Biosimilars’ cost savings unknown

April 20, 2015

The pharmaceutical and healthcare industry is lauding the FDA’s approval of the first biosimilar product this year, noting that the drugs could save the U.S. healthcare system billions of dollars.

The pharmaceutical and healthcare industry is lauding the FDA’s approval of the first biosimilar product this year, noting that the drugs could save the U.S. healthcare system billions of dollars.

In March, the FDA approved Zarxio (filgrastim-sndz), manufactured by Sandoz, which helps prevent infection in cancer patients during chemotherapy. Hospira has 11 biosimilar drugs in the pipeline, and other manufacturers are waiting for approval as well.

Biosimilars could save the U.S. healthcare system $44 billion over the next 10 years, according to a study from the RAND Corp. However, others caution that biosimilars are expensive to produce, and it is too early to estimate cost savings.

“We have identified that the impact in terms of savings will be lower than in small molecules and that, at the same time, the introduction of options to these biologics offer the potential for competition-based impacts on costs,”  Michael Kleinrock, director of research development at IMS Institute, told Drug Topics. “It's too early to tell exactly how that will play out. We think it somewhat premature to have a point estimate of savings potential when it could range dramatically.”

Challenges with biologics

As the market share of biologics continues to grow, payers will be scrutinizing their cost and efficacy, according to recent article in The Economist. In addition, because biologics must be injected, infused, or inhaled, some doctors may be discouraged from prescribing them, the authors noted. Some biologics’ high price tags – such as the $12,000 annual treatment for Abbvie’s Humira (adalimumab) for rheumatoid arthritis, will keep patients away, especially in developing countries.

 

Despite challenges, biologics have already contributed an estimated 22 percent of large pharmaceutical manufacturers’ revenue in 2013. Humira, for example, realized more than $11 billion in sales in 2013, according to EvaluatePharma.

“The overall savings from biosimilars will not be as dramatic as those from replacing branded conventional drugs with generic versions. First, biosimilars will be costly to make. Second, since they will not be identical copies, doctors and patients may be slow to accept them as substitutes,” according to the authors of The Economist article.