Biosimilar Uptake

By September 14, 2018Commentary

There are a lot of very expensive biologic drugs out there, and unlike more traditional oral medications, they are hard to make generic copies of, which keeps prices high even when patents expire.  The FDA and Congress attempted to address this issue by creating a pathway for “biosimilars” or generic biologics, but introduction of these has generally been slow.  Even when they are introduced market uptake may not be swift, as demonstrated by a pair of research letters in the Journal of the American Medical Association.   (JAMA Letters)   There are 10 approved biosimilars and the first research letter dealt with the first one, for Neupogen.  Medicare claims from 2014 thru 2016 were used for the analysis, which included a single indication biologic with a similar purpose.  Use of all these products decreased about 13% from the start to the end of the study period.  The branded Neupogen use declined from 97% of all prescriptions to 52%.  The single indication product rose from close to zero to around 16%.  The biosimilar rose to a little over 30%.  Although the good news is that the biosimilar gained rapid adoption, the average discount was initially only around 15%, so the savings aren’t as significant as typically is seen with introduction of a generic.

The second letter looked at Medicare data for out-of-pocket costs for a rheumatoid arthritis drug, Infliximab, and its biosimilar.  Medicare Part D coverage is complicated in its structure, with the “donut hole” increasingly kicking in as prices have increased.  Given the typical cost of specialty drugs or biologics, the donut hole often comes into play, causing beneficiaries to have additional cost-sharing.  This cost-sharing is ameliorated somewhat by the requirement that manufacturers of brand-name drugs provide a 50% discount for drugs dispensed when the beneficiary is in the donut hole, but that does not yet apply to biosimilars.  It will beginning in 2019.    This bizarrely results in beneficiaries having average cost-sharing for the biosimilar of $5118, compared to only 3432 for the brand name, even though the product price is lower.  This out-of-pocket difference may explain why the biosimilar so far has a limited uptake, but the relatively limited difference in price is also likely a factor.  Manufacturing costs are higher for biosimilars, so we shouldn’t be surprised if discounts don’t reach typical generic levels, but they could be bigger than they are.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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