chevron-down Created with Sketch Beta.

    ARTICLE

    Economic Considerations Related to Biosimilar Market Entry

    Pavel Darling, Andrée-Anne Fournier, and Michael Carson

    Aug 15, 2024

    6 min read

    Antitrust Litigation & Enforcement Healthcare Pharmaceutical Pricing
    Economic Considerations Related to Biosimilar Market Entry
    Bloomberg Creative via Getty Images

    Allegations of delayed generic entry for pharmaceuticals often give rise to antitrust issues. Such matters are typically focused on allegations that actions taken by other marketplace participants delayed the generic entry of small-molecule drugs, which can provide therapeutically equivalent treatment options to branded reference products at potentially lower prices. To promote the use of generics, most states have adopted generic “substitution” laws, which allow or require pharmacists to dispense the generic when available and cheaper. As a result, generics can experience rapid uptake following their introduction.

    Like generics, biosimilars are recognized as a means of providing similar treatment options to originator biologics at potentially lower prices. Over the past decade, biologics have become increasingly important in the pharmaceuticals space – for example, as of 2021, nearly half of prescription drug spending in the U.S. was on biologics. While biosimilar competition is still in its early stages, with the first biosimilar having only been approved in March 2015, as of today there are approximately 50 US Food and Drug Administration­­­­-approved (FDA-approved) and commercially available biosimilars. Of the $260 billion spent on biologics in the U.S. in 2021, only $38 billion (14 percent) was spent on biologics facing biosimilar competition, while $181 billion (70 percent) was spent on biologics that may face future biosimilar competition. Of the $181 billion, $96 billion was spent on biologics for which biosimilars were in development as of 2021. Thus, there is a significant potential for further biosimilar competition in the coming years.

    As the number of biologics has grown, there has also been an increase in litigation related to competition between originator biologics and biosimilars, such as recent matters pertaining to the originator biologics Stelara and Lantus. Notably, such litigations can impact the timing of biosimilar market entry. For example, the recent litigation for the originator biologic Humira resulted in multiple settlements with staggered U.S. launch dates for adalimumab biosimilars, which has led to allegations of delayed biosimilar entry. Thus, there seems to be a potential movement for biosimilars that is analogous to what has been observed for generics, where settlement agreements over patent litigations are being challenged as anticompetitive, or other business practices are being alleged as anticompetitive and causing delays in competition. Consistent with emerging competition-related litigation for biologics and biosimilars, antitrust agencies are also becoming increasingly focused on competition between originator biologics and biosimilars.

    In litigation related to competition between originator biologics and biosimilars, questions around class certification, liability, and/or damages will require both plaintiffs and defendants to rely on assumptions regarding the anticipated uptake of biosimilars following market entry, and the anticipated pricing of biosimilars and originator biologics. While uptake and pricing trends following the introduction of generics has been widely studied (though still debated in the courts), such trends have been less studied for biosimilars. This paper looks to help further such analyses by exploring the uptake- and price-related experience of biologics and biosimilars, and examining how the competitive environments have evolved for different biosimilar entrants.

    Economic considerations related to biosimilar market entry

    Biosimilar uptake following market entry

    Biosimilar uptake in the U.S. has been slower for some biosimilars than for others, and in general at a slower rate than the uptake observed for many generics, as shown in Figure 1. For example, researchers found that according to prescription drug data from IQVIA, infliximab biosimilars had achieved a less than 35 percent share five years after the first infliximab biosimilar launched in 2016. Meanwhile, other biosimilars have achieved a higher rate of uptake. For example, bevacizumab biosimilars achieved approximately an 80 percent share only three years after the first biosimilar launched in 2019. In contrast to both of these examples, the uptake of generic small-molecule drugs is often (but not always) characterized by rapid uptake in the first several years. As shown by the dotted line at the top of the figure, generics often achieve approximately 90 percent of the molecule’s total dosage quantity just three years after market entry.

