickets chill competition by discouraging biosimilar competitors from entering a market because of the exorbitant cost of litigating meritless patents. As a direct result of these manoeuvres, the healthcare system has lost USD 7.6 billion in biosimilar savings since 2012, including USD 1.2 billion in lost Medicare savings.


Humira represents the most notorious example of these competition-chilling patent thickets. AbbVie filed more than 75 late-stage patents in the three years before biosimilar competition was set to begin, allowing it to extend patent protection through 2034. Three FDA-approved biosimilars to Humira exist, but none are available to US patients. The drug first became available in 2002, but its virtual monopoly has allowed for steady price increases, and it now costs about USD 50,000 per year per patient.


Challenging illegitimate patents costs an estimated USD three million per patent, and there is no guarantee of success. That’s why many manufacturers opt to bypass litigation through patent settlements. These pro-competitive agreements ensure access for patients and savings for the system. And while they don’t prevent anti-competitive behaviour, they ensure patient access to competitive products long before patent expiration.


The second white paper (download it here) builds on the findings of the first by inquiring why so few of the nine biosimilars available to US patients have been able to garner significant market share. The authors found that biosimilars cost about half of the list price of brand-name biologics, with a net cost of nearly 20 percent less.


These savings for patients and the US healthcare system do not account for a secondary effect of having biosimilars on the market: they bring down prices of the reference biologics. For example, Remicade has lowered its net price in Medicare Part B by 23 percent since biosimilars entered the market. Remicade biosimilars have continued to discount further in order to compete; they are currently priced roughly 20 percent below Remicade’s discounted net price.


In a nutshell: competition brings prices down across the board. Analysis from the Biosimilars Council published in 2017 found that biosimilar competition could yield access for 1.2 million US patients by 2025 because of biosimilar competition. The improved access would especially help women, low-income patients and seniors.


Current marketplace dynamics also contribute to a lack of uptake on biosimilars in the US market, when compared to Europe for example. Specifically, well-documented “rebate traps” involve situations where health insurers face the risk of losing enormous rebates from biologic manufacturers if a biosimilar is offered on their formulary. In fact, in certain cases, manufacturers have allegedly sought to remove rebates on a basket of products, not just the one facing imminent competition, if a plan intended to utilize a biosimilar on its formulary. As such, these rebate traps compel payers to choose between biosimilars and the rebates from brand-name biologic manufacturers. Such perverse incentives to exclude biosimilars perpetuate the use of more-expensive brand-name biologics.


In the face of this challenge, AAM recommends updates to Medicare Part D, namely:


  • Ensure lower-priced biosimilar medicines are automatically covered on Part D formulary tiers immediately after launch;
  • Ensure that Part D plans place biosimilars on separate, rather than the same, formulary tiers to lower patient cost-sharing as compared to brand drugs and;
  • Provide for Part D plans to establish a specialty tier for biosimilars above the CMS specialty threshold (more than USD 670 in 2020).


These shifts would promote savings for the Medicare Part D program as more patients use lower-cost biosimilar medicines and help create a robust biosimilar market in the US


An additional perverse incentive affects providers, impeding the prescription and administration of biosimilars. Medicare Part B reimburses providers the same add-on (about six percent of the brand net price) whether they administer a lower-priced biosimilar or higher-cost brand-name biologic. This one-size-fits-all payment system actually incentivizes the brand-name company to increase its price in order to increase its own add-on, which further increases out-of-pocket costs. AAM recommends removing the cost-sharing for Medicare Part B patients using biosimilars. This move would help nudge patients away from costly brand-name biologic drugs and increase utilization of biosimilars. AAM advocates for a modification to Medicare Part B that would allow providers to share in the savings Medicare sees when a lower-cost biosimilar is prescribed instead of the expensive brand-name biologic.


Efforts by certain entrenched interests to sow doubt among patients and prescribers regarding biosimilars’ safety and efficacy directly affects the utilization and uptake of these medicines in the US. That’s why the International Coalition of Medicines Regulatory Authorities (ICMRA), which is made up of the heads of FDA and 28 other regulatory authorities from every region in the world are actively confronting misperceptions related to biosimilars. A recent statement by ICMRA unequivocally assures patients and the public, “Extensive laboratory studies give the foundation of evidence for biosimilar approval. These studies use state-of-the-art technologies to show that the biosimilar is highly similar to the originator medicine. In addition, regulators require some clinical studies involving human participants to show that there are no meaningful differences between how the biosimilar and originator medicine work.”


The obstacles detailed in the white papers have cost America’s patients nearly USD 10 billion over the past five years, with devastating consequences for taxpayers and the overall healthcare system as well as patients. These obstacles, however, are not set in stone. In fact, because they violate the Congressional intent to encourage competition upon expiry of innovation incentives, they ought to be actively and persistently disassembled.