Scott Soefje, MBA, BCOP, FCCP, FHOPA
Like little kids on a road trip, those of us in healthcare keep asking about biosimilars, “are we there yet?” And like most parents, we keep saying, “soon.” Regular updates are important, however, to keep us engaged and motivated to make optimal use of these beneficial agents as they become available.
It has been 40 years since the US Congress passed the Hatch-Waxman Act (Drug Price Competition and Patent Term Restoration Act of 1984), which established the approval and regulatory processes for generic drugs. It created an abbreviated application process to allow manufacturers to create copies of brand-name drugs that would need only to prove bioequivalence for approval.¹ This was designed to create cheaper drugs and was extremely successful.
As biologic drugs became more prevalent and expensive, Congress passed the Biologics Price Competition and Innovation Act (BPCIA) of 2009, part of the Patient Protection and Affordable Care Act, to address the high costs. Learning from European policy and trying to mimic the Hatch-Waxman Act, Congress developed a streamlined biologics license application for biosimilars.² The goal was to replicate the cost-savings seen with generic drugs and increase the access to safe and effective biologic drugs.³
Cost-Savings From Generics and Biosimilars
Generics and biosimilars have already led to significant healthcare savings. It is estimated that 90% of all prescriptions are filled with either generic medications or biosimilars. Together, these drugs have saved more than $3 trillion from 2014 to 2024, yet they account for only 13% of US drug spending and 1.2% of US healthcare spending overall.⁴
Since their market entry in 2015, biosimilars have saved the US healthcare system approximately $36 billion, with $12.4 billion in savings for 2023 alone.⁴ By 2028, these savings are expected to exceed $180 billion.⁵ This cost reduction is crucial for patients and healthcare providers, offering more affordable treatment options to patients, and easing the financial burden on the healthcare system.
To evaluate the BPCIA’s effectiveness, let us look at the key issues identified at the start of the biosimilars journey and see where we stand now.
Safety and Efficacy
As of December 2024, the FDA has approved 62 biosimilars, representing 17 reference products. The number continues to grow each year, with 17 added approvals in 2024, surpassing the previous record of 10 approvals in 2019.⁶ Biosimilars have proven their safety and efficacy, with more than 2.7 billion days of patient therapy showing no meaningful differences in safety or outcomes, and an estimated increase in access to care of 495 million days.⁴ Thus, from a safety and efficacy perspective, we can say biosimilar agents have arrived, as the FDA’s process seems to work, providing drugs with no meaningful differences compared with their reference products.
Removing Barriers That May Interfere With Biosimilars to Market
It is estimated that 70% to 80% of brand products eligible for competition do not have a biosimilar in development.⁴ Why? The answer is complex. The high cost of developing and marketing biosimilars can deter new entrants. Legal battles over patents and regulatory hurdles can delay biosimilars’ market entry. The “patent dance” was designed by the BPCIA to expedite patent disputes, aiming to accelerate biosimilar entry while protecting innovators.³ Early discussions between biosimilar and reference manufacturers were supposed to minimize litigation by allowing time to review and discuss patent contentions. Although generally successful, patent disputes still lead to significant delays.³ Product hopping—where the innovator pushes demand from the product facing biosimilar competition to another product that has patent protection, such as subcutaneous administration of monoclonals—is a common example. Efforts are ongoing for Congress to fix this issue and make the overall process easier to navigate.⁷
Provider and Patient Awareness
A significant knowledge gap is seen between healthcare providers and patients regarding the safety and efficacy of biosimilars, especially when biosimilar agents move into new therapeutic areas. Many providers are hesitant to switch from a trusted biologic to a biosimilar agent, even if it is more cost-effective.⁸ Thus, education is still needed as biosimilars spread into various therapeutic areas.
Interchangeability
Another major perceived barrier is interchangeability. For a biosimilar to be designated as interchangeable, it must not only meet the requirements for biosimilarity but also show that it can produce the same clinical result as the reference product in any given patient. In addition, if the product is administered more than once, the risk of alternating or switching between products must not be greater than using the reference product without switching. This designation allows a biosimilar to be substituted by the pharmacist for the reference product without the healthcare provider’s intervention.⁹
A recent FDA draft guidance aims to simplify the requirements for proving interchangeability.⁹ Previously, biosimilars needed extensive switching studies to show that patients could switch between the biosimilar and the reference product without losing efficacy or increasing adverse events. The new proposal suggests that such studies may not always be necessary if existing data sufficiently demonstrate the biosimilar’s safety and efficacy.⁹ This change is expected to reduce the time and cost of bringing interchangeable biosimilars to market, potentially increasing their availability and use.
Economic and Reimbursement Issues
The financial incentives for prescribing biosimilars do not always align with their cost-saving potential. Reimbursement policies can be complex and vary significantly between private insurers and government programs such as Medicare and Medicaid. Patients have not always seen the benefits of biosimilars. A recent study of 1.7 million claims showed that out-of-pocket costs were not lower for commercially insured patients.¹⁰ Current reimbursement models do not incentivize providers to use less costly biosimilars, even after the Inflation Reduction Act temporarily increased Medicare Part B reimbursement in October 2022 for a term of 5 years.⁸ One study found that biosimilars are less likely to be adopted in physician offices compared with hospital outpatient settings, possibly because of differences in financial policies.⁸
Another financial issue is the declining average sales price (ASP). Although this indicates that biosimilar costs are dropping,¹¹ it also puts providers in a tough spot as their revenue declines, sometimes to the point where they are paying more for the drug than is being reimbursed. This continues to happen with several products.¹²
Here are a few viable solutions that the Centers for Medicare & Medicaid Services (CMS) could use to alleviate this dilemma:
-
Remove payer rebates from the ASP calculation and include only the discounts that the physical purchaser of the products receives
-
Set a threshold below which the ASP of generics and biosimilars cannot fall; this may prevent the “race to the bottom” effect seen with generics, which can lead to shortages
-
Treat biosimilars like multisource generic drugs: in this scenario, the biosimilar and reference product billing codes are stacked, and a weighted ASP is calculated; this could be done by giving the reference and all biosimilar agents the same billing code or by calculating the ASP based on the combined billing codes of the reference product and the various biosimilars
Financial incentives that include supporting adequate reimbursement are essential for the continued adoption of biosimilars.
