Biosimilar Adoption in the US: Still Lagging Behind Europe

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As part of our upcoming US Healthcare and Life Sciences Review, we spoke to key stakeholders – former Association for Accessible Medicines (AAM) president & CEO Chip Davis; Carol Lynch, president of Sandoz US, head of Sandoz North America and member of the Sandoz Executive Committee; and Amgen’s biosimilars business vice-president and general manager Alper Ureten – regarding their views on the biosimilars market environment in the US, the success stories, and the areas for improvement.

 

Biosimilars arrived relatively late to the US compared to Europe. The country even lacked a regulatory pathway for biosimilars until the passage of the Affordable Care Act in 2010 introduced the Biologics Price Competition and Innovation Act (BPCIA), a number of years after the corresponding pathway had already been set out in Europe. Moreover, despite the US being the largest generics market in the world, with up to 90 percent generics penetration, market entry and commercial performance for biosimilars have lagged behind.

 

Chip Davis, former president and CEO of the Association for Accessible Medicines (AAM), attributed this to a number of factors. “It is a combination of perception, fearmongering about the quality of biosimilars, and successful lobbying initiatives from the innovative pharma industry”, he stated, underscoring the fact that “25 biologics have been approved in the US but only 12 are actually on the market today.” For him, this shows that “this is not an issue with the FDA or the regulatory process, as we do not have a biosimilar application backlog. We [just] do not have all the policies in place that we should to ensure biosimilar uptake.”

 

25 biologics have been approved in the US but only 12 are actually on the market today … this is not an issue with the FDA or the regulatory process, as we do not have a biosimilar application backlog. We [just] do not have all the policies in place that we should to ensure biosimilar uptake

Chip Davis, former president & CEO, Association for Accessible Medicines

 

For instance, he revealed, in terms of public reimbursement, “in Medicare Part B, which is where most biologics are reimbursed in the US, the physicians are currently incentivized to prescribe the most expensive products, because the reimbursement rates are more lucrative than those for lower-priced therapies.”

 

On the private side, there are some bright spots: one of America’s largest health plans, Kaiser Permanente, has created incentives for providers to switch from the originator biologic to a corresponding biosimilar, with the result that some biosimilars have over 90 percent market share in their system. Unfortunately, similar policies have not been introduced by other health plans, which Davis attributed to “aggressive lobbying by Big Bio and Big Pharma”.

 

Davis also pointed an accusing finger at the phenomenon of a ‘patent thicket’, noting, “there has been an increase in cases of patent abuse. That is why there is no competition to Humira® in the US for example, as AbbVie filed countless late-state patents for the product, fully knowing that no generics or biosimilar company would financially be able to go through the requisite litigation process to challenge such an estate. It is no coincidence that Humira is the largest drug in the world and that a significant percentage of its revenue is in the US market.” In 2019, US sales of Abbvie’s megablockbluster Humira® reached USD 14.9 billion, compared to USD 4.3 billion internationally.

 

Another issue he flagged are the misleading claims made by certain companies regarding the quality of biosimilars. Davis pointed out, “[this] is a complete and total red herring advanced by certain companies. One has to appreciate that in the US, there are commercial sales forces for the originators in physicians’ offices on a daily basis. The FDA, on the other hand, is not, and, by and large, neither are biosimilar companies.”

 

Davis did not wish to tar the entire innovator industry with the same brush, however, making certain to clarify that only certain errant members are behaving in such a manner. He held up Pfizer as a positive example, sharing, “Pfizer has been very forward-leaning in saying that some of the actions taken by some of their peers in the originator industry in terms of their marketing and education campaigns are not appropriate. They have even gone as far as to file a citizen position with the FDA,” which goes to show, in his opinion, that “this is not just a traditional brand versus generics issue; there is a real difference of opinion within the branded industry.”

 

The European and US [biosimilar] markets are in different stages of development. Europe has a well-established regulatory framework and therefore a well-functioning market with many products already approved. It is ahead of the US in terms of both regulatory structure and commercialization

Carol Lynch, Sandoz

 

Straddling both sides is Carol Lynch, president of Sandoz US; head of Sandoz North America; and a member of the Sandoz Executive Committee, who spent a decade with Novartis in the US, Switzerland and Germany prior to joining Sandoz US in March 2018. In line with their global strategy, biologics is one of their core market segments in the US market, and she shared her views on the US market environment for biosimilars. “I used to head our global biosimilars business from Germany where I managed the development and commercialization of the first wave of monoclonal antibody biosimilars in the European environment. The European and US markets are in different stages of development. Europe has a well-established regulatory framework and therefore a well-functioning market with many products already approved. It is ahead of the US in terms of both regulatory structure and commercialization.”

