The biosimilars payoff in the US might be small and fleeting

Analysis from Prime Therapeutics points to severe cost hurdles for biosimilars developed and marketed in the US

The biosimilars race was supposed to take off after the Biologics Price Competition and Innovation Act was passed (part of the Affordable Care Act) in 2010, but for going on five years now, FDA has only gradually come out with guidances and positions to clear the pathway toward biosimilar approvals. Now, an analysis by Matrix Global Advisors, a Washington consulting firm, and sponsored by Prime Therapeutics, the St. Paul, MN pharmacy benefit manager owned by a dozen Blue Cross/Blue Shield insurers, finds that under the current real-world scenario for researching and then gaining approval for biosimilars, only the biggest of big biologics—those with annual revenues in excess of $900 million, or even $1.3 billion in a “diminished market share” scenario brought about by legal hurdles—represent a market that will support the entry of a biosimilar.

A second phase of the analysis, conducted by Prime Therapeutics itself on its covered lives, finds that spending for the top 10 specialty drugs (presumably biologics) over the past seven years has been dropping as a proportion of overall specialty spending: there are more specialty products for limited patient populations (such as orphan diseases). The decline between 2007 and 2014 has been 6.5% (the top 10 drugs represented 61.5% of spend on specialty drugs in 2014), and is projected to decline further, to 30-40% of spend, by the early 2020s. Thus, an even smaller proportion of specialty biologics will be blockbusters.

One big proviso: the study doesn't consider export markets for biosimilars made in the US, which could expand potential sales. On the other hand, competition among several manufacturers for one blockbuster biologic reduces the potential market for all of them.

“Policymakers—even those interested in encouraging a biosimilars industry in the United States—have to date focused on preserving innovators’ incentives,” concludes Alex Brill, Matrix CEO, adding that a “paradigm shift” in policy thinking will need to occur, and “without this kind of shift, biosimilar competition may be limited and the desired health care savings reduced.”

The paper, “The Economic Viability of a U.S. Biosimilars Industry,” is available at Prime's website.