Market Barriers
The competitive landscape for biosimilars is tough. Originator biologics often have strong market positions and well-established relationships with healthcare providers and payers. The competition for formulary placement results in significant market share for their preferred biosimilar or sometimes even the originator product.¹³ ¹⁴ We are now seeing pharmacy benefit managers (PBMs) and biosimilar manufacturers forming alliances, leading to new business models and even PBM private-label biosimilars, which are drawing additional government scrutiny of PBMs.¹⁵
Moving Forward
For biosimilars to reach their full potential in the US healthcare system, we need a multilayered approach. This includes ongoing education and outreach to healthcare providers and patients, further streamlining of regulatory processes, and aligning financial incentives with the use of cost-effective biosimilars. In addition, addressing legal and market barriers will be crucial to fostering a competitive environment that encourages the development and adoption of these important medications.
The FDA’s efforts to simplify interchangeability requirements are a step in the right direction. By reducing the burden on biosimilar manufacturers, the FDA is helping pave the way for more biosimilars to enter the market, which could ultimately lead to lower healthcare costs and improved patient access to essential treatments.
It will be interesting to see how CMS adapts to the interchangeable status of biosimilars. Will they start treating biosimilar agents like multisource generic drugs? If CMS had treated biosimilars as generic drugs from an economic and policy perspective once the FDA declared biosimilarity, would it have accelerated the adoption of these drugs? Could this have also stopped the big barrier of payers dictating the preferred products? We may never know, but if interchangeability becomes more common, CMS should take the opportunity to investigate this possibility.
Conclusion
The original goal of the BPCIA was to create a system for biologics that mimicked the success of generic drugs. Biosimilars, like generics before them, are saving a significant amount of money and expanding the access of safe and effective medications.
The question remains, however: after 10 years of biosimilar availability in the United States and 20 years in Europe, are we there yet?
The answer is that we are making satisfactory progress, but we still have a long way to go to arrive at our preferred destination.
References
Thomas JR. The Hatch-Waxman Act: a primer. Congressional Research Service. 2016. Accessed October 25, 2024. https://crsreports.congress.gov/product/pdf/R/R44643/3
Patient Protection and Affordable Care Act, Pub. L. No. 111-148; 2010. Sec 7001-03, 124 Stat. 119, 804-21. Accessed December 17, 2024. www.fda.gov/media/78946/download
Baghdadi R. Biosimilars. Health affairs health policy brief, July 21, 2017.
Association for Accessible Medicines. U.S. Generic; Biosimilars Medicines Savings Report. Biosimilars Council. Washington, DC. September 2024. Accessed December 17, 2024. https://accessiblemeds.org/resources/blog/2024-savings-report
Joszt L. Biosimilars can create huge savings, but interchangeability needs to be reviewed. AJMC. April 10, 2023. Accessed December 17, 2024. www.ajmc.com/view/biosimilars-can-create-huge-savings-but-interchangeability-needs-to-be-reviewed</li>
US Food and Drug Administration. Biosimilar product information. December 2, 2024. Accessed December 17, 2024. www.fda.gov/drugs/biosimilars/biosimilar-product-information
Jeremias S. Breaking down biosimilar barriers: part 1: the patent system. AJMC The Center for Biosimilars. November 11, 2024. Accessed December 17, 2024. www.centerforbiosimilars.com/view/breaking-down-biosimilar-barriers-the-patent-system
Hong D, Kesselheim AS. Enhancing health care affordability: strategies for accelerating biosimilar uptake. Arth Rheumatol. 2024;76:1702-1704.</li>
US Food and Drug Administration. Considerations in demonstrating interchangeability with a reference product update. Guidance for Industry. June 2024. Accessed December 17, 2024. www.fda.gov/media/179456/download
Feng K, Russo M, Maini L. et al. Patient out-of-pocket costs for biologic drugs after biosimilar competition. JAMA Health Forum. 2024:5(3):e235429.
Albaugh J, Indurlal P. Medicare reimbursement trends of biological reference agents and their biosimilars (abstract). J Clin Oncol. 2024;16 suppl:11155.
American College of Rheumatology. The ACR to the CMS: what you need to know about biosimilars and G2211. June 10, 2024. Accessed December 17, 2024. www.the-rheumatologist.org/article/the-acr-to-the-cms-what-you-need-to-know-about-biosimilars-and-g2211/?singlepage=1</li>
O’Shea T. Payer perspective: incentives for biosimilars and formulary access. Managed Healthcare Executive. September 20, 2023. Accessed December 16, 2024. www.managedhealthcareexecutive.com/view/payer-perspective-incentives-for-biosimilars-and-formulary-access
Jeremias S. Breaking down biosimilar barriers: part 3: payer and PBM policies. AJMC The Center for Biosimilars. November 13, 2024. Accessed December 16, 2024. www.centerforbiosimilars.com/view/breaking-down-biosimilar-barriers-payer-and-pbm-policies
Tan J, Freeman S, Desantis D, Olson EG. U.S. biosimilar: greater access and new commercial models. December 4, 2024. Accessed December 17, 2024. www.ipsos.com/en-us/us-biosimilars-greater-access-and-new-commercial-models