The Interchangeability Impact: What Effect Will Biosimilars Have on the Market?
The growing therapeutic biologics market in the United States is about to undergo an evolution. Despite preconceived notions, however, the external factors pushing for these changes do not come from insurance companies or consumer-interest groups seeking lower healthcare costs. Instead, the pressure comes from another source that’s been looming on the horizon for almost a decade: biosimilars.
As the name suggests, biosimilars are products that are similar to an already existing biologic. Unlike generic versions of small-molecule drugs, biosimilars are not exact replicas of the original reference product. They contain only the therapeutically active portion of the licensed biologic. Because of this key difference from small-molecule generics, biosimilars currently inhabit a murky position in the pharmaceutical arena, leaving companies unclear as to their next move. They can’t be treated exactly like generics because they are not 100% identical, but the present situation resembles the one previously faced by small-molecule drug companies closely enough that it has made biologic firms leery of the future.
Lack of Regulatory Clarity Clouds the Future of the Biosimilar Market
While the FDA may have clear regulations covering other areas, they’ve lagged when it comes to biosimilars. The debut of Zarxio earlier this year proved that U.S. biotherapeutic companies cannot prevent copycat biosimilars from being released onto the market. This decision is not unexpected considering the fact that Zarxio has been available in Europe under the name Zarzio since 2006.1 That’s more than enough time for the government agency to prepare for this eventuality, but they have yet to determine interchangeability and labelling rules.2
The lack of rules regarding biosimilars is largely what prevents biologic firms from speculating about their effect upon the U.S. market. Generally, factors that determine interchangeability rest in three key areas: how closely the biosimilar resembles the reference product; whether it has the same clinical effects as the original; and how safe and effective it is.3 But until clear regulations are in place, biotherapeutic firms have no way of anticipating whether another company’s biosimilar poses an economic threat to their own original product.
If a biosimilar is deemed interchangeable, it can massively change the market on multiple levels. Right now, therapeutic biologics enjoy a monopoly by virtue of their unique and novel approaches. The advent of biosimilars, however, will sweep that away by bringing competition to the market. As a result, prices could drop. Insurance companies could choose to only cover biosimilars rather than biologics, something that we’ve already seen with generics and brand-name small-molecule drugs. Pharmacists could choose to substitute a biosimilar for a prescribed biologic without consulting the attending physician.
Considering how far and wide the effects reach, is it any wonder that biologic firms are concerned about their inability to act? While the changes brought on by biosimilar availability will benefit the government, patients and taxpayers due to the potential savings, companies could be adversely affected by the corresponding loss of revenue. But without FDA guidelines in place, biologic firms have no way of knowing whether a new biosimilar has the potential to be deemed interchangeable.
Strategies U.S. Biologics Companies Can Adopt to Counter the Burgeoning Biosimilar Market
Because the data exclusivity period for a biologic is shorter than that of its monopoly period, companies developing biosimilars have a distinct advantage over the firm that created the original product. It can cost billions of dollars to create a new biologic from scratch. Biosimilars are significantly cheaper to develop because they cut down on R&D costs by building upon a reference product. Perhaps even more significant, they can work on their copycat version while the reference biologic is in its monopoly period and time it so that their product is ready for release when that exclusivity ends.
But even with existing disadvantages, therapeutic biologic firms can adopt a few tactics to minimize potential revenue loss:
- Develop combination therapies to offset potential revenue losses
To lessen the economic threat posed by biosimilars, the original company can concentrate on developing combination therapies. By releasing new adjuvant drugs, the company can leverage the resulting pricing power to protect their bottom line.4
- Release improved second-generation products
Biosimilars are profitable because they undercut the reference product. Firms can use this strategy against them by developing second-generation biologics that improve upon the original. Because biosimilars are typically based upon first-generation products, improved versions will render them obsolete. Areas companies can look at in terms of improvement are reduction of dosage schedule, decreasing the treatment time or developing better administration technology.5
- Manage the overall perception of biologics vs. biosimilars
Given the distinct lack of FDA guidance in this area, biologic firms have a unique opportunity to educate the public and sway public opinion. Because of their copycat nature, questions remain about the safety and quality of biosimilars. What about potential complications? Could switching to a biosimilar result in complications like an unexpected immune response? Biologic firms can focus on the better quality of their products over the copycat version.
When the future remains uncertain, biologic companies have no choice but to focus upon what they can control in the present. Two such areas are that of quality and R&D. As more biosimilars gain approval, it becomes imperative that firms take whatever action is necessary to minimize costs and maximize efficiency. The BIOVIA Total Quality solution helps biotherapeutic firms protect their profit margins by minimizing the costs of poor quality. By replacing outdated paper- and spreadsheet-based systems with an integrated solution, a company can eliminate bottlenecks caused by standard quality processes, thus boosting productivity and efficiency. It ensures quality from start to finish, guaranteeing that only the best biologic products are released onto the market. As interchangeability rules eventually cement and take form, companies will need the best tools to support their efforts to release quality biologic products that stand out amongst a sea of copycat versions. Contact us today to learn more about BIOVIA Total Quality.
- “Biosimilar not interchangeable: Sandoz and Pfenex call for US FDA guidelines,” September 4, 2015, http://www.biopharma-reporter.com/Markets-Regulations/Biosimilar-not-interchangeable-Sandoz-and-Pfenex-call-for-US-FDA-guidelines?nocount ↩
- “Lack of regulatory clarity dominates US biosimilar debate post Zarxio,” September 22, 2015, http://www.biopharma-reporter.com/Markets-Regulations/Lack-of-regulatory-clarity-dominates-US-biosimilar-debate-post-Zarxio ↩
- “Senate Committee to US FDA: Where are the biosimilar guidelines?” September 18, 2015, http://www.biopharma-reporter.com/Markets-Regulations/Senate-Committee-to-US-FDA-Where-are-the-biosimilar-guidelines ↩
- “How Biosimilars Can Impact Pharma Company Valuations,” September 21, 2015, http://www.forbes.com/sites/greatspeculations/2015/09/21/how-biosimilars-can-impact-pharma-company-valuations/ ↩
- “The Economics of Biosimilars,” September 2013, http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4031732/ ↩