April 09, 2018
It seems like nearly all of my recent conversations with clients and other non-managed care parties center around the cost of specialty drugs. The rising cost of specialty medications, coupled with the increasing number of conditions specialty medications are being used to treat, have made deep impacts on the budgets of payers. Many I talk to hang onto a ray of hope within this high budget area—the hope of cheap biosimilars.
Many people that do not spend their days within the details of the managed care industry have a vision in mind that biosimilar drugs will have the same revolutionary effect on pricing of specialty products that generic drugs have had in the non-specialty space. I find it a bit disheartening to have to explain to them that they should temper their expectations based on the data we are seeing to date.
The first biosimilar in the US, Zarxio (Sandoz) a biosimilar for Neupogen (Amgen), may not have been in a high impact disease state; but we all watched its launch and marketing to get a feel for how biosimilar launches would go. I think many felt underwhelmed by the 17% discount Zarxio offered over Neupogen knowing that it would likely not be enough to cause the industry to force a switch to the biosimilar. It was clear that the innovator product would have plenty of room to compete with rebates and that the biosimilar manufacturer would then also have to compete with rebates to gain market acceptance.
In the conversations I have, the most highly anticipated biosimilar launch is that of the Humira (Abbvie) biosimilars. This anticipation is not too surprising considering the large number of patients using Humira and the large number of conditions it is approved to treat. Many have heard that the FDA has approved two biosimilars to Humira making it hard to explain to them that a market launch is not anticipated for at least a few years, and with the recent development of a second biosimilar settlement by Abbvie with Samsung Bioepis, it’s looking more like 2023 before one will be seen.
We have seen more promising developments in the biosimilar market for Remicade (Janssen) within the last year or so. The first biosimilar to Remicade to launch, Inflectra (Pfizer), came in at a similar discount as Zaxio, at about 15%. About a year later, the second biosimilar to Remicade, Renflexis (Merck), came with a market disrupting 35% discount. I heard quite a bit of excitement with the pricing of this biosimilar. It has been a big enough discount that I have seen multiple payers either prefer or exclusively cover Renflexis over Remicade. While the 35% discount is appreciated by payers, it is still a far cry from the 90%+ discount regularly seen in the non-specialty space for generics with multiple manufacturers.
Considering the development costs and the production costs of biosimilar biologic agents we are unlikely to see as deep of discounts as we do with generics, but I hope that the trend in preferencing Renflexis based on this discount will signal to other biosimilar manufacturers that payers are willing to reward upfront pricing discounts when they are significant enough. Although for simplicity's sake biosimilars are often compared to traditional generics, it’s clear that this does not give an accurate view into the biosimilar landscape. Many with vital financial interests in the outcomes of the biosimilar market do not work day to day within managed care and will rely on managed care professionals to help them sort through the tricky landscape.
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