August 2020, Volume XXXIV, Number 5
Biosimilars vs. biologics
An expanding source of cost savings
ising drug costs are a big part of today’s health care crisis. Consumers, physicians, and health plans all strive to contain consumer prices, while manufacturers continue to develop innovative pharmaceuticals and steer them through development, testing, and approval. That process can be arduous for all categories of drugs—including biologics and generics—but some commentators now see promise in “biosimilar” medications, seeing them as the path to reduce costs while ensuring effective treatment.
Biosimilars to biologics as generics to branded products?
Biologics. While most drugs are chemically synthesized, biologics are derived from living entities. They can be composed of sugars, proteins, nucleic acids, or cells and tissues, according to the FDA. These drugs can be isolated from natural sources, or may be produced in the laboratory, as in the case of gene-based and cellular biologics. Invented to treat complex, difficult conditions and to replace existing medications, biologic drugs are priced higher. Because of their costs, biologics have represented almost 93% of the net drug spending growth since 2014, according to one analysis.
Generics. Few steps are needed to make a generic drug. The generic drug’s active ingredient is the same as the brand-name product, and must be approved by the FDA. The paperwork is easier than for a new/novel drug application (NDA), and generic drugs are easier to produce. Generics are often produced by outside companies, but some manufacturers now release their own branded generics (e.g., Mylan’s authorized generic version of its EpiPen). Generics grew in popularity due to their large cost savings. Could this model apply to biosimilars?
Of any 5,000 drugs that enter preclinical testing, only five make it to human testing.
Biosimilars. A biosimilar is defined as a medication that is highly similar, but not structurally identical, to an existing FDA-approved biologic. These less-expensive biosimilar medications—which, according to FDA reviews, have no clinically significant differences from their reference drugs—offer potential savings for both health plans and consumers. To put this in perspective, industry analysts project near-term savings of at least $54 billion with only a 3% conversion from biologics to biosimilars.
From lab to consumer
Drug manufacturers develop thousands of ideas for drugs. But out of any 5,000 drugs that enter preclinical testing, only five make it to human testing. And only one of those may actually get approved.
The FDA approval process for biologics includes pre-clinical testing (average length: 3.5 years), phase 1 clinical trials (averaging one year), phase 2 clinical trials (averaging two years), phase 3 clinical trials (averaging three years), and FDA review of the new drug application or biologic license application (up to 2.5 years) before the product is launched.
The FDA does have programs that allow for expedited reviews—accelerated, priority, fast track, and breakthrough therapy—that target different parts of the review process. Cancer drugs dominate all four categories. Still, for many drugs, it can take an average of 12 years from lab to medicine cabinet.
The biosimilar approval process is arduous as well. Since 2015, the FDA has approved 24 biosimilars for nine reference biologics. But only 12 of those had reached the marketplace by the end of 2019. And those biosimilars have small market penetration.
Two types of biosimilars
The Biologics Price Competition and Innovation Act (BPCIA) of 2009 created two approval categories: 1) biosimilars, which are highly similar to and have no clinically meaningful differences from an existing FDA-approved reference biologic; and 2) interchangeable biosimilars, which are biosimilars that meet additional requirements under the BPCIA. Manufacturers of an interchangeable biosimilar must demonstrate that switching between the interchangeable and reference product in a single patient would not increase the risk of safety issues or diminished efficacy compared with using the reference biologic product alone—a much higher bar to meet, and one that many commentators consider to be out of reach.
The marketplace currently has its focus on the first biosimilar approval pathway. These are the biosimilars that are currently approved and on the market.
The 12 biosimilars launched in the U.S. represent just a fraction of the potential. The market has been cautious, looking for more regulatory guidance and support. The FDA’s Biosimilar Action Plan of 2018 (https://tinyurl.com/mp-fda-biosimilars) has many sound elements, but progress has been slow.
Unfortunately, critics accuse reference biologic manufacturers of using several tactics to inhibit competition with biosimilars:
These tactics are getting push back. In February 2020, the Federal Trade Commission (FTC) and FDA announced new efforts to prevent these anti-competitive business practices, and to better support a competitive market for biological products.
FTC Chairman Joseph Simons said, “We’re not only educating about biosimilars, but we’re re-educating to counter the misinformation. Practices in biologics markets are delaying the availability of biosimilar products, thereby depriving patients of the benefits of competition, including lower prices and increased innovation. The FTC is committed to continuing to enforce the antitrust laws in health care markets, including those for biologics and biosimilars.”