    Figure 1: Biosimilar uptake post-market entry

    Biosimilar uptake varies and is not uniform across molecules

    Biosimilar uptake varies and is not uniform across molecules

    In general, biosimilar uptake has varied across molecules to date. Published literature has assessed potential drivers of this variation in biosimilar uptake. Such potential drivers may include (but are not limited to) the lack of therapeutic equivalence for some biosimilars and the corresponding lack of regulated substitution; physicians’ differing familiarity with biosimilars (e.g., certain physicians are specialized in treatment areas for which no biosimilars have yet been approved); and how different conditions are treated (e.g., certain research indicates patients and physicians may be more reluctant to switch to biosimilars for treating chronic conditions). An additional factor that contributes to the often rapid uptake of generics is that such products are often offered at considerably lower prices than branded products. To the extent that price discounts offered by biosimilars have varied, this can also contribute to the differing uptake of biosimilars relative to the uptake of generics.

    Biologic and biosimilar prices following biosimilar market entry

    As mentioned above, price discounts offered by biosimilars have varied, and further, biologic and biosimilar pricing is not uniform across molecules. This is highlighted in Figure 2, which shows biosimilars’ prices over time relative to what the prices of originator biologics were just prior to biosimilar entry. For example, according to Centers for Medicare & Medicaid Services (CMS) Medicare Part B average sales price (ASP) data, at five years following the introduction of pegfilgrastim biosimilars, the ASP of these products was approximately 25 percent of the originator biologic’s (Neulasta’s) price prior to biosimilar entry. Meanwhile, five years following the introduction of epoetin alfa biosimilars, the ASP of these products was approximately 65 percent of the originator biologic’s (Epogen’s/Procrit’s) price prior to biosimilar entry. In contrast, researchers have found that in just three years following the introduction of generic small-molecule drugs, the price of these products is on average (but not always) approximately 20 percent of the branded product’s price prior to generic entry (as shown by the dotted line at the bottom of the figure).

    Figure 2: Biosimilar price post-market entry relative to initial originator biologic price

    Price discounts offered by biosimilars are realized at differing rates

    Price discounts offered by biosimilars are realized at differing rates

    Additionally, certain originator biologics (e.g., Neulasta [pegfilgrastim]) have adopted more aggressive pricing strategies with biosimilars following their entry, as shown in Figure 3 which accounts for how biosimilars’ and originator biologics’ prices change following the entry of biosimilars. Others, however, do not – for example, Neupogen’s (filgrastim’s) price has stayed relatively constant since biosimilar entry. This further highlights the variation across molecules in terms of biologic and biosimilar pricing following biosimilar market entry.

    Figure 3: Biosimilar price post-market entry relative to originator biologic price

    Originator biologics compete differently on price with biosimilars

    Originator biologics compete differently on price with biosimilars

    Published literature has assessed the potential drivers of the variation in biologic and biosimilar pricing across molecules. Such potential drivers may include (but are not limited to) differences across products in terms of reimbursements (e.g., originator biologic cost relative to biosimilar cost may differ across payers) and discounts or rebates (e.g., branded biosimilars tend to be offered at smaller discounts but with larger rebates, while unbranded biosimilars tend to be offered at larger discounts). As Figure 3 demonstrates, pricing strategies taken by biologic manufacturers vary by product. Yet even for originator biologics that do not compete directly on gross price, there are other mechanisms, such as rebates and other discounts, that allow them to compete on net price, and gross price data such as ASP do not reflect these. Given the importance that prices have on competition, these factors become critical to assessing the competitive environment for biologics and biosimilars.

    Takeaways regarding uptake and price following biosimilar market entry

    The data analyzed in this study show that the uptake and price experience of currently available biologics and biosimilars is varied and not uniform. As a result, in antitrust and competition matters involving biologics and biosimilars, the assumptions relied upon should be tailored to the specific product(s) of interest, and the factors that might be relevant for that set of products must be accounted for specifically. Additionally, this research stresses the importance of considering a range of different potential drivers when assessing uptake and price trends. As there are only a limited number of molecules for which biosimilars have launched in the U.S., further analyses of uptake and price will be important to identify trends and potential patterns that may emerge.

    Acknowledgements

    The authors thank the following individuals (also employed by Analysis Group, Inc.) for their contributions to this research: Paul Greenberg, Richard Mortimer, Christian Filter, Brendan Welch, and Sosina Abuhay.

    Each coauthor is an employee of Analysis Group, Inc. The opinions expressed in this publication represent only those of the authors, and do not represent the views or opinions of Analysis Group, Inc., or of other employees or affiliates of Analysis Group, Inc.

      Authors