United Kingdom

A World of Opportunity

 

 

Key Issue 1


Strong IP protection for originator biologics to encourage innovations, alongside effective incentives for competition once patents expire. The cost of development is so high for new biological drugs that originators need a sufficient period to recoup their costs and fund further new drug development.

Encouraging biosimilar uptake


The vista that biologics offer is that conditions which were previously untreatable are now being addressed by biological therapies, ranging from psoriasis, to rheumatoid arthritis, and various forms of cancer.

Ultimately, however, any healthcare system – whether a centralised European-style structure, or a private-insurance-funded U.S.-style system – has limits of affordability and prioritisation, whoever the payer is (private or state).

Creating a sustainable market in biosimilars would therefore seem to appeal to the common sense of the majority of studies, official publications and expert commentary reviewed for this paper.

IQVIA offers a concise summary of the key issues which need to be addressed in creating sustainable biosimilars marketplaces. The organisation states, “Biosimilar sustainability improves patient access and physician prescription choice of safe and high quality biologic medicines, in a framework that considers the ongoing needs of all stakeholders (patients, healthcare professionals/providers, payers and manufacturers).”

Deloitte also notes the emergence of a more sophisticated, holistic view of patient outcomes, rather than simple discounting arrangements: “There are a variety of value-based contracting models (financial, outcome and service based), of particular interest to some payers. These agreements, which can be based on cost, evidence and risk, require a more collaborative relationship between pharma, payers, providers, physicians and patients, in which all members work together to improve patient outcomes and the performance of healthcare.”

The key to achieving success in this quest, however, rests on several factors.

Regulators issuing clinical guidelines and payers determining pricing and reimbursement strategies are currently debating how biosimilar uptake can be promoted in ways that best enhance market competition – all aimed at increasing the speed of biosimilar introduction and uptake. Incentives under discussion are prescription quotas or provider incentives that promote biosimilar use but do not restrict physician choice. Tendering and procurement best practices are also under scrutiny and development, along with biosimilar pricing and free market competition policies. All of these contributory factors to the long-term sustainability of biosimilars markets are discussed in the following sections of this paper.

Key Issue 2 


Policies and actions by payers to encourage the uptake of biosimilars. Positive action by payers – whether state or private – may be required to rapidly create competitive biosimilar markets. There is clear evidence (referenced in previous sections of this paper) of beneficial price reductions and therapy uptake resulting from competitive but sustainable biosimilar markets.

Competitive discountinge


In the more mature biosimilars market in the EU, price discounts on biosimilars – compared with the original biologic pricing – have varied widely, from product to product and between different national healthcare systems. However, illustrative descriptions of the financial impact of biosimilar market entry focus on a broad average of around one third.

For instance, a paper from Medicines for Europe notes, “Since the introduction of the first biosimilar medicine the EU in 2006, biosimilar medicines have already generated more the 700 million patient days of clinical experience worldwide and generated savings of about EUR 1.5 billion in the EU-5 alone. Nevertheless, the future opportunity is even bigger with an expected cumulative spending of EUR 47 billion (2016-2020) on 8 biological medicines that are expected to lose exclusivity in EU-5 only. The potential is therefore clear: a 30% reduction in price per treatment day across these 8-key originator biologic medicines, driven by biosimilar competition in the marketplace, could yield cumulative savings for European healthcare systems of about EUR 15 billion over the next five years.”

This is not comparable with much deeper discounts already realized in the generic drug market, but given the vastly higher development costs, this is hardly surprising.

This level of discount helps create a sustainable market where competitive market cost savings are balanced by reasonable commercial incentive for pharmaceutical manufacturers to continue investing in new drug discovery, development and certification.

Any responsible policymaker has to ask themselves the question, “Are calls for commercially sustainable markets simply a self-interested lobby for profitability by the pharmaceutical industry, or is market sustainability truly in the public interest?” A story from the world of antibiotics helps shed some light on what the answer might be.

A number of independent commentators have recently been analysing the issue of anti-microbial resistance (AMR), and the potentially catastrophic consequences for bacterial infection control that increased AMR is projected to have. It is worth saying that such projections come from country chief medical officers and authorities – a cohort not noted for exaggeration or over-the-top language.

The clear consensus amongst all these commentators is that overly fierce downward price pressure has made new antibiotic discovery less attractive because the return on investment for companies creating original antibiotics, which will only be used in rare cases when all other treatments fail, is either low or negative.

The AMR story may be viewed in parallel with the emerging world of biosimilars. Anyone doubting this has only to refer to comments from the scientific officer of a pharmaceutical company who noted that his company withdrew its pegfilgrastim biosimilar candidate as it was no longer “financially sustainable to continue” the product’s developments in markets such as the United States.

