Biosimilars - The Latest Wave of Opportunity for Healthcare Systems
Looking at just the latest wave of patent expiration, seventeen biologics will come off patent in Europe over the five year period between 2018 and 2023. In the U.S., the equivalent number is fifteen.
According to a study conducted by IQVIA for the European Commission, the entry of biosimilars to create a competitive market have been seen to generate European Union average price-per-treatment-day savings that range up to 39%. The paper also stresses that these EU averages mask a wider variation with some individual countries seeing discounts of 50% and higher.
The resulting savings for healthcare systems are considerable. According to IQVIA, “Use of biosimilars in the EU5 countries alone stands to offer savings of more than €10 billion between 2016 and 2020.” Looking at just one single therapeutic category, the European Society for Medical Oncology reports that, “The introduction of biosimilars for the top three oncology agents is estimated to enable up to 2 billion euros in savings across Europe in 2021 alone. As such, their use could increase the availability of innovative therapies for patients who would not otherwise be treated with biologicals due to economic constraints.” Another widely referenced academic study estimates that in the U.S. “biosimilars will reduce direct spending on biologic drugs by $54 billion from 2017 to 2026.” The Association for Accessible Medicines tells us that “If FDA-approved biosimilars had been available in 2017, patients could have saved an additional $4.5 billion in lower drug costs.”
Although the U.S. market is just beginning to form, its size makes it critical to the success of biosimilars; for instance, the U.S. accounts for 59% of the global infliximab market, according to one report. Nevertheless, the EU provides a more mature, essential data-basis for any party creating modelled estimates.
Real-life experience in Europe shows that in some cases, biosimilars have taken very considerable market share. Equally, where the reference product has held a high market share, the entry of biosimilars has nevertheless still caused pricing to drop by around a third. Moreover, there is evidence to show that market demand has in some cases grown as a result of competitive biosimilars becoming available.
Take the example of one single biologic – adalimumab – which came off patent in Europe in late 2018 and which is currently the world’s top selling biologic. NHS England has already negotiated market discounting that strips around one third off the former original biologic pricing.
If the discount achieved by the UK’s NHS were applied to the European market as a whole, the resulting competitive market would save healthcare providers some $1.32 billion (€1.15 billion) per year for this drug alone.
It is therefore encouraging that early signs from an emerging competitive market in the U.S. over another biologic - infliximab - reveal that 25% has already been discounted off former branded reference drug pricing, and that the market expects this discount to increase a little further before settling into sustainable competition.
The benefits to the health care system from these potential savings are too great to ignore. Consequently, reforms are required to ease competitive market entry and improve manufacturing efficiencies to eliminate barriers and help biosimilars provide equivalent systemic benefits relative to biologics that generic medicines have created relative to patented medicines.
Largely speaking, expert commentators give the European biosimilars market a good prognosis. They view it as moving towards an efficient model that strikes a balance between patient treatment quality and choice, competitive market discounts, and a commercially sustainable playing field that encourages innovation and new therapy discovery.
A literature review of studies on the subject reveals that, in the European market, biosimilars have increased patient access to biologic medicines, raising consumption of the molecule (i.e. all variants of the same biologic medication, including both original and biosimilar products) across countries. More patients are being treated for lower costs.
This means the current reimbursement policies are generally geared toward sustainability, in that they offer a neutral or positive climate for biosimilars relative to original.
Additionally, biosimilars have proved themselves to be sustainable across countries by being safe, quality products, while manufacturers have provided a reliable supply to markets.
Moreover, potential legal barriers to introducing biosimilars have been broken down by a number of key official judgements – such as the case of secondary patents and clustering strategies around adalimumab.
But the picture is far from perfect.
Although centrally regulated through the European Medicines Agency, drugs in Europe are still subject to differences in policy, process and purchasing/prescribing rules, depending on the individual country. Levels of biosimilar uptake differ based on:
The role of local rules and policies has caused rapid and widespread uptake of biosimilars. For example, the case of rituximab in Norway where biosimilarsreached 80% market share in less than six months due to local payer tenders, but have been much slower in countries such as Italy and Spain.
