Report: Biosimilars hold big savings potential

The creation of a clear approval pathway for biosimilar drugs remains a daunting task for the Food and Drug Administration, despite the fact that it's prescribed by law through the Patient Protection and Affordable Care Act. But when those lower-priced, generic versions of some staggeringly expensive bioengineered medicines do finally come to market, they're likely to have a profound effect on the nation's outlays for specialty pharmaceuticals.

In a recent report on the outlook for specialty and biotech medicines, pharmacy benefit management giant Express Scripts, or ESI, predicted that U.S. patients and health plan payers would save $250 billion between 2014 and 2024 "if just a handful of biosimilars were to enter the market."

"This estimate is based on the 11 existing biologic drugs that are the most likely candidates for biosimilars in the next 10 years," ESI noted. "The assumptions were based on conservative estimates of utilization, cost and consumer inflation. By the end of 2024, none of the drugs in this group will be patent-protected, unless extensions are granted."

What's more, researchers said, "the savings from a biosimilar pathway [are] likely to grow significantly greater when an additional set of major biologic drug patents expire between 2026 and 2028."

ESI voiced strong support for the cost-saving potential of biosimilars and for what it predicts will be a "new patent cliff" for top-selling bioengineered medicines. "The Patient Protection and Affordable Care Act created a pathway to encourage development of interchangeable generic biological products, which should encourage competition and lower drug costs as it did with many small molecule, synthetic drugs," the PBM reported in May. "Critics of biosimilars are raising the same safety concerns that critics of generic synthetic drugs raised before generic availability was prevalent. If the pathway is accelerated, the cycle of high-cost brands going off patent provides opportunities for innovators, clinicians and drug manufacturers to work together to provide lower-cost, clinically effective prescription drug solutions for people facing life-threatening conditions."

Nevertheless, biosimilars still face an uphill battle for FDA approval, said ESI's chief medical officer, Dr. Steve Miller, at the Express Scripts Outcomes Symposium in Orlando April 23. "Roadblocks arise from both the nature of biologic drugs and the recent FDA regulatory pathway established for the approval of biosimilar drugs," he said.

One hurdle, Miller told listeners, is that biologic drugs are "very large, complex proteins" and are "manufactured using living organisms rather than by chemical reactions."

"Due to natural variability in living cells, uncontrollable small differences are inevitable in both the biological manufacturing processes and the resulting molecules," he pointed out. "Traditional drugs are chemically synthesized, they are much smaller molecules and they can be manufactured with virtually zero variability.

That poses challenges for the FDA review and approval process. What's more, Miller charged, "the makers of brand-name biologics are lobbying to preserve their drugs' market share at the expense of chronically ill patients. These groups have introduced bills in multiple states that would create obstacles for the substitution of their biologic drugs, thus creating impediments for biosimilar use."

"These companies claim that the purpose of their legislation is to protect patients from unsafe medications. The real motive, however, is to create barriers for competition," added ESI's top clinician.

Even without the expected onset of lower-cost biologics, however, the increasing availability of lower-cost generics has profoundly affected the market for statins and other traditionally derived, small-molecule branded pharmaceuticals as more and more older blockbuster medicines fall off the patent cliff and lose their market exclusivity. And that shift also is bending the nation's healthcare cost curve, independent of other cost-cutting efforts.

In 2012, "Total spending on medicines declined by 3.5% as a result of declining use of branded drugs, greater availability of lower-cost generics, lower levels of price increases and reduced spending on new medicines," noted IMS Institute for Healthcare Informatics in a report released in May.

A flood of new copycat versions of former blockbusters like Plavix and Lipitor that lost their patent protection and marketing exclusivity in 2011 and 2012 helped take the air out of the drug-price-inflation bubble last year. "Prescription drug costs for most patients are declining, with 72% of all prescriptions costing patients $10 or less and only 3% of prescriptions costing more than $70," IMS reported.

Nevertheless, noted ESI in a recent Drug Trend Report, "$55.8 billion was spent unnecessarily on higher-priced medications" in 2012, "when more affordable, clinically equivalent alternatives were available."