To discern the future of biosimilars, a look at how far innovation in biologics has come is helpful. Biologics have saved millions of lives over the years and raised the standards of living for tens of millions more. But modern pharmaceutical markets also bring complex challenges to healthcare.
We will take a close look at the past, present, and future of biosimilars, including market challenges and the great potential they can provide humanity.
Biologics are pharmaceutical products designed to treat diseases and offer therapeutic solutions. Unlike chemically derived drugs, they are derived from living organisms like stem cells, animal tissues, bacteria, and numerous other sources. Biologics include gene therapies, monoclonal antibodies, blood products, and a host of other therapeutics.
What Are Biosimilars?
As the name suggests, biosimilars are drugs designed to work the same as a biologic. Biosimilars do not contain any significant safety, quality, or effectiveness variance from FDA-approved biologics. Biosimilars are typically brought to market when the patent for a biologic has expired.
The first biologics date back more than one hundred years and led to medical breakthroughs like the smallpox vaccine. But biosimilars are a much more recent discovery.
The Biologics Price Competition and Innovation Act of 2009 provided a clear pathway for biologics to receive FDA approvals, which helped to incentivize innovation and development while protecting patents at the same time. As a result, biosimilars can provide alternatives to innovator biologics.
The first globally approved biosimilar was introduced in the EU in 2013. The US Food and Drug Administration (FDA) approved the first biosimilar in the US two years later, in 2015.
What Is the Potential of Biosimilars?
Biosimilars can bring diverse options to the market with the intent of giving patients more affordable alternatives to name-brand prescriptions.
For example, Humira is FDA-approved for treating rheumatoid arthritis and Crohn’s disease. It is one of the most expensive drugs ever prescribed, with a monthly cost averaging $9,065.
There are 10 biosimilars heading to market in 2023 that aim to offer comparable results at a dramatically reduced price.
What Are Contributing Factors to Biosimilar Market Growth?
Biosimilars are expected to become an increasingly significant factor in the overall growth of biologics. In fact, the global biologics market is expected to double to $712.45 billion by 2032, and biosimilars alone have seen a 56 percent compound annual growth from 2015 to 2020.
There is a rise in sentiment for intermediaries advocating for responsibility and transparency regarding how reimbursements, rebates, and other costs are managed with name-brand pharmaceuticals.
Positive Support from Legislation
The Inflation Reduction Act (IRA) includes an amendment to the non-interference clause which requires HHS to negotiate prices with drug companies that make specific brands, aiming to reduce costs under Medicare Part D.
The IRA seeks to encourage biosimilar developments by boosting reimbursements to physicians and supporting lower list prices, with the ultimate goal of making biosimilars more widely available at competitive prices.
The IRA will likely steer market growth with policies surrounding biosimilar adoption, including:
- Promoting their interchangeability with name brands
- Advocating for better transparency
- Expanding Medicare Part D coverage
- Including biosimilars in the structure of formularies and reimbursements
- Tracking intermediary pricing and rebates to reveal market value
In addition to the IRA, multiple US states have introduced legislation promoting biosimilar adoption, with the intent of categorizing them similarly to generic drugs.
What Is the Future of Biosimilars?
Expectations are high as legislators, physicians, and pharmacists align to better market options.
There are different projections for biosimilar market growth, but they all trend positively. The availability of lower-cost biosimilars has saved US healthcare more than $12.6 billion since 2011.
According to the National Center for Biotechnology Information, cost savings of biosimilars could amount to $54 billion from 2017-2026, while others place those savings anywhere from $85 to $133 billion by 2025.
We should expect to see the following in US markets:
- Rapid changes based on market evidence and research
- Expanded pharmacy reimbursement
- More biosimilar therapeutic options
- Faster approvals for biosimilar interchangeables
- Emphasis on education and data-driven evidence
Why Are Biosimilars the Future of Healthcare?
The following are indicators of a strong, continued uptake in biosimilars in US healthcare markets.
Biosimilars will grow in market share as expiring patents and political incentives allow more manufacturers to enter the market with alternatives.
Expanding Therapeutic Biosimilars
Biosimilars for diabetes, ophthalmology, and immunology will likely expand, and if formularies and evolving reimbursement plans lead to greater patient savings, as hoped, this will increase political optimism, bolstering easier approvals.
Supporting Technological Advancements
Improved manufacturing processes, technology like artificial intelligence (AI) and machine learning, and clear guidelines for product approvals will rapidly scale new medical innovations.
Changing dynamics in market competition and greater potential for interchangeability will help reduce costs and offer more affordable options for patients.
Broadening Healthcare Coverage
The US government is showing clear support for biosimilars by calling for a boost in Medicare coverage, where plans pay for a biosimilar’s price plus 8 percent.
Comparing the US to Early Trends in European Markets
Looking at promising early signs in European healthcare markets suggests the following policy recommendations will move US markets in the right direction:
- Incentivizing innovation
- Letting physicians choose which medicines to prescribe
- Supporting intellectual property
- Avoiding forced-switching
- Looking to clinical trials for guidance
- Seeking post-market surveillance to keep pricing and third parties honest and accountable
In addition, the Center for Medicare & Medicaid Innovation (CMMI) is expected to push for coverage under Medicare Part D.
Potential Roadblocks: What Is the Problem with Biosimilars?
The potential for market growth looks hopeful for biosimilars, but the following potential roadblocks have to be considered at this crucial point in time.
Competition from Innovators
The brands currently dominating markets with their patented innovations may launch their own biosimilars to go head-to-head with competitors.
There are concerns that political overzealousness stemming from the Inflation Reduction Act in the biosimilar marketplace could stifle patented innovations, along with fears over unintentional price-setting. For instance, the IRA provides for delaying negotiations regarding biologics that are likely to see competition from biosimilars within two years of publication. While this is meant to deter financial incentives that could slow biosimilar uptake, it could also unintentionally stall innovation and funding for important innovations.
However, the IRA also amends the non-interference clause by adding an exception that requires the Secretary of HHS to negotiate prices with innovator drug companies for a small number of their patented biologics that don’t have a biosimilar competitor covered under Medicare Part D. It is possible that negotiating better prices for unchallenged innovator products can lead to a positive outcome.
Concerns Over Patent Protection
Market originators often have to fight legal battles to protect their inventions. In the case of biosimilars, this can delay products coming to market and leave a cloud of uncertainty for investors and other stakeholders.
Lack of Education
Physicians, legislators, and patients need to become familiar with the effectiveness and safety standards of biosimilars in order for uptake to trend positively.
To overcome these roadblocks, healthcare stakeholders and regulators will have to extend efforts to support research and development, provide clarity for future patent protection, and increase public awareness of the benefits of biosimilars.
The Future of Biosimilars Will Be Determined by Data
Expectations are high for biosimilars. But one thing is clear—legislators, physicians, and patients alike are looking to data from market experts to show the potential of cost savings, market diversity, and interchangeability.
PBMs are essential to data clarity, and Xevant provides these crucial intermediaries with the deep analytics they need.
Our PBM software helps you:
- Reduce costs
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Learn how Xevant can help you with market insights, client metrics, rebate management, and more.