With numerous specialty drug patents expiring in the next five years, manufacturers are readying new biosimilars for introduction into the market. By 2020, 12 biologic products with global sales of more than $67 billion could face biosimilar competition. A biosimilar is a biologic product that is approved and judged by the FDA to be highly similar to another FDA-approved biologic product (known as a reference product) and has no clinically meaningful differences in terms of safety and effectiveness from the reference product. Only minor differences in clinically inactive components are allowable in biosimilars.
Patient advocates and payers anticipate biosimilars will foster competition and deliver increased savings from negotiated discounts. Competition between a biologic drug and a biosimilar is much more likely to resemble brand-to-brand competition than it is to resemble the dynamics of brand-to-generic competition.
Savings estimates range from $44 billion to as high as $250 billion over the first ten years that biosimilars are available to patients. The Congressional Budget Office estimated that biosimilars would initially be priced about 25 percent below their brand-name counterparts and after several years of competition would be priced as much as 40 percent below the reference product, saving the federal government nearly $6 billion over ten years. More recent analyses estimate the cost of biosimilars to be around 20 percent lower than that of branded biologic therapies. Nevertheless, this remains a significant reduction since many biologics command hundreds of thousands of dollars for annual treatments.
White Paper: The Management of Specialty Drugs, sPCMA, February 2016
Considerations of the FDA’s Impact on Competition in the Drug Industry, Matrix Global Advisors, November 2014, PCMA sponsored
Information for Consumers (Biosimilars), FDA, August 2015
The Next Frontier for Improved Access to Medicines: Biosimilars and Interchangeable Biologic Products, Biosimilars Council, a division of GPhA, April 2015
Health Care Advisory: Update on Biosimilar Reimbursement Pathways: CMS Guidance and Outstanding Issues, Alston & Bird LLP, July 2015
Biosimilar Competition In The United States: Statutory Incentives, Payers, And Pharmacy Benefit Managers, Health Affairs, February 2015
Cost Estimate: S. 1695, Biologics Price Competition and Innovation Act of 2007, Congressional Budget Office, June 2008