Failure to Launch: Biosimilar Sales Continue to Fall Flat in the United States

Rising US drug expenditures are driven primarily by spending on specialty biologic drugs. From 2014 to 2018 alone, spending on biologic drugs increased 50% to $125 billion (1). Growing spending reflects rising biologic drug prices, not just increased use. Many policy analysts, including the Congressional Budget Office (CBO), forecasted that biosimilars would curb spending by finally introducing competition into the marketplace. However, in this issue of the journal, Dr. Kim and colleagues report that between 2016 and 2019, the two available infliximab biosimilar drugs made up less than 1% of anti-TNFi sales for a large commercial payer that covers 14 million Americans. Additionally, of the thirteen biosimilars approved by the Food and Drug Administration (FDA) with indications for rheumatic diseases, only two have reached the commercial market (Table). In other words, biosimilars have largely failed to launch in the United States.

Table.

Originator biologic drugs and biosimilars approved by the U.S. Food and Drug Administration.

Originator Biologic Drug	Biosimilar	Product Owner	FDA Approval Date	Biosimilar U.S. market launch
Infliximab (Remicade)		Janssen	11/10/99
	Infliximab-dybb (Inflectra)	Celltrion	4/5/2016	11/2016
	Infliximab-abda (Renflexis)	Samsung Bioepsis	4/21/2017	7/2017
	Infliximab-qbtx (Ixifi)	Pfizer	12/13/2017
	Infliximab-axxq (Avsola)	Amgen	12/6/2019
Adalimumab (Humira)		Abbvie	12/31/2002
	Adalimumab-atto (Amjevita)	Amgen	9/23/2016
	Adalimumab-abdm (Cyltezo)	Boehringer Ingelheim	8/25/2017
	Adalimumab-adaz (Hyrimoz)	Sandoz	10/30/2018
	Adalimumab-bwwd (Hadlima)	Samsung Bioepis	7/23/2019
	Adalimumab-afzb (Abrilada)	Pfizer	11/15/2019
Etanercept (Enbrel)		Amgen	1/1/2002
	Etanercept-szzs (Erelzi)	Sandoz	8/30/2016
	Etanercept-ykro (Eticovo)	Samsung Bioepis	4/25/2019
Rituximab (Rituxan)		Roche Genentech	2/23/2006
	Rituximab-abbs (Truxima)*	Celltrion	11/28/2018
	Rituximab-pvvr (Ruxience)	Pfizer	7/23/2019	Planned for 2020

^*Rituximab-abbs (Truxima) is commercially available as of 11/11/2019, but not yet approved for rheumatic diseases.

The lack of market penetration and very modest price reductions for biosimilars have left policymakers, payers, physicians and the public frustrated, particularly because sales in Europe continue to rapidly expand and robust cost-savings have materialized. Ten years ago, the CBO projected cost savings of 40% for biosimilars in the United States. In European marketplaces, these estimates are not far off. Countries like Denmark and Sweden, using the negotiating and purchasing power of their single-payer systems have instituted a winner-takes-all bidding system. Remarkably, Denmark realized a two-thirds cost savings through this bidding process coupled with mandatory switching (2). Contrast this to the United States, where recent analyses show that in 2018, biosimilars only achieved 9% ($91 million) of the $1 billion in cost savings the CBO projected (3). Below I discuss the four main factors that have created formidable legal, financial and regulatory barriers to U.S. market entry and uptake.

Patent Protections and Legal Actions.

Unprecedented in scale are the tactics used by drug makers to block the entry of biosimilars into the market after originator biologic patents expire. In the US, the Biologics and Price Competition and Innovation Act (BPCIA) created a 12-year exclusivity period for originator biologics. Companies have extended this period through lawsuits and filing numerous patents to create a “patent thicket” that biosimilar competitors must navigate to reach the market. Among the many examples is Humira (adalimumab), a top seller representing over $13 billion in US sales in 2018. Humira was approved in 2002 and therefore completed its exclusivity period in 2014. The drug manufacturer, Abbvie, has filed over 200 patents and patent applications that cover the drug itself, manufacturing methods and other ancillary aspects associated with its use, more than 3 times the number of patents filed in the European Union (76 patents) and Japan (63 patents) (4). Accusations that Abbvie is systematically attempting to delay market entry of its competitors are supported by the fact that nearly half of its patent applications in the U.S. were filed after the patent expiration date in 2014 (5). The manufacturer recently reached a settlement agreement that delayed the launch of the biosimilar adalimumab-atto, approved in 2016 (Table), until 2023. During this time, Humira’s price has increased 18% each year, rising from $16,000 to over $30,000 from 2012 to 2016 alone. These striking price increases are largely passed to insurers, including Medicare, and to patients.

