Gold Medal for Gaming Goes to Biosimilars

Hopes for big savings fade; prices reflect barriers to entry

The Food and Drug Administration last week approved the first fully generic version of injectable insulin, the life-saving medication for diabetics whose price has soared in recent years. The FDA’s Acting Commissioner Janet Woodcock hailed the development as “a momentous day for people who rely daily on insulin” due to the generic’s “potential to greatly reduce health care costs.”

Drug industry observers were less impressed. “It is a minor market development,” a Bernstein & Co. analyst told the Wall Street Journal. “There won’t be a financial benefit to the patient,” the publisher of The Diabetic Investor newsletter told STAT. “In the real world, it doesn’t make a damn bit of difference price-wise.”

So it goes in the government’s long-running failure to create viable generic competition for biologic drugs, the pricey medications that now account for over 40% of drug spending. Biologics, which are genetically engineered enzymes and antibodies, are a leading driver of patients’ rising out-of-pocket health care costs and everyone else’s rising health insurance premiums.

Although the FDA has approved at least 29 generic biologics (better known as biosimilars) since the 2009 passage of the Biologics Price Competition and Innovation Act (BPCIA), branded biologics, whose total annual cost can run into the six figures, still dominate the market. Less than 20% of the $211 billion in sales biologics manufacturers racked up last year was subject to biosimilar competition, according to the market research firm IQVIA.

In the few cases where biosimilars have come to market, their prices are only 15% to 35% below the branded products’ prices. That’s significantly less savings than the 80% achieved when generic manufacturers begin selling off-patent small molecule drugs.   

The agency’s approval last week of Viatris’ Semglee, a long-acting insulin, won’t break that pattern. It’s only notable for being the first time the agency has approved a biologic that is fully interchangeable, in this case, for Sanofi’s Lantus, the $5 billion-a-year brand name version.

The importance of being interchangeable

Manufacturers of small molecule generics approved under the 1984 Drug Price Competition and Patent Term Restoration Act do not need to show proof-of-efficacy before being deemed interchangeable, which allows pharmacists to switch a prescription to a less costly generic without seeking the prescribing physician’s permission. They just need to show their molecules are chemically the same. Biosimilar manufacturers, on the other hand, must submit the results of long and costly clinical trials that show patients can safely take the generic version without loss of efficacy or harmful side effects.

Christine Simmon, executive director of the Biosimilars Council of the Association for Accessible Medicines, the trade group for generic manufacturers, estimates the chemical comparability testing needed to win generic drug approvals costs somewhere between $5 million and $10 million per drug. The clinical trials required of biosimilar manufacturers cost $100 million or more per drug. “There is still debate whether that level of clinical trials is necessary to approve a biosimilar,” she said.

Given the time and expense needed to conduct such trials, the prices biosimilar manufacturers set on their products are relatively close to the cost of the branded product. They are priced like branded me-too drugs, not like true generics.

The clinical trials needed to win interchangeability status are costlier still. “That’s why you don’t see many announced plans to develop interchangeable biologics,” Simmon said. “We’re the only country in the world with a separate standard for interchangeability.”

Europe already has a thriving generic biologics market. Its first approvals came nearly a decade before the U.S. passed its legislation. The European Medicines Agency has approved more than twice as many biosimilars as the FDA. All are interchangeable for their branded predecessor product.

In France, for instance, the prices of rheumatoid arthritis drugs Humira, Enbrel and Remicade, which together generated over $31 billion in U.S. sales in 2019, were cut in half when biosimilars entered the market in 2015. The fully interchangeable generic versions now have an 80% share of the French market, according to a new study in Health Affairs.

The U.S. biosimilar versions of Humira (generic name adalimumab), on the other hand, will not launch until 2023 due to patent litigation settlements between AbbVie, Humira’s manufacturer, and Amgen, Boehringer Ingelheim and Sandoz, which make the approved biosimilars. An analysis in Health Affairs blames lengthy litigation over dubious process patents and the resulting settlements for the delay. Projections by IQVIA that biosimilars could save patients and insurers $100 billion over the next five years “will likely not materialize unless policy makers reconsider the BPCIA process,” the analysis concluded.

It’s not just legal wrangling over patents that stands in the way. The specialist physicians who prescribe biologic drugs earn a 6% mark-up on the price of the drug to cover the cost of handling and infusion (virtually all biologics are administered either by injection or infusion). Recognizing the introduction of biosimilars would reduce physician reimbursement, the authors of the BPCIA inserted a clause that holds that fee constant when patients switch to a lower-priced version.    

But that hasn’t stopped some physician groups from lobbying against programs that incentivize patients to make the switch. When Cigna last month offered patients $500 prepaid debit cards if they switched to the biosimilar versions of Cosentyx and Remicade, the American College of Rheumatology blasted the move.

“It’s making the patient very, very vulnerable to adverse health outcomes through what we would essentially consider bribery,” Dr. Christopher Phillips, who chairs the professional society’s insurance subcommittee, told Modern Healthcare. His Paducah, Ky.-based rheumatology practice has received $1.2 million in research-related grants from biologic manufacturers over the past five years. AbbVie, maker of Humira, is his largest client.

The American Medical Association took a similar tact in the resolution it passed in June. “The patient-physician relationship is the cornerstone of health care, and decisions about which drug is best for a patient should not be made based on financial incentives offered by insurance companies,” AMA Trustee Ilse Levin said in a press release. “Particularly at a time of economic uncertainty and during a public health emergency, payers should not be advancing strategies that prey upon financial instability and jeopardize patient health.”

Similar risks

The claim that switching patients to biosimilars will subject them to unnecessary health risks has no more scientific validity than the drug industry claim it costs billions of dollars to develop a new drug. Physicians’ main concern is immunogenicity, where some patients develop antibodies to the biologic, which render the drug ineffective or, worse, cause a severe immune reaction.

However, the initiation of every biologic drug therapy, whether a brand name product or a biosimilar, poses that same risk. A 2015 review of 68 clinical trials assessing the efficacy of five brand name biologics for treating rheumatoid arthritis found an average of 13% of patients developed anti-drug antibodies, with Remicade (25%) and Humira (14%) leading the pack.

Head-to-head trials between biosimilars and their brand name equivalent have also come up with similar risk profiles. The tests that the generic manufacturer Mylan submitted for approval of its biosimilar to Humira (named Hulio; it’s not yet on the market) showed its immunogenicity profile was almost exactly the same as the original molecule. After patients in the two arms of the trial switched drugs halfway through, “no effect of switching was observed,” the study concluded.

Given the evidence-free hurdles erected in biosimilars’ path to market, patient advocacy groups allied with biosimilar manufacturers have begun lobbying for their own form of bribery. Representatives Kurt Schrader (D-OR) and Adam Kinzinger (R-IL), members of the bipartisan problem solvers caucus, have introduced legislation that would increase the physician reimbursement for prescribing biosimilars to 8% of the average sales price, but only when “the biosimilar’s price is lower than the brand-name reference biologic.” It is a sad day when physicians need bribes to help their patients get a minor price break on their medications.

To sum up: Biosimilars are coming. But, thanks to a unique set of U.S. rules for biosimilar introduction, most of them will come to market at prices that are far above the cost of manufacturing and far higher than their prices in Europe. Indeed, they will be priced the same way me-too drugs in the branded small-molecule space are priced: Low enough to snag some market share, yet high enough to guarantee the 20%-plus profit margins that all drug companies, whether branded or generic, now see as their birthright.