Biologics restrictions result in lost savings

Restricting access to samples of generic biological drugs would lead to nearly $140 million in lost savings for every $1 billion in biologics sales, Matrix Global Advisors said.

(For the full chain pharmacy section of DSN's Aug. 25 issue, click here.)

“This potential lost savings has enormous implications for the large and growing segment of pharmaceutical spending that biologics represent,” Matrix Global Advisors CEO Alex Brill wrote in “Prescription Drug Savings from Use of REMS Programs to Delay Generic Market Entry,” a report the firm issued last month examining how overuse of risk evaluation and mitigation strategies, or REMS, is slowing the stream of generics into the marketplace.

Biologics are the fastest-growing segment of the pharmaceutical market, he said, growing by 9.6% last year and accounting for 28%, or approximately $92 billion, of the country’s drug spending.

“In light of the forthcoming regulatory pathway for biosimilars and the pending patent cliff among biologics, access to biologic drugs for biosimilar approvals is critically important,” Brill said. “In the current REMS environment, biologics makers will have the same opportunity to restrict access to samples of biologic drugs, with negative consequences to payers and patients.”

Of the 64 approved individual REMS programs in effect today, 15 are for biologics. Brill said some generic drug makers already have reported restricted access to biologics samples.

More restrictions, he noted, are likely to have a dramatic impact on efforts to control healthcare spending.

“To capture the magnitude of the potential lost biosimilar savings from REMS misuse, we use the Congressional Budget Office’s assumptions about the market dynamics following biosimilar market entry,” Brill wrote in his report. “The competitive dynamics of the biologic drug market are not expected to mimic the dynamics in the small molecule market. CBO expects an eventual 40% biosimilar price discount and 35% substitution rate.”