LAKE FOREST, Ill. – Clad in white lab coats, blue gloves and safety goggles, scientists are buzzing around a lab at Hospira in this suburb north of Chicago.
Their focus has big implications for an emerging class of drug treatments known as biosimilars, as well as for patients and insurers. Biosimilars are essentially generic versions of what’s known as biologics, or drugs made from living cells that treat complex diseases such as cancer and autoimmune disorders. Because they are copycats, biosimilars are expected to cost 20 to 30 percent less than the biologic drugs they’re meant to replace.
Federal regulators this month approved the first biosimilar for the U.S. That drug, Zarxio by Sandoz, helps prevent infections during chemotherapy, and is considered an alternative to Amgen’s Neupogen. A leading pharmacy benefits manager said biosimilars for Neupogen alone are expected to save $5.7 billion in drug costs through 2024.
Hospira is at the forefront of the biosimilars march, with a dozen drugs in its pipeline. Other drugmakers are developing dozens more. As of November, 45 biosimilars had entered clinical trials, compared with 22 in January 2013, said Bernstein Research.
While most drugs are synthesized from chemicals, biologics and biosimilars are usually made from proteins grown in living cells, making them better able to target the root of the problem within the body.
“Biologics have the ability to prolong life,” said Sumant Ramachandra, Hospira’s chief scientific officer. “But when exclusivity periods expire, the monopoly position that a biologic drug has is going to be subject to competition. That helps drive down the price.”
Many newer biotech drugs cost more than $100,000 per year, Hospira said, and together they account for nearly 30 percent of all U.S. drug spending. The Affordable Care Act, passed in 2010, paved the way for biosimilars to gain approval in the U.S. as a way to bolster competition and lower prices.