Addressing the patent thicket has been challenging. Recently introduced legislation, the bipartisan Biologic Patent Transparency Act, will require biologic manufacturers to disclose and publish patents in the “Purple Book,” a publicly searchable database. The Act would limit “competition-stymieing patent thickets that delay competition without providing meaningful product improvements by restricting enforcement of patents that are issued after a biosimilar application has been submitted to the FDA.” The fate of this legislation is unclear, and its potential impact on reducing the patient thicket remains to be seen.

Rebates and Gap Discounts.

Another barrier to biosimilar market entry is the rebate system between drug manufacturers, Pharmacy Benefit Managers (PBMs) and other payers that create incentives for listing higher-priced originator biologics over biosimilars on formularies. For drugs used by rheumatologists like anti-TNFi, rebates to plans can approach 50% of the drug’s list price (6). The so-called ‘rebate trap’ occurs when the originator biologic manufacturer threatens to withdraw this sizeable rebate if a biosimilar is placed in a preferred position on the formulary. Since the retail price of biosimilars is only modestly lower than originator biologics, rebates may result in biologics having a lower post-rebate price than biosimilars. This could explain why fewer than 10% of commercial Medicare Part D plans cover biosimilar infliximab compared to >90% of plans covering originator infliximab (7). To compound matters, it is not uncommon for multi-year rebate agreements to be made right before biosimilar launch dates. Moreover, there remains a lack of transparency regarding rebates, making it hard for plans to uniformly benefit from competition and for biosimilars to compete on a level playing field.

Despite various attempts, policy solutions to address the rebate trap have failed to materialize. A recent rule proposed by the Department of Health and Human Services (HHS) to limit manufacturers from providing rebates was withdrawn after analyses by the CBO and others suggested that the policy might cause Part D premiums to rise. Despite disagreement about assumptions that went into this analysis (8), the prospect of premium increases essentially killed the rule. Meanwhile, the issue has been taken up in court; a lawsuit initiated in 2017 by Pfizer, maker of biosimilar infliximab, against Johnson & Johnson, maker of originator infliximab, addressing anti-competitive practices like rebate traps is ongoing.

In light of multiple policy failures, one area where policy has successfully leveled the playing field for biosimilars is the Medicare Part D pharmacy benefit. In the Medicare program, out-of-pocket costs are based on the full retail price of drugs and rebates are not passed directly to patients. Medicare Part D plans include an initial deductible, coverage, gap, and catastrophic phase. Beneficiaries received a 50% manufacturer discount during the gap for originator biologics in 2018, but not for biosimilars, leading to significantly higher out-of-pockets for biosimilars (7). Fortunately, this policy misstep was addressed in 2019 through the Bipartisan Budget Act, which now allows gap discounts for biosimilars.

Prescriber Inertia and Infusion Reimbursement.