At the same time, there is a danger that single-winner tender systems – such as those prevalent in Nordic countries – can result in a single biosimilar achieving dominant market share. In the quest for commercially sustainable competitive markets, this result is no more desirable than the original biologic retaining dominance, as the incentive for competitive players to innovate and play a role in these markets is disincentivised.
For the European biosimilars market to continue to develop sustainably, therefore, multiple-winner tendering systems (and/or short award periods) appear to be the favoured purchasing mechanism.
Elimination of single-winner tenders. Multiple-winner tenders are felt by most expert commentators to create healthy levels of competition over time, by keeping several champion-challenger players in each biologics category.
There may also be a strong case for wider discussions and agreement on competitive biosimilar market discount parameters that are consistent with market sustainability. Medicines for Europe has created a policy position on best procurement practices that addresses this and other points. Those policy points are:
A review of different local country biosimilar competition rules finds that mandatory discounts, where imposed, mainly focus in the 20-40% range versus the reference product pricing. Looking at specific examples of central tendering, it is interesting to note that the discount on adalimumab pricing negotiated by NHS England has been finalised at around one third. Commentators broadly seem to favour open competitive markets, which are achieving discount levels that are align with market sustainability.
A harmonised understanding of what constitutes sustainable market discounting would benefit all stakeholders. The more mature open markets in Europe provide data for the debate around sustainable discounts/savings.
A final point about the European market for biosimilars is also raised by a number of authoritative commentators - that of improving clinician, patient and pharmacist education on available biosimilars, their quality and effectiveness.
This follows slower adoption rates in countries where active promotion by the state has been ‘a light touch’. As one key study notes, “In countries like Norway, where biosimilars are strongly promoted by health authorities, the uptake is usually fast, while in countries like Italy, where health authorities had a conservative perspective, the uptake has been slower.”
This point should not be confused with the technical questions around switching and interchangeability between original biologics and biosimilars. This issue focuses on proofs of clinical outcomes similarity between drugs, as well as the protocols for payer, clinician and/or pharmacist to substitute a biosimilar for the original biologic or a competing biosimilar. Suffice to say that while regulators in global markets will continue to act with due caution in designating biosimilars as interchangeable, their level of confidence in making these decisions is fast growing as more real-world evidence becomes available (independent studies are regularly adding to the body of real-life clinical evidence that switching patients to biosimilars is effective and well-tolerated.)
Communications around biosimilar availability, quality, efficacy and safety need more attention, more resources, and more evenly applied official sponsorship across European countries.
As one study states, “Recommendations by the different country experts ranged from the need for information and communication on biosimilars to … more support for switching and guidance on substitution.”
Many clinical societies do clearly recognise the need for information and education on biosimilars. For instance, the European Society for Medical Oncology published a paper about the integration of biosimilars into routine oncology practice, calling for multidisciplinary collaboration to build confidence wherever it is still lacking. According to the paper, questioned about their knowledge of and comfort with biosimilars, many oncologists exhibited only a moderate confidence in their understanding of key concepts that underpin biosimilar drug development and use. Close to 87% of respondents stated that they wished to be offered more educational activities on the subject.
Increased clinical and payer communications and education from official bodies about available biosimilars and their quality and efficacy. Many observers note that clinicians, payers and patients are insufficiently aware of the range of biosimilar alternatives and their clinical outcome and safety equivalency to original biologics. Where the state, or official bodies, promote biosimilars, take-up improves significantly.
While the European market is in some aspects fragmented, it does nevertheless benefit from a unitary regulatory authority, and experience of a competitive biosimilars market is broadly consistent across countries, with a few notable exceptions.
This has resulted, for example, in a picture for infliximab where the European market is now split between four competitors, and with the original patented drug now down to sub-50% market share.
