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The hope is that more biosimilars will lead to more access and more affordable medications, but biosimilar uptake is lagging. Here’s why and how FDA hopes to fix it.
Smoothing the pathway for the development and approval of biosimilars is a central strategy of the Trump administration, Congress, and the FDA. The hope is that more biosimilars will lead to more access and more affordable medications.
Yet, even though FDA had approved 12 biosimilars by August 2018, only four had come to market due to barriers that include patent challenges and difficult payment policies that stymie biosimilar coverage and prescribing. Those delays cost American consumers more than $4.5 billion in 2017, according to a recent FDA analysis.
More complex testing requirements put the cost of developing a biosimilar at $100 million to $250 million per program, much more than the $10 million involved in producing a new generic drug. Consequently, biosimilars come to market at prices only 15% to 20% below the innovator, which often is not enough difference to drive reimbursement.
FDA Makes Moves
In several speeches over the last six months, most recently in July at the Brookings Institution, FDA commissioner Scott Gottlieb lamented the “anemic” growth of the U.S. biosimilars market, blaming innovator rebating schemes and contracting practices for blocking less costly therapies from patients.
Gottlieb also announced FDA’s much-anticipated Biosimilars Action Plan, which lists a range of FDA initiatives for establishing a more efficient review process.
FDA also issued final guidance on biosimilar labeling, and more guidance documents are expected on biosimilar data analysis methods, managing post-approval changes, and demonstrating interchangeability with a reference product.
To encourage greater uptake of biosimilars, FDA also plans more education of clinicians and patients on biosimilar safety and efficacy to address misconceptions that foster reluctance to prescribe and use these therapies. Biosimilar makers also anticipate that an efficient path for demonstrating product interchangeability with brands will help build prescriber and patient confidence in switching to the new products. Many of these issues will be discussed further at an FDA public hearing on Sept. 4, 2018.
Meanwhile, FDA has set its user fees for 2019 based on an expectation that it will assess and approve 23 biosimilars in the coming year, and that more will come to market as a number of leading biotech therapies lose exclusivity protection.
As of July 1, 2018, more than 60 Biosimilar Development programs to 31 different reference products were in the FDA pipeline, prompting the Center for Drug Evaluation and Research to establish a new office to better integrate biosimilar policy and review functions to smooth the regulatory process.
But FDA efforts to streamline biosimilar testing and approvals will have limited effect on the market so long as “rebating schemes” or “patent thickets” continue to deter the entry of approved biosimilars, Gottlieb stated in his July speech. Brands “thwart competition by dangling big rebates to lock up payers in multi-year contracts right on the eve of biosimilar entry,” he complained. And volume-based rebates further encourage health plans to require prior use of a brand before permitting access to a biosimilar, a requirement that the commissioner said has “no clinical rationale.”
Gottlieb also expects FDA’s action plan will support market competition by reducing “gaming” of FDA requirements, such as using REMS (risk evaluation and mitigation strategies) to prevent biosimilar makers from obtaining reference products needed for testing.
But a main focus is on publicizing how the “rebate trap” permits PBMs and insurers to profit from the spread between list price and the actual rebated price for an innovator therapy, which can amount to hundreds of million dollars in annual revenues for plans. Plans that shift patients from an established drug to a less costly biosimilar stand to lose substantial rebate revenues, and efforts by the Trump administration to deliver on promises to cut drug costs and spending are targeting the role of such rebates in shaping coverage and reimbursement throughout the healthcare system.