Several factors impact clinicians’ willingness to substitute biosimilar drugs. First, cost savings for biosimilars have been smaller than expected, reducing incentives for switching. Kim et al. show that cost savings increased modestly to about $1000 per quarter by the end of 2018, and patients’ out-of-pocket costs were unchanged. Second, most clinicians are influenced by what is covered on formularies or by payers, and formulary coverage for biosimilar infliximab has been inconsistent. Third, reimbursement policies may not incentivize providers to switch to biosimilars in the commercial sector. For commercial payers, drugs administrated in offices are often reimbursed as a percent-of-charge. Therefore, higher drug prices mean providers administering the drug receive a higher reimbursement amount; a lower cost biosimilar could therefore potentially result in lost revenue. The Medicare program currently addresses this issue by reimbursing providers under the Physician Fee Schedule based on the biosimilar’s Average Sales Price (ASP) plus 6% of the reference biologic price, making physician profit comparable whether a biosimilar or reference biologic is prescribed. Fourth, even with comparable revenue for administration of a biosimilar, switching to a biosimilar can result in unreimbursed work, including the time it takes to explain the change to patients and to generate a new drug order. Finally, physician knowledge about biosimilars has lagged. In one study, more than half of physicians were unfamiliar with the drugs and more than one-third had never prescribed them (9). The alignment of financial incentives will need to be coupled with targeted and effective education to overcome prescriber inertia.

Regulatory Issues and Interchangeability.

Given the fragmented and complex nature of the U.S. healthcare system, it is not surprising that the regulatory pathway for biosimilars has taken many years to define. One key issue that drives the need for new regulation is that biologic drugs do not have fully reproducible structures, unlike small molecule drugs. Protein glycosylation is one important source of variability and can impact immunogenicity, stability, and clinical efficacy. Under current FDA regulations, manufacturers are required to produce data demonstrating that switching from the originator biologic to the biosimilar has no significant effect on safety and efficacy. If a biologic drug has multiple indications, scientific justification for extrapolation to the other indications for which the originator biologic is approved is required. In addition to extrapolation justification requirements, different exclusivity periods for each indication can create additional approval delays.

As the regulatory pathway continues to evolve, the experience to date with biosimilars should provide some reassurance. For example, a recent systematic review examining 90 research articles across 14 disease indications and over 14,000 participants found that most reports did not find differences in biosimilar immunogenicity, safety or efficacy compared to originator drugs (10). The FDA will likely continue to modify the regulatory pathway for biosimilars in response to emerging data, including that arising from post-marketing pharmacovigilance studies.

A separate issue from regulatory approval is the concept of interchangeability, a designation granted by the FDA to indicate that a product is expected to produce identical clinical results. To receive this status, a biosimilar manufacturer needs to provide additional information to the FDA to evaluate the risk of alternating or switching between products. If interchangeability status is achieved, a pharmacist could potentially substitute a product without provider notification, as is currently the case with many generic drugs. Given concerns about immunogenicity, efficacy, and safety, rheumatologists are understandably anxious about unintended consequences of this designation for biosimilars, as outlined in a recent position statement by the ACR (11). Not surprisingly, almost 40 states have already put forward preemptive legislation to require provider notification for switching. In Europe, interchangeability designations are relegated to member states, a factor that has facilitated widespread biosimilar substitution in many countries.

Given the impact interchangeability could have on biosimilar uptake in the US, some manufacturers, such as Boehringer Ingelheim, the maker of adalimumab-abdm, have started the first interchangeability clinical trials. Final FDA guidance on interchangeability is pending and is a regulatory factor that could influence the speed of biosimilar uptake in the United States.

Potential Solutions.

As illustrated above, the failure of biosimilars to gain traction in the United States is due to at least four interrelated issues. Each of these will need to be tackled in turn to reduce the legal, financial, regulatory and clinical barriers that have impeded the development of a more vibrant biosimilar market that fosters competition and leads to cost savings. In the short-term, policies such as the Biologic Patent Transparency Act can begin to address the patent thicket. Legislation that would allow the Federal Trade Commission to more aggressively target anti-competitive behaviors could further address launch delays. Policymakers should also reinvigorate attempts to directly address the rebate trap and the misaligned incentives of groups such as Pharmacy Benefit Managers, learning from the missteps that led to premature withdrawal of the recently proposed HHS rule. On the regulatory front, the FDA should provide timely leadership and clear rules that respond to evolving evidence about biosimilars. The agency’s policies around indication extrapolation, use of data generated by the European Union and other countries to expedite approvals, and interchangeability have the potential to profoundly impact biosimilar uptake in the coming years. Finally, high quality continuing medical education to keep providers up to date on the efficacy and safety of biosimilars should be coupled with reimbursement policies that incentivize them to switch to biosimilars.