With Americans increasingly concerned about drug prices and President Trump announcing his plans, there is one obvious solution with the potential to save the U.S. health-care system billions of dollars. This solution has been ignored for too long.
The introduction of biosimilars into the U.S. market will lower prices and increase access for millions of Americans. A study from RAND showed that increased access to biosimilars could cut U.S. health-care spending by as much as $54 billion over the next decade. This obvious opportunity for savings is one that we cannot afford to ignore any longer.
But, alas, as with so much else about our health-care system — it’s complicated.
Biosimilars (or as they are known in other parts of the world, “follow-on biologics”) are copies of innovator biological drugs. A common misconception is that they’re generic drugs. They’re not.
{mosads}Biosimilars are far more complex molecules that undergo a wholly different, more complicated, lengthier and more expensive development and FDA regulatory review process. The same is true for biosimilars in other parts of the world. So, the obvious question arises: Why are they more expensive here at home? Again, it’s complicated.
Almost nine in 10 prescriptions filled in the U.S. are generic drugs. They are high-quality, FDA-approved copies, and they can be 85-percent less expensive than the innovator brand. Biosimilars are far more expensive but can still represent a considerable savings (since their initial brand price is so much higher).
Experts generally agree that biosimilars could be priced between 20-25-percent lower than their innovator brand cousins. Biosimilars have only been on the market in the U.S. for two years but the results are counterintuitive. They are less expensive but aren’t capturing market share. What’s wrong with this picture? In this case, it’s not complicated.
This is due largely (borrowing a phrase from FDA Commissioner Scott Gottlieb) to industry “shenanigans.” And the “industry” here isn’t just Big Pharma, but also “Big Payer.” The insurance industry and prescription benefit managers (PBMs) engage in a dance called “exclusionary contracting” that often blocks a less-expensive product from replacing a costlier one on a patient’s insurance plan.
At a recent meeting, Commissioner Gottlieb suggested that a key federal law on kickbacks could be reinterpreted by the government to help rein in this anti-competitive practice.
Per Dr. Gottlieb: “One of the dynamics I’ve talked about before that’s driving higher and higher list prices, is the system of rebates between payers and manufacturers. And so what if we took on this system directly, by having the federal government reexamine the current safe harbor for drug rebates under the Anti-Kickback Statute?”
Good question.
There are many issues surrounding the introduction of biosimilars into the American health-care ecosystem: safety, effectiveness, interchangeability with the brand, potential adverse medical events, appropriate regulatory labeling and physician prescribing guidelines.
But, even so, biosimilars are FDA-approved. They are safe and effective. They are less costly, and they deserve a seat at the therapeutic table.
Biosimilars can provide broader access to life-saving medicines, but only if insurance companies and PBMs place advancing patient care over padding their own bottom lines. It’s a process. As Dr. Gottlieb correctly surmises, “There is no silver bullet here that will make the biosimilars market go gangbusters. It’s going to be a slow build.”
In the president’s speech Friday, we need to hear that the building is about to commence.
Peter J. Pitts, a former FDA associate commissioner, is president of the Center for Medicine in the Public Interest (CMPI), a medical issues research group that deals with clinical outcomes and econometric studies that analyze the value of new medicines and genomic and molecular-based medical innovation.
Note: CMPI receives funding from biopharmaceutical companies on both sides of the biosimilars debate but does not receive grants specifically on the issue.