In an April 24, 2024 article in Matrix Global Advisors, Alex Brill and Christy Robinson provide an interesting commentary on the Current and Future State of U.S. Biosimilars (here). In the article, they address a number of issues regarding the current biosimilar market and the direction it is taking. They also describe the varied uptake of various approved biosimilar products in different therapeutic areas.

They note that “[F]ourteen years ago, Congress established a regulatory pathway for biosimilars, direct competitors to branded biologic drugs. To date, the Food and Drug Administration (FDA) has approved 49 biosimilars, referencing a total of 15 originator biologics. Of these, 38 have entered the market, corresponding to 10 reference biologics.” In reviewing the various approved and marketed products (as some have been approved but not yet marketed), they outline the rate of biosimilar uptake and the factors that have contributed to the success (and, in some cases, slower uptake) of various products. It is interesting to note that the marketplace is responding much like the fledgling generic market did in the early days of Hatch-Waxman (if you remember the struggle that many generic medications had in gaining market share in the early days of the legislation in the late 80’s and early 90’s). It seems to be a similar problem in the biosimilar market today. Back in the early days of Hatch-Waxman, there was an all-out assault by brand name manufacturers to slow the uptake of generic equivalents. They submitted all types of petitions outlining the parade of horribles that would occur with the entry of less expensive generic versions of medications and argued about the bioequivalence of the new generics.

Generics overcame this problem through education of the public and providing information about the substitutability of generic products, but it took time. Generic uptake started slowly, with some initial products gaining market shares of less than 30-50 %, but after a few years the recognized cost savings and equivalence of generics to their brand name counterparts, the uptake numbers for most generics is in the range of about 90% to date. But at the time of initial market entry of early generics, many of the factors affecting today’s market dynamics (PBMs, fewer wholesalers, supply chain issues and tight formulary management along with tiered co-pays for various products), were not even part of the picture.

The pharmaceutical marketplace is vastly different today. Biosimilars are in a completely different market dealing with pharmacy benefits managers (PBMs), government programs, and sky-high prices that have limited patient access. The FDA has spent a significant effort on educating both patients and health care providers (here). They have also held webinars, seminars, and have adopted a position that, once a biosimilar is approved, it is no different than its brand name counterpart and can be expected to have the same safety and efficacy profile and same therapeutic effect. FDA has hinted this stance through guidance that we have covered in previous blog posts (see here) and in public statements (here and here).

There is however one thing in the Brill and Robinson article that concerns me. The generic market is the victim of its own success as it struggles with squeezed margins that are so low that manufacturers are discontinuing some of their products because they can no longer afford to manufacture them. Will the success of biosimilars create the same problem that has befallen the generic market? Well, the Brill/Robing concern is not exactly on point with their statements and conclusion: “While competition has clearly led to significant price declines for key products over time, there is also a meaningful price floor for biosimilars that distinguishes this market from small-molecule generics. High development and manufacturing costs for biologic drugs limit a competitive biosimilar market from realizing the degree of price competition commonly observed among traditional generics.” But they go on to say: “The biosimilar market will surely continue to expand in the next few years as more blockbuster biologics come off patent. However, the Inflation Reduction Act of 2022 (IRA), which included a provision to allow the federal government to negotiate a select number of drug prices in Medicare, has some stakeholders concerned that biosimilars will become obsolete”. They also provide two other perspectives on market dynamics that may play into how successful current and future biosimilars will be. It will be interesting to follow the biosimilar market to see how the Inflation Reduction Act (IRA), PBMs and other factors impact the future market development of these important products.