Physicians and patients are warming up to biosimilars but policy tweaks are needed to boost utilization, industry observers said.
Around three-quarters of physicians see biosimilars as equally safe and effective as their corresponding biologic and 71% of patients are willing to take them with a doctor's recommendation, according to a new NORC at the University of Chicago survey of more than 1,200 physicians and patients. But the therapies' adoption has been slowed by price manipulation and patent litigation.
While biosimilars are cheaper than biologics, drug manufacturers have heavily discounted the price to payers and offered coupons to patients to lower out-of-pocket costs, effectively eliminating any cost incentives, said Caroline Pearson, senior vice president at NORC at the University of Chicago.
"Every manufacturer is trying to maintain market share for their product," she said. "It's tough because from the payer and patient point of view, the brand biologic is functionally the same cost or cheaper."
While costs seem similar, specialty drug coupons have been linked to higher premiums, research shows. There are several policies that could encourage the transition and ultimately lower healthcare costs, experts said.
The Food and Drug Administration should come out with more guidance and data on the effectiveness and safety of biologics versus biosimilars. There should be a limit on payer and patient discounts for biologics. In addition, the actual price of drugs should be conveyed to both physicians and patients via transparency mandates, experts said.
"Policies need to focus on making the cost benefit clear because the physician and patient willingness is clear," Pearson said. "Specialty drug costs continue to rise at a pretty fast rate and biosimilars have the opportunity to slow that spending growth, particularly in classes where we haven't seen significant price competition."
A proposed patent reform plan would encourage biosimilar development by expediting their market entry, said Karen Young, U.S. health industries leader at PricewaterhouseCoopers.
"This could result in more competition, which could mean lower prices for both the generics and biosimilars as well as their brand and biologic counterparts—removing a barrier for physicians to prescribe," she said.
The biosimilars market could reach $30 billion by 2025, up from less than $10 billion in 2020, Fitch Ratings projects. That could make a sizable dent in pharmaceutical spending, given that biologics' high prices drive overall drug spending inflation, according to Vizient's latest drug pricing outlook.
The wholesale acquisition costs and average selling prices of biosimilars are 15% to 37% and 3% to 24% lower, respectively, than the biologics they replicate. That could save the U.S. healthcare system around $150 billion over five to 10 years, the Center for Biosimilars estimates.
Advocates are hopeful that President Joe Biden's proposals to allow Medicare to negotiate drug prices, limit launch prices for drugs that face no competition, restrict price increases and import more drugs would bolster demand for biosimilars. But COVID-19 has likely delayed those policy pushes, Fitch Ratings researchers said.
Biosimilar development and adoption have also been delayed by drug manufacturer's patent litigation and extensions for new indications, FDA approval delays, their formulary positions as well as some hesitancy from physicians and patients to change treatment paths.
AbbVie has entrenched Humira's position as the top-selling biologic with a patent thicket. But six biosimilars approved by the FDA reference Humira, which reduces inflammation to treat arthritis and other disease, are slated to launch in 2023.
The FDA has approved 29 biosimilars, 20 of which have launched as of the start of 2021. More than 70 are in clinical trials or pending FDA approval, according to an AmerisourceBergen report. Nine biosimilars recently approved by the FDA are not currently being marketed, in part, due to patent settlements. No biosimilars currently on the market are interchangeable without physician consent, Vizient data show.
Fitch expects biosimilars to be a "long-tail source of growth" that have the potential to significantly enhance earnings and cash flow. Supportive care, oncology and anti-inflammatory drugs are the three main therapeutics for biosimilars but there is more activity in products related to ophthalmology, bone health, insulin, growth hormones and infertility, ratings experts said.
Eight out of 10 physicians have prescribed a biosimilar over the past 12 months, and a similar share expect to prescribe more over the next year, according to the NORC survey.
"Over the next two or three years, I think you're going to see biosimilars across the board preferred on every benefit design," a payer told NORC. "It may take three years… because the manufacturers look to mitigate the price [difference] by contracting for the originator to lower the price."
