A key theme emanating from Virtue Insight's 4th annual biosimilars congregation held in London on Wednesday was that despite a growing appetite for biosimilars among cost-conscious payers, the gold rush mentality that shaped many initial investments in the field needs reassessment.
A presentation from Kristie Kuhl – executive vice president at Makovsky – that focused heavily on a growing sense of negativity towards drug prices in the US market, makes relevant reading for all drug manufacturers, biosimilar-focused or otherwise.
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A key slide highlighted the rapid rise in popular media news reports questioning the 'value' of US drug prices over the past four years; a trend that neatly intersects with efforts by pharmacy benefit managers to utilise drug exclusion lists as a means to control spending and the governments' proposal to reduce full drug coverage for five disease areas under Medicare Part D, a decision that could allow price negotiations in through the back door, argue some.
One pharmacy director from a leading US healthcare plan recently told FirstWord "I'm looking forward to the potential cost savings that biosimilars could bring to the US healthcare system. We're going to be pushing them very strongly on our plans, making them the products of choice. Financially, they make a lot of sense."
Deep discounting of biosimilar versus the reference product will provide much needed incentives for increased biosimilar usage. Recent news from Norway, where biosimilar infliximab is to be priced at a 39-percent discount to branded Remicade (Merck & Co.), provides a clear indication of where the biosimilar battle is going to be fought – see Spotlight On: Norway unveils near 40 percent discounting for biosimilar infliximab – can it pave the way for a broader European trend?
While a growing unease towards the high price of specialty drugs could act as a suitable backdrop of increased uptake to biosimilars, however, a counter view put forward on Wednesday is that opportunities, which initially look to be worth billions of dollars, could quickly shrink.
Indication extrapolation remains a key facet of the biosimilars business model, but remains poorly understood by physicians, noted a number of presenters, whilst it is becoming apparent that branded biologic manufacturers are not going to simply sit back and let biosimilar developers enjoy their time in the sun, whether their defence strategies are focused on legal and regulatory measures or by raising the barriers to entry via innovation.
Furthermore, the move by branded players to seek differentiated naming for biosimilars in the US market and lobbying efforts towards the FDA and state governments on issues pertaining to substitution appear to be moving the goalposts for would-be biosimilar developers – see Gamekeeper or Poacher? - Big Pharma's Stance on Biosimilars.
In addition, returns on investment within the sector have so far been poor. Novartis' Sandoz unit is the market leader, with 2013 sales of $420 million (up 23 percent versus 2012), representing over 50 percent market segment share in the regulated markets of the US, Canada, EU, Japan and Australia. According to industry data, the global biologics market reached $169 billion at the end of 2012. Biosimilars, therefore, currently account for less than 1 percent of biologic sales.
In a note to investors published in December, Sanford C. Bernstein analyst Ronny Gal suggested that there had been a definite 'shift to [a] discussion of commercial issues' during a recent biosimilars conference. While regulatory and scientific issues will also be important, 2013 was the year people began openly asking the question whether any money could be made from these products. A clear answer remains elusive at this point in time.
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