Pharma, R&D

Spotlight on drug pricing could be catalyst for change in US biosimilar landscape

While biosimilar makers have long established themselves in Europe, only a few copycat versions of biologics have launched in the nascent US market, which is beginning to show signs of maturing, but is complicated by a reimbursement landscape fractured by multiple players. The spotlight on drug pricing, however, may at long last provide the catalyst for change.

Biosimilars were approved in the United States amidst much fanfare in 2015, years after their introduction in Europe, thanks partly to the tactics employed by Big Pharma to evergreen the patent protection of their prized blockbuster biologics in the world’s biggest market for drugs.

AbbVie $ABBV, for instance, has ensured that all but one biosimilar maker will delay launching copycat versions of its flagship Humira — which brought in roughly $12 billion in US sales last year — to 2023 in the United States. The one dissident, who is still wrestling with AbbVie in the courts, is Boehringer Ingelheim.

Earlier this week, the German drugmaker said it had decided to focus all its effort into launching its Humira biosimilar Cyltezo in the United States, and would abandon its entire biosimilar development program elsewhere. Meanwhile AbbVie has not been able to keep biosimilar competition at bay in Europe, where at least four Humira copycats have already been launched, forcing the company to slash the rheumatoid arthritis drug’s price by 80% in European markets to remain competitive.

The few copycats that have launched on the US market out of the 15 that have secured FDA approval have not so far garnered significant market share compared to their European counterparts — largely due to pricing dynamics and reimbursement hurdles. Yet with political pressure reaching full boil on drug pricing in the United States, newer entrants may be forced to temper their pricing strategy, which could entice insurance coverage, and help their makers chip away at the monopoly of established branded biologics.

On Wednesday, Teva $TEVA and Celltrion’s once-rejected biosimilar for Roche’s non-Hodgkin’s lymphoma drug Rituxan was approved by the FDA — but the two partners have not disclosed their pricing plans for the drug, Truxima, or offered a launch date. Sales of Rituxan, one of Roche’s arsenal of cancer blockbusters, have already plummeted in Europe thanks to biosimilar competition. Teva and Celltrion are also gearing up for a US approval for a Herceptin biosimilar, which could deal a further blow to Roche’s $20 billion cancer franchise.

Severin Schwan

But Roche is convinced that marked difference in biosimilar dynamics between Europe and the United States will persist. Last month, as part of a quarterly earnings conference call, CEO Severin Schwan put on a brave face: “I would put the US in a highly heterogeneous system and…let’s be clear we expect significant entrant of biosimilars, we don’t expect the erosion rate to be similar to Europe at this stage even with some potential additional activities with the administration in the U.S. government.”

But under commissioner Scott Gottlieb, the FDA seems upbeat about the future of biosimilars.

“We’re advancing new policies to make the development of biosimilars more efficient and to enable more opportunities for biosimilar manufacturers to make these products commercially successful and competitive,” Gottlieb said in a statement announcing the Truxima approval. “We’re seeing more biosimilar drugs gain market share as this industry matures.”

In Europe, however, biosimilar competition has begun to hurt makers of branded drugs in a meaningful way. AbbVie, in its recent quarterly earnings call, suggested the pricing pressure they are facing in the Europe from Humira biosimilars is greater than previously anticipated. The company has now forecast a 26-27% erosion in Humira ex-US sales in 2019, from a previous estimate of 18-20%.

Vimal Divan

As the landscape for biosimilars evolves at a different pace in Europe versus the United States, there is a mixed bag of developments to keep track of, noted Credit Suisse’s Vimal Divan.

On the positive side, the FDA has approved three biosimilars in recent weeks — Truxima, Coherus’ Neulasta biosimilar Udenyca, and Novartis’ version of Humira, Hyrimoz. On the negative side, other than Boehringer’s decision to terminate biosimilar development outside the United States, Merck $MRK has also axed the development of their knockoff of Lantus, and Novartis’ Sandoz unit has stopped their Rituxan biosimilar program in the US.

As it stands, Pfizer and Novartis are best positioned to weather potential biosimilar threats in the coming years, Divan said, noting that the two drugmakers are also developing their own biosimilars, which could help offset some of that risk. Unsurprisingly, the two companies that have the most to lose are AbbVie and Roche.

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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