The market side of biosimilars

August 10, 2015

R&D and product manufacture are only the beginning. When the time comes to enter the marketplace, biosimilars still face numerous obstacles.

In order to gain a larger share of the U.S. therapeutics market, biosimilars will need to overcome numerous challenges involving pricing and competition, naming conventions, formulary decision, delivery devices, and understanding the nuances of the market, a panel at the recent Biosimilars 20/20 conference in Philadelphia reported.

Steven MillerPricing is key to wider acceptance of biosimilars, yet the U.S. market has been reluctant to embrace discounts as a tool for building market share, said Steven Miller, MD, MBA, senior vice president and chief medical officer, Express Scripts.

“America isn’t really leading the charge here,” he said. “You’ve had biosimilar products in Europe now for nine years, and they’ve had enormous discounts.”

See also: Biosimilars' cost savings unknown

Development 

Robert StianchiDevelopment costs are a key element of pricing, said Robert Stianchi, director of market research for Merck’s Biosimilars Business, adding that development costs for biosimilars far exceed generics but also lag far below those of branded biologics.

See also: New forum created to expand access to biosimilars

Merck data shared by Stianchi revealed the relative costs of development:

• Generics require two to three years to bring to market, at a cost of $2 million to $3 million
• Biosimilars require seven to eight years, at a cost of $100 million to $150 million
• Biologic innovator drugs take up to 10 years to bring to market, at a cost of $800 million

Manufacturing

Manufacturing costs, which Miller characterized as “really trivial,” play another key role in the pricing of biosimilars.

The average per-gram manufacturing cost of eight biological drugs averaged $231, and the average cost of manufacturing amounts to 2.3% of the retail price, according to 2008 data from Bernstein Research.

A 2012 CVS Health study reported that the 11 leading biosimilar agents alone could reduce overall healthcare spending by about $250 million between 2017 and 2022, he said.

 

The near-term pipeline

Those savings could start accruing to the healthcare system this year. FDA already approved Sandoz’s Zarxio (filgrastim) earlier this year, and four other products have reached what Miller called the “near-term biosimilar pipeline,” with approvals likely by year’s end:

  • Hospira’s Inflectra (infliximab), biocompatible with Janssen’s Remicade 

  • Apotex’s Pegfilgrastim, biocompatible with Amgen’s Neulasta

  • Apotex’s Grastrofil (filgrastim), biocompatible to Amgen’s Neupogen

  • Hospira’s Retacrit (epoetin alfa), biocompatible with Amgen’s Epogen and Janssen’s Procrit

But biosimilars have to be competitively priced against branded drugs to gain traction in the market, Miller said.

“If you have a product that is a biosimilar and the branded drug is discounted at a price that makes it competitive - $30 for the biosimilar and $25 for the branded - and if that happens too often, you won’t get biosimilars in the United States,” he said.

Market complexities

Biosimilars are not only more complex than small-molecule drugs in their molecular makeup and scientific development, but also in their market development, Merck’s Stianchi said. “Will biosimilars sell themselves?” Stianchi said. “Probably not.”

Biosimilars must navigate several marketplace complications, among them delivery systems - including the barriers to self-injection and intravenous infusions - patient mindset and behavior, training and support, acquisition costs, and complex payment processes.

“As a result of these complexities, traditional strategies will need to be expanded to include nontraditional customers,” Stianchi said.

When a biosimilar agent comes to market, it must also be “market-similar,” but the biosimilars market is fraught with uncertainty, owing to what Stianchi called “the dynamic policy environment,” which involves the naming of the agents, extrapolation of indications from the reference biologic to the biosimilar, and automatic substitutions for the reference biologics that are closer to what has been done with generics for branded drugs.

 

Defensive strategies

Those who market biosimilars must also take into account what Stianchi called “the defensive strategies” of the makers of reference biologics and branded drugs.

“With rebate programs, they can make cost to patients very low,” Stianchi said. “If that makes the cost near zero for the patient, what’s the incentive for them to use the biosimilar? So the approach is a mix of both generic and innovator biologics - except, for example, disease and mechanism of action for market development,” Stianchi said. “Generally, a biosimilar is more like a branded type of marketing than a generic.”

He explained that biosimilars marketers have to have all the same systems as those who market the reference biologics, including relationships not just with pharmacies, but also with physicians and payers.

They’ll also have to consider formulary decisions, including the access level the formulary will grant the biosimilar - whether preferred or nonpreferred, as well as co-pay levels.

Another factor to be considered will be the types of pricing, including discounts and rebates, that will be offered through formularies.

Naming 

Naming is another obstacle that could disrupt market acceptance of biosimilars, said Stianchi. He cited a survey produced by the Academy of Managed Care Pharmacy, the American Pharmacists Association, and the American Society of Health-System Pharmacists and published in the March 2015 Journal of Managed Care & Specialty Pharmacy.

“About 75% of U.S. pharmacists are confident to substitute, if products share a nonproprietary name,” he said. “That number drops to just under 40% if the name has a prefix or suffix” - in other words, if biosimilar agents use proprietary names.

Administration

Administration devices also pose a market challenge for biosimilars, Stianchi said.

“The devil is in the details,” he said. “For many biosimilars and even other complex pharmaceuticals, the device is a key focus for many customers. If devices are inferior, it disrupts the ability of the product to gain market share.”

For example, GlaxoSmithKline’s Advair (fluticasone and salmeterol) is already off patent, but its proprietary inhaler doesn’t come off patent until next year, and delivery devices for biosimilars may not be available until two years after that, Stianchi said.

 

Devices

Devices pose another hurdle: End-users need education in how to operate them.

Stianchi noted that when Sandoz came out with its Omnitrope human growth hormone in 2006, the self-administration kit involved 20 steps. The company refined the kit in 2008, into a more streamlined penlike device that required only five steps.

“The device needs to be taken into consideration,” Stianchi said.

“There’s a lot of opportunity,” he said. “The biosimilars market is a continuation of the branded world and the generic world, and the company that ends up finding a balance between them will be very successful.”

What lies ahead

Despite these obstacles, Express Scripts’ Miller predicted that the market for biosimilars would come around. “I do think society is going to be asking for biosimilars, because healthcare costs are so out of control,” he said.

But big pharmaceutical companies rehearsed this script before when they fought generics, Miller said.

“The same arguments are being used against biosimilars today,” he said. “They have the same playbook, but the time now is a lot shorter than what it was with Hatch-Waxman” - the 1984 Drug Price Competition and Patent Term Restoration Act, named for its two sponsors, then-U.S. Rep. Henry Waxman of California and Sen. Orrin Hatch of Utah, which opened the floodgates to generic drugs. 

Miller called for “boots on the ground,” citing the need to lobby policymakers for clarified and streamlined regulations in order to encourage commercialization of biosimilars. The big pharmaceutical companies, he said, are funding patient groups that are throwing up resistance.

“When I go to Washington and try to create a coalition, it can be a lonely place,” Miller said. He’d like some company in pushing biosimilars forward.

Richard Mark Kirkneris an independent healthcare journalist based in Greater Philadelphia.