They were the drugs that were supposed to save the U.S. tens of billions of dollars.
“Biosimilars” are near-copies of complex and expensive biologic drugs to treat cancer, rare diseases and autoimmune disorders like rheumatoid arthritis and colitis. But U.S. sales have been so limited that their future is in doubt. Already, one company has scrapped nearly all its biosimilar development.
Worst-case scenario? Drugmakers could abandon biosimilar development, and makers of original biologic drugs could keep raising their six-figure-a-year prices. Two years ago, the independent policy research group RAND Health predicted biosimilars would save the U.S. roughly $54 billion from 2017 through 2026. That’s looking optimistic.
“This is a make-or-break period,” said Dr. Scott Gottlieb, who led the Food and Drug Administration until April. “My fear is that some of the biosimilar-makers … will say, ‘We’ll just go back to doing other things,” ’ and other drugmakers won’t enter the niche.
Leigh Purvis, AARP’s director of health services research, said the original biologic drugmakers “could kill this market before it ever takes off, and we desperately need it.”
Biosimilars are akin to generic drugs, but true generics aren’t possible with biologic drugs. Pills are easily duplicated by mixing chemicals. Getting a generic version of a brand-name pill approved requires spending about $2 million and two years to conduct lab tests. Manufacturing costs just pennies a pill.
Biologics, on the other hand, are made by manipulating living cells to produce a protein. They treat disorders often caused by faulty genes or immune systems, and they must be injected or delivered by infusion.
The complex process needed to grow and purify the proteins means a copycat biosimilar will never be identical to the original drug. But it also can’t have “clinically meaningful” differences. Getting approval can take five to nine years of lab and patient testing, and costs more than $100 million.
A decade ago, Congress passed a law meant to encourage development of cheaper biosimilars. But the makers of the originals have fought to block rivals — with successive patents, lawsuits and rebates to insurers.
The result? Even drugmakers with the expertise and resources to produce biosimilars are mostly thwarted. In the U.S., that is.
In Europe, monopoly-protecting patents generally don’t last as long as in the U.S. and government-run health systems have favored biosimilars in exchange for discounts.
Biosimilars hit Europe in 2006. Now 54 are available at discounts up to 80%.
In the U.S., the FDA has approved 24 biosimilars, nearly all since 2015. Just 11 of them are for sale, generally at 15% to 35% below the original drug’s price. Those discounts are easily matched by original biologic makers.
Biosimilars have been approved in the U.S. for five biologic bestsellers on the market as long as 22 years: Humira and Enbrel, for rheumatoid arthritis, psoriasis and other autoimmune disorders, and the cancer drugs Herceptin, Rituxan and Avastin. However, their biosimilars can’t be sold in the U.S. due to litigation and multiple, monopoly-extending patents.
The brands have monthly list prices of more than $5,000 to nearly $13,000. Health plans pay less, but even well-insured patients must pay a big portion.
Drugmakers have been harnessing scientific advances to create targeted biologic drugs, many for cancer and rare conditions without good treatments. Their executives predicted insurers wouldn’t balk at high prices because the patient numbers aren’t big.
But as more people took biologic drugs and companies increased prices every year, insurers and middlemen called prescription benefit managers limited patients’ access. They also set high co-payments.
Biosimilars were seen as financial salvation. But given their limited sales to date, the FDA is trying to enable faster approval. In May, it issued guidelines to enable biosimilar-makers to show their products are interchangeable with an original biologic. Pharmacies then could substitute a biosimilar for a brand-name biologic.
A report by a biosimilars trade group estimated the U.S. health system lost $7.6 billion in possible savings since 2015 due to patent walls delaying sales of approved biosimilars.
In October, biosimilar versions of the most lucrative drug, Humira, hit Europe. Humira, which treats psoriasis, rheumatoid arthritis and other autoimmune disorders, launched 17 years ago and brought maker AbbVie $20 billion in 2018 sales, two-thirds from the U.S.
Seven drugmakers have Humira biosimilars approved or awaiting approval in the U.S., but none are expected soon. AbbVie sued each rival to block sales. All seven companies eventually settled, agreeing to pay AbbVie royalties so they can start selling biosimilar versions — in 2023.
Meanwhile, AbbVie has raised Humira’s U.S. monthly list price from $1,524 in 2009 to $5,174, according to figures from health data firm Elsevier.
Makers of Avastin, Herceptin, Rituxan and Enbrel likewise raised their list prices 50% to 200% over that decade.
Even if access improves, few patients will see big savings, said Michael Kleinrock, research director at IQVIA. Insurers and prescription benefit managers will get those.
He also sees bigger problems: Only about 20 biologic drugs have the billions in annual sales making it worthwhile to develop biosimilar rivals. And biosimilars of drugs created years ago will lose favor as next-generation biologics arrive.
He said, “If there’s less reward, there’s less incentive.”