It’s interesting how the same arguments keep resurfacing in different forms. I wrote recently about why I love generics and that got me thinking about how generics first became a “mainstream” industry – driven largely by the US market following passage of the Hatch Waxman Act in 1984.
Back in those days, many voices doubted loudly whether generics could ever create competition and drive savings. Today, as biosimilars (off-patent versions of existing biologic medicines) look increasingly like the “new generics”, it’s fascinating to watch the same tactics being deployed against them.
A quick flashback to the 1980’s. The argument then was simple: the pharmaceutical market is special and competition will never work. The proposed answer: regulate pricing instead. Fast forward to today, when 90% of US prescriptions are generics but represent only 22% of the cost[i]. In terms of real dollars, $2 trillion was saved over the last decade due to the availability of low-cost generics. Just as well that we didn’t listen to the “sirens” on that one...
Nonetheless, it seems the debate is not yet over. A recent opinion piece in the Wall Street Journal (WSJ) argued that it’s time to “throw in the towel on biosimilars” and focus instead on regulating the price of the originators. (I’m glad to say that it sparked an immediate rebuttal by former FDA commissioner Scott Gottlieb, who put the ball firmly in the court of the US Congress to help shape the development of this critical new market).
But perhaps the most interesting thing about this argument is its timing: it comes just as the US biosimilars market is actually gaining traction in the US, and after a decade of strong performance in the EU. Indeed, we are seeing consistently greater uptake with each new biosimilar launch in both Europe and the US, as shown by leading financial analysts.
This is due, in part, to significant and immediate healthcare coverage. For example in the US, United Healthcare, which covers 50 million American lives [ii], recently announced it would prefer the trastuzumab biosimilar over the reference medicine for commercial and community plans. They also preferred a biosimilar filgrastim to the reference medicine – bolstering a category where the market leader has become a biosimilar and where two-year savings for that one medicine are over half a billion dollars.
Additionally, with drug pricing taking center stage in the upcoming US elections, biosimilars continue to make waves as a key building block for a sustainable healthcare system. Policies continue to encourage biosimilar development, such as the recent Centers for Medicare and Medicaid Services (CMS) guidance enabling biosimilars to receive their own healthcare common procedure coding system (HCPCS) reimbursement code. [iii].
While biosimilars are building momentum, there is no doubt that challenges to uptake exist, including reimbursement and (mis)information. Indeed, even within the “throw in the towel” WSJ opinion piece, we see a bias. The authors state that biosimilars can’t be identical to reference medicine biologics, citing the complexity of production. In reality, though, it’s a well-understood scientific fact (“variability”) that even reference medicine biologics aren’t identical to themselves batch to batch.
Finally, it’s worth spelling out what that proposal in the WSJ opinion piece is really saying. Effectively, the message is that the US should “give up” on competition and rely on the government to regulate the market. As a British citizen who knows and loves the US, that doesn’t sound like the America I know!
So no, it is not time to throw in the towel on biosimilars; if anything (as the British love to say) it’s time to “stop the towels blocking the deckchairs” and “allow the competition onto the beach.” Only then will patients and healthcare systems truly win.