FDA Matters thinks biosimilars will be a huge success. FDA-approved products similar to off-patent biologics (“biosimilars”) will be available in the US by 2014 or 2015, with more added each year. There will eventually be price competition in the range of 20% to 40% discounts. Biosimilars will be used in most health care settings with most prescribers using them at least some of the time.

Much of the current negativity about biosimilars is fed by a mismatch of expectations: the Biologics Price Competition and Innovation Act (BPCIA) is barely 18 months old, while the transformation of the marketplace will take a decade or longer.

Will the biosimilar market be similar to the generic drug market? Over the last 25 years, generic drugs have grown from 12% of all prescriptions to nearly 75%. Discounts can be as great as 80% off the original innovator price. Because of their greater complexity and higher production costs, biosimilars will never achieve similar market penetration nor sell at such a steep discount.

However, generic drugs and biosimilars share a common premise: the willingness of physicians and pharmacists to use alternative products (generic and biosimilars) instead of the innovator (or reference) product with which they are most familiar. As generic drugs have become accepted by prescribers, so too will biosimilars.

Will biosimilars fail if they don’t generate substantial discounts?  Biological products are more expensive than drugs and at the extreme end may cost $100,000 to $300,000 in a year. In order to gain market share, biosimilar manufacturers will have to provide discounts to purchasing groups, wholesalers and benefits managers of at least 20% off the originator’s prices. Deeper discounts are likely if there is more than one biosimilar competing for sales. To payers and purchasers, saving $20,000 on a $100,000 medication is both substantial and significant.

If physicians and pharmacists don’t accept biosimilars, how will the market grow? It took more than 25 years for generic drugs to reach 75% of all prescriptions. As with generics, physicians will gain experience with biosimilars as they become available. Meantime, powerful forces of change–led by payers, purchasing groups and formulary committees–will start to narrow the choice of products easily available to physicians and pharmacists. This will become evident by 2015, although it may take as long as a decade for the pace of new biosimilars to transform the marketplace.

Why is therapeutic substitution important in understanding the market for biosimilars?  Increasingly, payers and purchasing groups have treated drugs within a therapeutic class (e.g. statins) as interchangeable and insisted on use of the least expensive one or two. Similarly, biosimilars are eventually going to be judged in the marketplace by safety and efficacy within a therapeutic class, rather than the degree of similarity to the reference product. FDA will create the basis for this approach by looking at the totality of the evidence before deciding the testing requirements for a biosimilar….but has already made clear that some clinical trials (i.e. more concrete proof of safety and efficacy) will be needed as part of the first generation of biosimilar applications.
Why does the success of biosimilars seem so certain to FDA Matters, even in the face of their slow evolution and the many unanswered questions about details? Knowing that it may be months before the first guidance is issued, key FDA leaders are making clear that they are active and serious. Agency leaders recently authored a “perspectives” article, published in the New England Journal of Medicine, that explains their approach.  In June 2011, the head of CDER’s Office of New Drugs indicated that FDA had already held 15 drug development meetings with representatives of 21 companies interested in nine different biosimilar products.

Bio-pharmaceutical companies are not just asking for meetings with FDA. Large sums of money are being invested in the belief that a substantial and profitable biosimilars market will evolve. For example, a large pharmaceutical company recently closed a deal worth up to $720 million for the rights to a biosimilar version of another company’s blockbuster biologic product.

Biosimilars will transform the drug marketplace. We are just in the early stages, which makes it hard for some to see the degree of change that is coming.

The FDA’s August 3, 2011 article on biosimilars in the New England Journal of Medicine is at: http://www.nejm.org/doi/full/10.1056/NEJMp1107285.

republished and adapted from FDAMatters