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Ineffective Federal Policies Cause Havoc in Biosimilars Market

December 6, 2019

Lawsuits are being filed and a trade group released a report stating “anti-competitive” marketing practices by biologic drug makers are costing the health care market billions of dollars,

as federal patent policies and Food and Drug Administration (FDA) rules are proving inadequate in opening the market while protecting the rights of drug innovators.

The report, Failure to Launch: Barriers to Biosimilar Market Adoption, $2.2 Billion in Lost Savings was released in September by the Biosimilars Council, a division of the trade group representing generic drug makers, the Association for Affordable Medicine. The report claims barriers are costing consumers and taxpayers an additional $2.2 billion on top of $7.6 billion in lost savings the group claimed since 2015.

Big Potential Savings

Biosimilars are generic versions of biologic drugs, cutting-edge prescription treatments developed using living organisms and more difficult to replicate than chemical drugs. Biologics are among the most expensive drugs on the market, costing between $10,000 and $30,000 on average for a course of treatment, and they are used to treat some of the most challenging illnesses, such as autoimmune disorders. Biosimilars cost 47 percent less than their brand-name counterparts, and they could save patients $54 billion over the next 10 years if used in place of them, according to the Association for Accessible Medicine.

Patients are already experiencing savings from the use of biosimilars, says Benedic Ippolito, a research fellow at the American Enterprise Institute.

“While uptake of biosimilars has been slower than many had hoped, we’ve started to see some increases in the market share of biosimilars, like those competing with the biologic drug called Neupogen,” said Ippolito. “Neupogen has now lost the majority of its market share to competing biosimilars.”

Like generic drugs, biosimilars can bring down the price of brand-name drugs. Failure to Launch cites the biologic drug Remicade, the cost of which under Medicare Part B has dropped by 23 percent since its biosimilar entered the market.

Courts May Decide

An obstacle to the development of biosimilars is the leverage created by rebates the brand-name companies grant to providers to offset the high costs of their drugs, Failure to Launch states. The report cites a lawsuit alleging antitrust violations involving the drug Remicade documenting the removal of rebates for any number of drugs in a drug maker’s portfolio if a purchaser utilizes a biosimilar that competes with a biologic.

Other tactics such as product bundling are now being challenged in court. In a case involving Remicade, the Rochester Drug Cooperative (RDC) claims the manufacturer, Janssen, a division of Johnson & Johnson (J&J), used such tactics to help the company maintain its market share and raise the price of its drug despite the availability of a lower-cost biosimilar. The case is now in arbitration. J&J is facing a similar suit from fellow drug maker Pfizer over its biosimilar Inflectra.

“How the courts eventually rule could be very consequential to this market,” said Ippolito.

Cost Control Debate

Rising drug prices are driving interest in biosimilars. Biologic drugs account for 36 percent of total prescription drug spending and are the biggest drivers of rising prescription drug costs, the Biosimilars Council report states. Total spending on biologics amounted to $125.5 billion in 2018, of which $21.5 billion was paid by Medicare.

Like brand name manufacturers, companies that make biosimilars need reassurance of return on their investments, and good patent policies can save consumers millions of dollars, says Michael Carrier, a professor at Rutgers Law School and an antitrust law specialist who has written about the biologic drug industry.

“Europe is ahead of the U.S. on this,” said Carrier. “ Not only will biosimilars need to clear the costly development stage, but they’ll have to contend with biologics that are trying to block them from the market.”

Biosimilars also face strict regulations regarding distribution, says Carrier.

“The FDA could make it clearer how biosimilars could receive interchangeability status, which would allow them to be a substitute at the pharmacy counter,” said Carrier.

Call for Price Controls

Another proposal advanced in an August 21 op-ed in the The Wall Street Journal by Peter Bach and Mark Trusheim calls for government price controls on biologic drugs after a developing company’s period of market exclusivity ends. Former FDA commissioner Scott Gottlieb opposed this approach in an op-ed in the same publication on August 25.

“Among other dangers, this could trigger shortages of the drugs,” wrote Gottlieb. “It would also discourage investment in manufacturing, as few drug makers would want to produce complex drugs in perpetuity for little profit,” wrote Gottlieb.

Ippolito says the biosimilar market needs time to carve out its niche.

“Allowing firms to copy existing drugs after a period of exclusivity has been an extremely successful way of both encouraging novel innovation while also limiting long-run costs in the small-molecule market,” said Ippolito, referring to the majority of drugs on the market which can be more easily replicated as generics.

“In theory, the biosimilar market can do the same,” said Ippolito. “Calls to simply give up on the biosimilar market are far too premature. The small-molecule generic market took time before it became the success we recognize today. That doesn’t mean biosimilars don’t have their own challenges, but it is far too soon to give up now.’

 

Ashley Bateman (bateman.ae@googlemail.comwrites from Alexandria, Virginia.

 

Internet Info:

 

Failure to Launch: Barriers to Biosimilar Market Adoption, $2.2 Billion in Lost Savings, Biosimilars Council, September 2019: https://www.heartland.org/publications-resources/publications/failure-to-launch-barriers-to-biosimilar-market-adoption-22-billion-in-lost-savings

 

AnneMarie Schieber, “Proposed FDA Rule on Biosimilars Suffix Sparks Industry Concerns,” Health Care News, May 28, 2019: https://www.heartland.org/news-opinion/news/proposed-fda-rule-on-biosimilars-suffix-sparks-industry-concerns

Author
Ashley Bateman writes from Alexandria, Virginia.
bateman.ae@googlemail.com