Federal regulators have approved the first “biosimilar” drug to be sold in the U.S. under a program intended to spur a new market of lower-cost alternatives to some of the most expensive treatments in healthcare.
The Food and Drug Administration on Friday approved the drug Zarxio, a cancer drug produced by Novartis unit Sandoz as a biosimilar alternative to Amgen's biologic drug Neupogen.
While many see Zarxio's approval as a crucial first step, a number of unanswered questions may determine how big of a foothold biosimilars ultimately gain in the U.S.
“Biosimilars will provide access to important therapies for patients who need them,” FDA Commissioner Dr. Margaret Hamburg said in a news release. “Patients and the healthcare community can be confident that biosimilar products approved by the FDA meet the agency's rigorous safety, efficacy and quality standards.”
Unlike generic drugs, biosimilars are not exact replicas but rather are meant to work in the same manner as their brand-name counterparts. The new approval process was conceived to provide greater access to biologics, which in many cases cost several thousands of dollars.
A study released last November by the RAND Corp. estimated the introduction of biosimilars to the market could save up to $44 billion over the next decade.
The FDA has four other biosimilar applications under review, including Celltrion's version of Johnson & Johnson's arthritis treatment Remicade and Hospira's version of Amgen's anemia medication Epogen. Canadian pharmaceutical firm Apotex has submitted applications for its version of Neupogen, as well as one for an alternative to Amgen's long-acting formulation of Neupogen, Neulasta.
Experts estimate Zarxio could initially be sold at a discount of up to 35% of Neupogen's current price, which can run more than $3,000 for 10 injections.
According to Mark Ginestro, a principal at tax and advisory firm KPMG, biosimilars are likely to be sold for 20% to 30% less than their brand-name counterparts at first. In time, though, the prices could go even lower as physicians, payers, pharmacy benefit managers and patients get more comfortable with the products.
“It will be interesting to see how the innovators respond to that,” Ginestro said. “Will they offer a corresponding discount to maintain share?”
Asked whether the arrival of Zarxio to the market would compel Amgen to consider lowering the price of Neupogen to compete, Amgen spokeswoman Kelley Davenport provided a statement: “We will continue to promote the robust clinical data of Neupogen, 24 years of experience and utilize our commercial capabilities to compete effectively."
Amgen and other makers of original biologics might not lower prices to compete with biosimilars, Ginestro said. They might instead bet that they can retain a sizeable portion of their market share among existing users who may be reluctant to switch to a new treatment.
Still, even if if payers choose not to switch immediately to a biosimilar, the introduction of such product into the market may provide payers with leverage when negotiating prices with biologic makers that could force them to lower their price, Ginestro said.
Zarxio is first drug to be approved through the federal government's pathway for biosimilars created under the Biologics Price Competition and Innovation Act, which was enacted as part of the Affordable Care Act in 2010.
One important question and unanswered question about the FDA's approval process involves interchangeability, or the ability of pharmacists to substitute a brand-name biologic medication for a biosimilar without approval of the prescribing health provider.
The agency did not address interchangeability in its approval of Zarxio and has yet to issue final guidance on interchangeability and labeling.
In its approval of Zarxio, the FDA designated it with a placeholder nonproprietary name of “filgrastim-sndz” instead of labeling it simply filgrastim, the chemical name for Neupogen. The issue of naming has been a point of contention between biosimilar makers, who want their products to carry the same chemical name as the original biologic drug. Biologics makers, meanwhile, want to differentiate their products from biosimilars as much as possible.
It is not clear when Zarxio will actually be available to consumers. In February, Amgen filed a lawsuit in U.S. District Court in California to block Sandoz from marketing Zarxio, a move Ginestro said would only delay but not stop the drug from eventually making it to the market.
Sandoz said in a statement that the company "cannot speculate on product commercial availability."
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