A year ago, providers, plans and pharmacy benefit managers thought they were on the brink of a new era of competitive drug prices. The federal approval of the first biosimilar for sale in the U.S. was supposed to foster new products that offered big discounts on some of the most expensive treatments.
But there's been no flood of new drugs and no lower prices since the Food and Drug Administration's approval of Sandoz's drug Zarxio.
In fact, after a year of speculation over the growth of the market, Zarxio, an alternative to Amgen's cancer therapy Neupogen, remains the only biosimilar for sale in the U.S.
Other biosimilars—most notably Celltrion's CT-P13, a substitute for Janssen Biotech's blockbuster anti-inflammatory medication Remicade—applied for FDA approval about the same time as Sandoz. It has yet to be approved.
Stakeholders say the delay is a result of a number of regulatory issues that could present hurdles in the biosimilar market, which once was estimated to result in savings of up to $44 billion over a decade.
Since January, 59 biosimilars of 18 reference products have enrolled in the FDA's Biosimilar Product Development Program, said Dr. Janet Woodcock, director of the agency's Center for Drug Evaluation and Research in testimony during a congressional committee hearing in February.
Woodcock then said the agency was actively seeking to recruit additional staff to meet the demand.
According to a report by consulting firm Eastern Research Group (PDF), the FDA spent an estimated $81.7 million on biosimilar-related work during the first three fiscal years of the product development program, resulting in a workload that totaled 295 full-time equivalents.
The FDA has cautiously been reviewing biosimilars, drugs which like generics are designed to be cheaper alternatives to name brands. Biosimilars, however, are not identical to the biologics they copy because they are derived from living organisms. The agency has been struggling with how to address interchangeability, or the ability to switch a patient onto a biosimilar drug from an original biologic, and vice versa, without impacting safety or efficacy.
The FDA has yet to issue guidance advising biosimilar producers on this issue. Some guess the agency will require drugmakers to undergo clinical trials to prove interchangeability and that would take millions of dollars and years to conduct.
Naming conventions is another hot-button issue. Critics want biosimilars to carry vastly different names from biologics to avoid confusion among physicians and pharmacists and prevent adverse reactions. Biosimilar makers say the drugs should carry the same non-proprietary name as their brand-name counterparts to avoid confusion about the safety and efficacy of their products.
The FDA sought middle ground last August when it proposed adding a four-letter suffix to the non-proprietary names shared with brand-name biologics. It is unclear what direction the agency may take when it finalizes guidance on naming.
All of these issues raise questions as to whether the biosimilar market could ever reach its potential.
From a financial perspective, sales of Zarxio have not “lit the world on fire,” said Chris Raymond, biotechnology analyst for equity research investment firm Raymond James.
Part of the reason might have to do with Amgen's effort as of late to divert patients away from using Neupogen in favor of its longer-acting version Neulasta. The move has helped the company keep a good portion of its consumer base despite the introduction of competitors like Zarxio or Teva Pharmaceuticals' drug Granix, a version of Neupogen that has been sold in the U.S. since 2013 as a biologic, not a biosimilar.
Medicare's current reimbursement for biosimilars isn't helping. Payment to doctors for prescribing outpatient drugs is a product's average sales price plus 6%, creating an incentive for physicians to use more expensive medications.
“You might have alternatives that are cheaper,” Raymond said. “But from a doc's profitability standpoint that may not necessarily make sense.”
Zarxio's third challenge came when Sandoz decided to list its wholesale price 15% lower than Neupogen's price. Zarxio had originally projected to be 30% cheaper.
Experts say biosimilar producers will have to market their products to new patients rather than trying to persuade those who have been using their brand-name counterparts to switch.
“Their business case needs to be based on their ability to win a significant share of the patients who are diagnosed in the future,” said Terry Hisey, senior life science principal for Deloitte Consulting. “It's not just simply a matter of trying to manufacture a product and distributing it in a market where the demand has been created by somebody else, unlike generics.”
Dan Mendelson, president of Avalere Health, said the biosimilar market will eventually be worth tens of billions, but he expected growth to occur slowly in the U.S., as consumers get more comfortable with choosing such drugs over their originator counterparts.
Such was the case in Europe, where Zarxio, known there as Zarzio, was introduced to that market in 2009. By 2013, Zarzio became the first biosimilar to overtake a reference product in market share, with more than 100,000 patients prescribed the drug in more than 40 countries worldwide.
“It's not like the whole thing is going to take off like a rocket ship,” Mendelson said. “This is going to be measured in a slow change in the marketplace.”
In addition to CT-P13, five additional biosimilar candidates have applied for FDA approval but have yet to be reviewed. Among them includes a second biosimilar for Neupogen, two biosimilar versions of Neulasta, and one for Amgen's blockbuster autoimmune disease therapy Enbrel. Amgen itself—the company that was the first target for copycat biologics—has submitted an application for review of its own biosimilar version for AbbVie's top-selling drug Humira.