 

To her mind, the complexity and fragmentation of the US healthcare system is no excuse for the barriers that biologics still face. “I would say that European countries often have the same challenge. Taking the UK as an example, the National Health Service (NHS) manages costs through different trusts, the physicians often have their own budgets to manage, and social services are run through a different budget. This creates a situation where different stakeholders are questioning in which pockets savings from biosimilar adoption, for instance, would end up.”

 

While there is no magic bullet for increasing biologics penetration in the US, she highlighted four areas where she would like to see change. “Firstly, under Medicare Part B, we have physician-administered products, which must be administered within a hospital setting by a doctor. We believe a greater reimbursement incentive in the form of an add-on payment to physicians is required in order to support biosimilar adoption in this setting. Secondly, in terms of Medicare Part D, we would like biosimilars to have their own pricing tier in the formulary as opposed to being lumped into an existing tier with branded products.”

 

From a patient perspective, she added, “thirdly, we would also like to eliminate co-pays or any other additional out-of-pocket costs to ensure that patients receive the benefits of biosimilars as well.”

 

The last one for her related to reducing bureaucracy for physician offices. She contextualized “in the US, many states have prior authorization policies for the use of biologics. Before a physician can decide to prescribe a biologic, he needs to apply for ‘prior authorization’ to demonstrate that the biologic has been recommended and is necessary because the patient has tried a number of other medications that had been unsuccessful. The issue is that if the doctor then wants to switch to a biosimilar of that biologic molecule, he needs to go through the authorization procedure again!”

 

Ultimately, she stressed, “we need to work together with all stakeholders to improve the marketplace so patients can gain more access to transformative medicines.” For Sandoz’s Zarxio®, which was the first biosimilar launched in the US and stands as the first biosimilar success story in the country, achieving volume market share leadership within three years, she enthused, “we can demonstrate that in the last two years, USD 500 million in savings have been delivered to the US healthcare system”, concluding, “multiplying that across the 26 biosimilars approved in the US, the savings add up very quickly. When you deliver savings to the healthcare system, it creates headroom for new innovative therapies.”

 

Alper Ureten, VP and GM for Amgen’s Biosimilars business, sang a slightly different tune, however. Another global biopharma giant, Amgen has ten products in its biosimilars portfolio, with four boasting FDA approval. He disagreed with the view that the US biosimilars market had underperformed, underlining, “so far, our experience has been positive and does not align with that perspective.” For Amgen, he added, “we now have a year of direct involvement in this market since commercialising our first product. Our launches to this point have been strong and we have established a 30 percent market share with our two oncology products. That for me is a balanced and successful start on this journey. Our achievements in only our first year demonstrates that if you adhere to [the clear standards expected of companies involved in biosimilars], you can succeed in this market.”

 

He raised the point that it is important to define what success for biosimilars in the US market looks like. “We do not believe that using the generics market as a reference is suitable, given the production costs involved for biosimilars and the high standards demanded. A biosimilar generally takes five times longer and can cost upwards of 25 time more to develop than a generic. When these are taken into account, the market behaves differently to generics.”

 

A biosimilar generally takes five times longer and can cost upwards of 25 time more to develop than a generic. When these are taken into account, the market behaves differently to generics

Alper Ureten, Amgen

 

That being said, he held the staunch belief that biosimilars should be able to compete on their own merits. “There is an ongoing debate in the US about the role of biosimilars, with a number of bills being considered in the Senate. One such bill proposes a reimbursement for biosimilars at ASP (average sales price) plus eight percent instead of the standard ASP plus six percent. We do not expect intervention by regulators or outside forces to favour one category of portfolio products.”

 

From his perspective, “there are some companies who are taking a short-term strategy and are trying to tilt the playing field through legislation. We do not feel that this is needed at all. If you observe how medical reimbursement currently looks, whether a biosimilar or a reference product is purchased, the same add on payment is received. This creates the necessary level playing field.”

 

Ultimately, he rationalized, “when you look at the bigger picture, biosimilars were produced to create competition. Competition is what creates a sustainable marketplace and price savings over the long term. What is most important is to let the manufacturers compete. The more players that are out there, the more and better the ideas available in the ecosystem. “

 

While a champion of healthy competition, the one concern he saw, however, was the potential for over-competition to drive prices to unsustainable levels, which would cause “a repeat of the situation unfolding in the generic injectable market where unsustainable prices have caused manufacturers to either fail to invest in a reliable supply, or leave the market entirely, creating shortages.”

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