It's rare to see the insurance industry, patient groups, employers, providers and pharmacy organizations all aligned on a single issue. But the high cost of biologic drugs has mounted agreement across the industry that we need a competitive specialty pharmaceuticals market.
Innovator biologics – large, complex, and often unstable molecules made from living organisms – are first-of-their-kind treatments for chronic or often fatal diseases, such as cancers, HIV, rheumatoid arthritis and more.
But biologics are expensive to develop, and target a very small subset of the population. To recoup research and development costs on therapies for a small pool of patients, biologic drugs tend to carry very high price tags that can range from $30,000 up to $1 million over the course of treatment. Just 1-3 percent of the population uses biologic drugs, yet spending for these therapies will account for 50 percent of total U.S. drug expenditures by 2018.
However, there are some signs of relief.
On March 6, the Food and Drug Administration (FDA) approved the U.S.' first follow-on biologic drug, Zarxio, a medication used to prevent infections in cancer patients undergoing chemotherapy by increasing white blood cell counts. This comes five years after the Affordable Care Act (ACA) included the Biologics Price Competition and Innovation Act (BPCIA), which created the means for the FDA to approve follow-on biologics when the original branded drug patent expires.
As when generics first hit the market in the 1980s, follow-on biologics increase the number of options available to patients and typically offer financial savings. In Europe, where these drugs have been available for more than eight years, follow-on biologics typically sell for 30 percent less than the brand name alternative. Predictions for overall industry savings from newly approved follow-on biologics in the United States range from $5 billion to $250 billion between 2014 and 2024, depending largely on the pace by which the FDA's approves them and the number of products within each therapeutic category brought to market.
And therein lies the rub.
Unlike generics, which are exact replicas of the branded drugs that came before them, biologics are made of living organisms, which makes it impossible to exactly replicate the original. This is why these drugs are often referred to as biosimilars – while the follow-on version may produce the same clinical result as the original patented drug, they are not exact copies. Because of this, there has been
a lot of discussion and consideration by the provider community and by the FDA regarding the level of interchangeability a biosimilar has with the original drug, and why approvals have been slow to start.
State regulatory bodies exacerbate the problem even further. State legislatures have long dictated many groups have debated the safety of sharing the same name, which has further slowed approvals and progress for the branded drug. The complexity of biologics, though, coupled with the lack of complete replication by biosimilars has raised concerns that substitution laws need to be tightened. As a result, eight states currently have statutes on the books regulating the use of biosimilars in lieu of the originator biologic, which could impede the market penetration of these new entrants.
Naming convention is another issue that makes biosimilar introductions more complicated. While generic drugs can all go by the same non-proprietary name, biosimilars are not an exact match to each other or to the originator biologic. As a result, many groups have debated the safety of sharing the same name, which has further slowed approvals and progress.
Although it is important for prescribers and the public to understand the unique nature of biologics and biosimilars, it's time to move forward with approval of biosimiliars in the U.S. market and bring competition and choice to providers and the health industry at large. Many of the biosimilars currently under review, and those that are sure to come, are already sold in other countries.
In fact, Zarxio is already available in 60 other countries, with the same international non-proprietary name, and carries with it a clean record of safety and efficacy. We should be able to use the clinical evidence from other countries as proof of concept for biosimilars here in the United States, and get the FDA to declare biosimilars as interchangeable with their branded precursors. Not only would this speed approvals, but it would help mitigate the impact of state substitution laws.
While all innovation presents challenges, our healthcare industry should be supportive in creating a competitive biologics market. There will be a number of policy decisions impacting approval, payment, naming and interchangeability at the state and federal levels that will have ripple effects across the market. Getting the policy right is a critical first step to unleashing the potential of biosimilars. The healthcare industry is ripe for innovations that drive down costs, increase access to life-saving treatments as well as everyday care, and improve the quality of care and outcomes. Biosimilars have the ability to do all three.
Michael J. Alkire is chief operating officer (COO) for Premier, Inc., a healthcare performance improvement alliance helping hospitals and health systems provide better patient care while reducing costs.
Premier, Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of approximately 3,400 U.S. hospitals and 110,000 other providers to transform healthcare. With integrated data and analytics, collaboratives, supply chain solutions, and advisory and other services, Premier enables better care and outcomes at a lower cost.
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