A lot of consumers didn’t want generic drugs in the 1990s. Then the FDA, health plans, employers, and pharmacy benefit managers (PBMs) pitched in with education campaigns stressing that generic drugs delivered the same quality as brand-name drugs.
Physicians can still choose a biosimilar, even if it’s not “preferred.”
In some ways, we face the same resistance with biosimilars today. Except now, instead of switching to generics for treating high cholesterol or high blood pressure, we’re asking consumers to switch from a biologic to a biosimilar for treating cancer. It’s a bigger decision.
Brand-name biologics: Still preferred under most benefit designs
A Journal of the American Medical Association (JAMA) study (https://tinyurl.com/mp-benefit-designs) looked at benefit designs for 17 major health plans in 2020. The plans represented 60% of Americans covered by commercial health plans.
More than 500 separate coverage decisions linked to biosimilars were made across those health plans. Ten of those 17 health plans chose not to offer preferred coverage for biosimilars at all. Just two health plans made biosimilars a preferred choice half of the time or more.
Here are two specific cost-saving opportunities for biosimilars—both in oncology:
Neutropenia. Five of the biosimilars launched in the United States are in one drug class, called granulocyte-colony stimulating factor (G-CSF). This drug class treats neutropenia, a condition that’s often a side effect from cancer. About 11,000 patients every year take a G-CSF drug, generally for about six months. But because it’s for patients with cancer, there are new patients with neutropenia who need G-CSF, every month, every year. Since G-CSF biosimilars are priced 10–30% percent lower than the reference biologics, a small change in prescribing habits could produce substantial savings.
One case study by Prime Therapeutics in preferring biosimilars shows a big difference in market adoption rates. Following a September 2018 recommendation from Prime, three Prime Blue Plan clients changed their medical policies to prefer biosimilars over the reference drug in the G-CSF class.
Having several biosimilars in one drug class makes it easier to implement preferred-product benefit designs. Three Blue Plans who took an active management approach saw high conversion rates of 87%, 88%, and 98% in 2019. Collectively, this delivered a cost savings of $4 million. By comparison, the formulary-neutral Blue Plans saw biosimilar conversions at about 24%.
Why was there such a big difference in conversion rates? The three Blue Plans that chose the active management approach aimed for the faster conversion and the bigger savings. They trusted that the physicians in their network knew enough—or would learn enough—about biosimilars to confidently prescribe them instead of the reference biologic.
The other Blue Plans took a formulary-neutral position on the biosimilars. They relied on the physicians in their network to find the lowest cost drug option to prescribe for the patients. But physicians don’t always have the time to search for the lowest cost drug or have easy access to patient formulary and benefit information. This information gap can contribute to a slower market shift to biosimilars.
When a biosimilar is a preferred formulary drug, switching is seamless. But physicians can still choose a biosimilar, even if it’s not “preferred.” That’s the bottom line. If a physician knows there’s a biosimilar available to treat his/her patient’s condition, the physician can prescribe it. That can make a huge difference in increasing the use of biosimilars.
Breast or gastric cancer. Five biosimilars for trastuzumab (Herceptin) are used to treat breast or gastric cancer. These are all approved and launched. If Prime’s Blue Plan clients prefer these biosimilars, we estimate that potential plan savings could total $31 million over two years. We’re working to do that on the formulary level. And physicians can help increase uptake and savings opportunities by prescribing the biosimilars.
Tips for prescribers
The FDA provides a list of approved biosimilars at https://tinyurl.com/mp-fda-list, complete with name, approval date, reference product, and links for more information. The FDA’s Purple Book (https://purplebooksearch.fda.gov) offers lists of licensed biological products, identifying their related biosimilars. Search the FDA site for additional educational content geared to physicians, staff, and patients.
If a biologic is prescribed and indicated as “dispense as written,” no changes may be made. To receive a biosimilar, the physician must prescribe the biosimilar. Absent the “dispense as written” specification, under Minnesota law, a pharmacist may substitute a biosimilar, but only after informing the physician.
The cost to the patient? It depends.
Consumers with health insurance are rarely paying the full retail price for a biologic or a biosimilar drug. Physicians often have to work with their patients and their insurance provider to understand specific cost-sharing situations. Factors will include:
Biosimilar savings have more of an impact on the health care system as a whole. Most of the savings accrue to the health plan and employer group. Over time, biosimilar prices continue to come down, which creates more pressure on the original reference drug price.
As more biologics and biosimilars become available, improved care and opportunities for cost savings will expand. It is important for physicians to be aware of these issues.
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