Biosimilars: Missing the Mark

During the recent Sandoz v Amgen ruling, the Supreme Court highlighted the importance of the case when Chief Justice John Roberts announced that the time for each side to present its argument—usually set at half an hour—would be extended by 5 minutes.

That small signal, as well as the tone of other comments made during the Court’s questioning, is evidence that the Supreme Court considers the topic of biosimilars to be both unusually complex and unusually weighty.

Biosimilar patent cases are clogging the courts, mostly in an effort to delay the products from coming to market too soon. This was the issue at the heart of the Sandoz v Amgen, which argued for an extension of the reference product’s exclusivity period. 

Manufacturers fear that introduction of biosimilar products to the market would have significant impact on their profits—in the same way a generic drug’s introduction usually greatly reduces a branded products market share. These fears could be rooted in the hype that has been built up for biosimilars over the last few years and based on the impact they have had in Europe. 

However, uptake has been slow due to lackluster discounts and a small amount of biosimilars actually hitting the market. 

Hope for Greater Savings

Sandoz v Amgen is the first case the Supreme Court has heard about biosimilars, which are drugs designed to act like expensive original biologic drugs, but at a reduced price. 

Some biologic therapies have shown significant medical utility, so in order to expand access to them, Congress created a special law, the Biologics Price Competition and Innovation (BPCIA), to make it easier for companies to develop copycat formulations.

But unlike generic alternatives to traditional small molecule drugs, biosimilars have to be grown in cell culture, not chemicals. The savings enjoyed from biosimilars in the United States has been disappointing, never approaching the 90% reductions sometimes seen with generic alternatives to traditional pharmaceuticals.

The United States began to license biosimilars fairly late in the game compared with the rest of the world. Estimates of savings have varied wildly. In 2008, the Congressional Budget Office estimated that the creation of the biosimilars pathway would result in direct savings to the federal government of $5.9 billion through 2018, and total savings (including private payers) of $25 billion. Another study, done in 2014 by the Rand Corporation, found that the potential savings from biosimilars could be $44 billion through 2024. 

But others say that the number would probably be much higher, if the biosimilars pipeline ever really got flowing. In fact, a 2013 study by Express Scripts forecast a $250 billion savings over 10 years. 

“I don’t know that anybody expected the effect of biosimilars to be quick or immediate,” noted Jonah Houts, vice president of government affairs at Express Scripts. “I think the FDA has been slower to provide guidance to industry than everybody expected. The BPCIA has been the law of the land for seven years, and the number of approvals has been underwhelming, including two biosimilars for Remicade, one for Neopogen, and one each for Enbrel and Humira.”

Nonetheless, Mr Houts stands by the company’s 2013 study. “There are now dozens of products ripe for biosimilar competition, and I’m very confident that five years from now, we will be having a much different discussion, to the wild benefit of patients and plan sponsors across the country,” he predicted.

Pipeline Builds Capacity

In light of the lack of regulatory guidance, it may be that not even a favorable decision from the Supreme Court can help bring the cost of biologics down. In fact, some regulations even contribute to the problem, according to Mr Houts.

“At the FDA, the most glaring issue that confronts payers and the patient community is the issue of nomenclature,” he said. “The FDA decided to adopt a policy of having the manufacturer add a random four-character suffix at the end of the generic biological drug’s name. It doesn’t indicate the manufacturer, it doesn’t indicate the weather on the day you got it approved. It’s simply going to confuse providers, patients, and pharmacies.”

Meanwhile, at the state level, some have also been hard at work creating a mechanism for the substitution of interchangeable biosimilars. “In more than half the states, we have worked with a coalition to change the state pharmacy practice act to allow the substitution of interchangeable biosimilars,” Mr Houts said. “Today, in the absence of interchangeable biosimilars, 100% of the time the patient would have to get a new prescription,” he noted, adding that 31 states thus far have changed their state laws to permit substitution.

Current biosimilars are not considered to be interchangeable with the original biological therapy, but the FDA has issued a proposed guidance on interchangeability for future biosimilars, said Mary Jo Carden, RPh, JD, vice president for government and pharmacy affairs at the Academy for Managed Care Pharmacy (AMCP).