 

 

 

Key Issue 1


Strong IP protection for originator biologics to encourage innovations, alongside effective incentives for competition once patents expire. The cost of development is so high for new biological drugs that originators need a sufficient period to recoup their costs and fund further new drug development.

Encouraging biosimilar uptake


The vista that biologics offer is that conditions which were previously untreatable are now being addressed by biological therapies, ranging from psoriasis, to rheumatoid arthritis, and various forms of cancer.

Ultimately, however, any healthcare system – whether a centralised European-style structure, or a private-insurance-funded U.S.-style system – has limits of affordability and prioritisation, whoever the payer is (private or state).

Creating a sustainable market in biosimilars would therefore seem to appeal to the common sense of the majority of studies, official publications and expert commentary reviewed for this paper.

IQVIA offers a concise summary of the key issues which need to be addressed in creating sustainable biosimilars marketplaces. The organisation states, “Biosimilar sustainability improves patient access and physician prescription choice of safe and high quality biologic medicines, in a framework that considers the ongoing needs of all stakeholders (patients, healthcare professionals/providers, payers and manufacturers).”

Deloitte also notes the emergence of a more sophisticated, holistic view of patient outcomes, rather than simple discounting arrangements: “There are a variety of value-based contracting models (financial, outcome and service based), of particular interest to some payers. These agreements, which can be based on cost, evidence and risk, require a more collaborative relationship between pharma, payers, providers, physicians and patients, in which all members work together to improve patient outcomes and the performance of healthcare.”

The key to achieving success in this quest, however, rests on several factors.

Regulators issuing clinical guidelines and payers determining pricing and reimbursement strategies are currently debating how biosimilar uptake can be promoted in ways that best enhance market competition – all aimed at increasing the speed of biosimilar introduction and uptake. Incentives under discussion are prescription quotas or provider incentives that promote biosimilar use but do not restrict physician choice. Tendering and procurement best practices are also under scrutiny and development, along with biosimilar pricing and free market competition policies. All of these contributory factors to the long-term sustainability of biosimilars markets are discussed in the following sections of this paper.

Key Issue 2 


Policies and actions by payers to encourage the uptake of biosimilars. Positive action by payers – whether state or private – may be required to rapidly create competitive biosimilar markets. There is clear evidence (referenced in previous sections of this paper) of beneficial price reductions and therapy uptake resulting from competitive but sustainable biosimilar markets.

Competitive discountinge


In the more mature biosimilars market in the EU, price discounts on biosimilars – compared with the original biologic pricing – have varied widely, from product to product and between different national healthcare systems. However, illustrative descriptions of the financial impact of biosimilar market entry focus on a broad average of around one third.

For instance, a paper from Medicines for Europe notes, “Since the introduction of the first biosimilar medicine the EU in 2006, biosimilar medicines have already generated more the 700 million patient days of clinical experience worldwide and generated savings of about EUR 1.5 billion in the EU-5 alone. Nevertheless, the future opportunity is even bigger with an expected cumulative spending of EUR 47 billion (2016-2020) on 8 biological medicines that are expected to lose exclusivity in EU-5 only. The potential is therefore clear: a 30% reduction in price per treatment day across these 8-key originator biologic medicines, driven by biosimilar competition in the marketplace, could yield cumulative savings for European healthcare systems of about EUR 15 billion over the next five years.”

This is not comparable with much deeper discounts already realized in the generic drug market, but given the vastly higher development costs, this is hardly surprising.

This level of discount helps create a sustainable market where competitive market cost savings are balanced by reasonable commercial incentive for pharmaceutical manufacturers to continue investing in new drug discovery, development and certification.

Any responsible policymaker has to ask themselves the question, “Are calls for commercially sustainable markets simply a self-interested lobby for profitability by the pharmaceutical industry, or is market sustainability truly in the public interest?” A story from the world of antibiotics helps shed some light on what the answer might be.

A number of independent commentators have recently been analysing the issue of anti-microbial resistance (AMR), and the potentially catastrophic consequences for bacterial infection control that increased AMR is projected to have. It is worth saying that such projections come from country chief medical officers and authorities – a cohort not noted for exaggeration or over-the-top language.

The clear consensus amongst all these commentators is that overly fierce downward price pressure has made new antibiotic discovery less attractive because the return on investment for companies creating original antibiotics, which will only be used in rare cases when all other treatments fail, is either low or negative.

The AMR story may be viewed in parallel with the emerging world of biosimilars. Anyone doubting this has only to refer to comments from the scientific officer of a pharmaceutical company who noted that his company withdrew its pegfilgrastim biosimilar candidate as it was no longer “financially sustainable to continue” the product’s developments in markets such as the United States.