U.S. biosimilars glass--half full or half empty?
Will success for biosimilars companies reduce drug price control pressure?
Ten years after the U.S. created a pathway for biosimilars--and four and a half years after the first FDA approval--a few manufacturers have demonstrated that they can overcome the technical, regulatory and commercial barriers to create sustainable businesses. Manufacturers are confident that most of the half-dozen biosimilar products on the U.S. market will be profitable and that they can launch a continuous stream of successful copies of blockbuster biologics.
Commercial success for a handful of products does not, however, mean that biosimilars will meet expectations that were unleashed a decade ago. In discussions of the technical and regulatory issues, and of legal and commercial rivalries, it is easy to forget that there is only one reason for the biosimilars pathway to exist: to reduce costs for American patients and for society.
Knock-off biologics aren’t creating relief for many patients, they are not producing sufficient savings for the healthcare system to create headroom for new innovative products, and there’s little evidence they are diminishing political pressure to control drug prices.
Industry leaders urge patience, arguing that they are on track to bend cost-curves in the long-term. Naysayers want to throw in the towel and regulate the prices of off-patent biologics (see“Lackluster U.S. Biosimilars Market Sparks Radical Recommendations”).
While biosimilars will bite off hunks of the revenue stream from a handful of blockbuster biologics, it could be another decade or more before biosimilars make good on their promise to deliver massive savings.
“When you look back, we always expected it to become a bigger part of the U.S. landscape,”
Even companies that are commited to making biosimilars work are frustrated by the slow pace of adoption in the world’s largest drug market.
Vasant Narasimhan, CEO of Novartis AG (NYSE:NVS; SIX:NOVN), told BioCentury that the pace of biosimilar penetration of the U.S. market has been “disappointing.”
“When you look back, we always expected it to become a bigger part of the U.S. landscape,” he added. Narasimhan briefly led Novartis’ biosimilars activity in 2014, when he served as Global Head of the Sandoz Biopharmaceuticals and Oncology Injectables business unit.
He contrasted slow uptake in the U.S. with the rest of the world. “Our overall performance with Sandoz in biosimilars has been very positive. It’s driven by Europe,” especially Germany, but Sandoz is also experiencing good uptake in Asia.
Narasimhan is confident that the U.S. biosimilars market will gradually expand, but he doesn’t think prices will drop as steeply as they have in Europe.
In the U.S., biosimilars manufacturers must overcome patent thickets that delay launches, and a byzantine reimbursement environment that creates perverse incentives for large segments of the market to favor higher-cost products.
These barriers come after companies have invested up to $350 million to develop a biosimilar, a cost that precludes biosimilar competition for biologics for products that generate sub-blockuster revenues.
Even when prices of biosimilars fall, it is usually a slow and gradual decline that comes after years of price