“There would be a two-step process: first, the government will deem the agent a biosimilar, and then it will be deemed interchangeable,” Ms Carden explained. “Once that has occurred, there will not be a new prescription.”

The AMCP has also been involved with an initiative to monitor the effects of biosimilars and interchangeability. The Biologicals and Biosimilars Collective Intelligence Consortium (BBCIC) is a subsidiary of the AMCP which is using technology the FDA spent $150 million to develop as part of the FDA Sentinel Initiative, according to   Bernadette Eichelberger, PharmD, the Consortium’s program director. Pharmacy benefits managers and managed care organizations, such as Harvard Pilgrim, are part of the group, she added.

Litigating in Obscurity

Commentators hope that the biosimilars pathway will one day bring down the costs of biologics, and the Supreme Court’s decision in Sandoz v Amgen may play an important role in determining that outcome. At issue in the case is a phenomenon referred to as “the patent dance,” in which biosimilar developers provide the developers of original biological therapies with some information about their generic version of the product.

The BPCIA provides the holders of patents on reference products for 6 months of market exclusivity (beyond the standard 12 years, which is already much longer than the 5 years enjoyed for most conventional, small molecule drugs) from the time when the manufacturer of the original biological drug is put on notice of the biosimilar. 

 “Sandoz and the government were arguing that the federal law doesn’t create a cause of action for an injunction to make people go through the patent dance,” Mr Houts said. “But you can’t sue to keep a biosimilar off the market for the reason that the applicant didn’t go through the patent dance; it’s optional, not mandatory.”

Rebates Killing Uptake

In a recent issue of JAMA, Aaron Hakim, MS, and Joseph S Ross, MD, both of the Yale University School of Medicine, explained that biosimilars may not deliver the savings payers and consumers had hoped as a consequence of large rebates negotiated by pharmacy benefit managers. 

They suggested that due to something known as the “rebate trap,”—a flaw through which biosimilars are offered as low-tier options by payers, and thus cost more money because reference products have larger negotiated rebates. 

“Biosimilars for chronic diseases, the largest category of biological therapies, are unlikely to yield widely expected cost savings,” Mr Hakim and Dr Ross wrote in their commentary. “Rebate agreements between pharmaceutical companies, pharmacy benefit managers, and other payers create an incentive for payers to prefer more expensive branded biologics over biosimilars.”

Mr Hakim and Dr Ross explained that most pharmaceutical companies provide substantial rebates on reference biologics to payers through use of pharmacy benefit managers. According to their commentary in JAMA, chronic disease biologics can sometimes have rebates up to 50% off the drug’s list price. If a biosimilar is offered at a 15% discount, payers are still unlikely to provide the biosimilar as the preferred product for fear of the pharmaceutical company pulling their 50% discount on the reference product. 

“Even in [an] optimistic scenario, in which the price of the biosimilar is 60% less than the price of the brand after rebates and discounts, if the payer is only able to convert 50% of its patient users to the biosimilar, the rebate trap ensures that payer total costs actually increase relative to costs prior to biosimilar availability,” Mr Hakim and Dr Ross wrote.

They further explained that in order for biosimilars to achieve cost savings, nearly the entire patient base in a plan would have to switch to the biosimilar product. The authors noted that this is unlikely because only about 20% of patients are new users, while the remaining 80% are patients with well-maintained disease who are unlikely to switch products. 

Mr Hakim and Dr Ross suggested that better policy needs to be used in order to make biosimilars a cost-savings solution. They said that “interchangeability” needs to be more easily established, giving pharmacists and providers the ability to switch products at the point-of-sale/distribution.  

However, they predicted that the cost savings that biosimilars promised may still come to fruition, pointing to the past of generic drug pricing in the United States as a possible sign of the discounts to come.

“Many of the challenges currently being raised against biosimilar substitution are similar to arguments used against traditional generic drug substitution following the passage of the Hatch-Waxman Act in 1984,” Mr Hakim and Dr Ross concluded. “Small-molecule generic drugs are now broadly viewed as an appropriate substitution for brand-name pharmaceuticals. Once the same is true for biosimilars, the health care system will likely realize substantial savings.”