As the competitive market has swung into action, infliximab treatment days have increased at an accelerated rate compared to pre-patent-expiry. Competitive market discounting appears to have settled in line with the general EU biosimilars experience.
Of course, responsibility for communications about biosimilar quality, clinical efficacy and safety cannot simply be laid at the door of the regulatory authorities.
All stakeholders need to contribute to that goal, including clinical associations, payers, healthcare management and the pharmaceutical industry. In combination, these voices can become greater than the sum of their parts and make a major contribution to clinical confidence in prescribing biosimilars.
To take just one prominent example, since the original patent for infliximab – the biggest original biologic on the market - expired in the US in 2017, biosimilars created to compete with it are reported to carry a 25% discount, compared with pre-competition pricing. This is in line with the European experience and, if these levels are maintained, looks to create a sustainable competitive market. This is good news if this one instance turns out to be representative of the market as a whole. However, it should also be noted that market penetration of infliximab biosimilars has yet to reach European levels. This underlines that fact that the U.S. market is much less advanced than the European market. The next wave of biosimilars are mostly oncology products – an entirely different marketplace - and are expected to do better with fewer obstacles.
Where procurement is centrally planned in the U.S., there are examples of a desire for commercially sustainable markets, and successful execution of the sustainable approach. In one instance, an integrated managed care consortium has shown that with careful planning and implementation, sustainable pricing agreements can be made between biosimilars companies and payers, resulting in high volumes, financial viability, and cost-savings for the patient. However, these experiences are not yet the norm. Generally in the U.S. there has not yet been high volume uptake for biosimilars, and patients are not yet seeing optimal savings, mainly on account of non-preferred formulary placement, and non-transparent rebates. Proposed reforms may, on the other hand, help reduce these obstacles.
Another area where the European and U.S. markets diverge – and where the market penetration of biosimilars in the U.S. falls significantly behind the EU - is the area of regulation. Just one example is the lack of guidance around interchangeability and automatic substitution of a biosimilar when the reference biologic is prescribed – a subject which is ably covered in-depth in specialist papers.
These issues themselves do not stop sustainable biosimilars markets becoming established, but they do hamper the speed of developments, and as such are worth official attention. At all events, regulators needs to make the certification process and ease of market entry for biosimilars smoother in the U.S. Lengthy delays between approval and launch have become the norm in the U.S. in spite of the 2017 Supreme Court ruling that biosimilar applicants would no longer have to wait six months to launch their biosimilar. Overall, court rulings will continue to play a key part in accelerating or suppressing market development.
But this is not just about the regulators. An area for reform and development which all parties can help address is that of clinician and payer education in relation to the safety and effectiveness of biosimilars.
In contrast to the U.S., biosimilar education has been strong in parts of Europe. In Germany, for instance, extensive national and regional input from regulators, payers and medical professional groups have provided substantial stimulus for biosimilar uptake. In fact, Germany is now a leader in several therapeutic classes containing biosimilars, including erythropoietins.
In the U.S., on the other hand, there have been only a few instances of medical professional societies, such as the American College of Rheumatology, issuing recommendations to healthcare providers to incorporate biosimilars into treatment plans where appropriate. But generally, education efforts have been more muted than is desirable.
That said, the FDA has announced that it is bolstering efforts to educate physicians to reduce clinical doubts on safety and efficacy of biosimilars. Furthermore, the agency is addressing physician concerns regarding indication extrapolation - a process where the FDA can approve a biosimilar for indications included on the label of the drug despite not being subject to clinical studies.
On top of this, the U.S Government’s Congressional Research Service has lent its voice to the issue with a substantial paper designed to brief all stakeholders in the issues of biosimilars.
Finally, biosimilar companies have to make a major investment in communicating and educating clinicians, healthcare providers, payers and official bodies to encourage take-up of their product.
All of this is valuable, but more communications are needed to guide and inform biosimilar uptake if competition is to thrive – communications from regulators, from clinical associations, between healthcare management organizations , and, indeed, from the pharmaceutical industry itself (through bodies such as the Biosimilars Forum or the Biosimilars Council).
As regulators make certification and market entry easier,so must the industry embrace the need to make its manufacturing processes more efficient.
Currently, the pharmaceutical manufacturing industry as a whole is going through a developmental phase known globally as Industry 4.0 or ‘digital transformation’. This new era has swept in, bringing with it:
The new generation of digitalized, automated technology now available is enabling manufacturers around the world to improve overall performance and reduce time to market through:
In the biopharma world, there are three main areas where digitalization can introduce major efficiency benefits and reduce both development and time-to-market costs (a proportion of which can be redeployed in competitive pricing strategies or new drug development investment). They are:
Simply put, major industry players need to lead by example. Instead, according to one key commentator on Industry 4.0 adoption in the pharmaceutical industry: “The pharmaceuticals and life sciences industry has been very cautious in applying digital technology to improve manufacturing and supply chain operations thus far, yet that caution is becoming a hindrance.”
Increase adoption of new-generation, Industry 4.0 technology in the pharmaceutical industry, in order to improve efficiency, quality and agility, both in manufacturing and discovery/development. The resulting cost-savings can then be shared with providers and payers through competitive pricing which does not undermine future product development investment capabilities. This recommendation would be best promoted through trade bodies.
Teva Pharmaceutical’s recent development of its biologics plant in Westchester, Pennsylvania, provides a vignette of the kind of mindset and investments that the industry needs to deliver, in order to play a contributory role in the drive to create a sustainable biosimilars market.
The Teva plant at Westchester was designed and created to employ innovative design, in order to deliver simplicity and efficiency wherever possible. Rather than leverage its existing plant and estate, Teva decided to invest in an entirely new plant for biologics manufacturing. This immediately meant that all three key stages of biomanufacturing could be combined in the one plant – cell bank establishment, drug substance development and drug product manufacturing. This concentration of processes into a multi-purpose site is still relatively unusual in the industry.
Sourav Kundu, Senior Director and process development expert at Teva, explains, “This manufacturing site really benefits through what we call ‘efficiency by design’. By having all three key stage processes on the one site, there are several efficiency gains that stand out. First, our automation and data management/analysis systems can be applied across the full range of processes, eliminating IT duplication and ensuring very tight integration across the plant. Secondly, we didn’t need separate teams at three sites, but one co-ordinated team across all areas. Quite apart from technical benefits of a digitalised manufacturing environment built from scratch, the cultural gains were also substantial, with the process development group for instance housed just two hundred yards from the manufacturing management group. On top of this, we are leveraging computational chemistry to accelerate in-silico discovery work. And then in the manufacturing environment, we have in-line sensors to drive datastreams into our systems. At first, they are really focused on batch quality monitoring, but as the data-basis grows, we will move that to real-time analytics and highly sensitive quality controls.”
Jason Bock, VP, Global CMC Biologics at Teva, continues, “Within the Westchester plant, we are also adopting single-use bioreactor platforms. Here the benefit is very much one of speed and flexibility – which are critical to the developing biologics and biosimilars markets. It’s really hard to predict how markets will develop, especially as original reference drugs come out of patent and the market opens up. Will there be one biosimilar entering the market, or half a dozen? The answer makes a huge difference to likely market volumes; and first-movers definitely have a major advantage in these situations. So the single-use platform gives us the ability to reduce up-scaling plant development cycles from the traditional two-and-a-half years, to as little as nine months. That’s a real benefit.”
Mi Jin, Director, Downstream Development and Operations, concludes, “This integrated site, which takes advantage of all the latest digitalized technology, really does help us move that much faster from concept to clinic. Even within the plant, process design has minimized the movement of liquid – a critical factor when dealing with inherently sensitive products and substances. The agility and efficiency of this approach is what gives us the ability to compress go-to-market times and reduce manufacturing costs – competitive advantages which we then share with the markets we serve.”