Biosimilars could still pack revenue-busting punch, analyst suggests
- A typical biosimilar launched in the U.S. will erode about 20% of branded drug sales in the first year following market launch and nearly half of revenues within three years, a June 12 analysis from Leerink analyst Geoffrey Porges suggests.
- Payers can tip the balance, Porges wrote, either accelerating or slowing uptake depending on how they rank biosimilars on their formularies. In the U.S., no directly interchangeable biosimilar has been approved, meaning pharmacists can't automatically switch patients onto the cheaper copy.
- Although 11 biosimilars have secured an OK from the Food and Drug Administration in the U.S., only three have launched due to legal hurdles — disappointing some market observers who hoped for a more immediate impact.
Analysts expect biosimilars to eventually generate substantial savings in healthcare costs in the U.S. Many top-selling drugs, such as AbbVie's Humira (adalimumab), are biologics and command substantial annual price tags. As a number of those biologics lose patent protection, biosimilars could add competition and help lower costs.
That hasn't happened yet in the U.S., which has lagged behind Europe in the adoption of copycat drugs.
"Investors have been worried about the tail value of these flagship products but so far at least the 'biosimilar threat' has had more bark than bite," wrote Porges.
The analysis comes a week after Mylan and partner Biocon won FDA approval of the first biosimilar to Amgen's drug Neulasta (pegfilgrastim). The companies plan to launch the drug in the "coming weeks," which would bring a fourth biosimilar onto the U.S. market.
Despite the small impact to date, Porges suggests that when biosimilars do launch, they could still have a material impact to the bottom lines of branded drugmakers.
According to his report, biosimilar competition led to an average 6% quarter-on-quarter decline in sales for the three branded drugs which have seen copies launch. (Porges considers Basaglar, a follow-on biologic to Sanofi's Lantus (glargine), a biosimilar). That sales erosion is actually faster than what he calculated the average decline to be in Europe.
Notably, his analysis found that the most significant impact on branded drug sales comes after launch of the first biosimilar competitor, with subsequent launches having less of an impact. This could be bad news for Amgen if Mylan and Biocon's copy launches as expected.
Moody's, a credit rating agency, also forecasts biosimilars launching at greater frequency in the U.S., noting that this will put pressure on sales of the top biologics.
Unlike generics, however, biosimilars in the U.S. have so far launched with smaller discounts to brand. Both Novartis' Zarxio (filgrastim-sndz) and Pfizer's Inflectra (infliximab-dyyb) came on the market at a 15% discount to their respective reference products. (Merck & Co., however, initially launched their competing Remicade biosimilar at a 35% discount).
"While there's a considerable amount of excitement from payors, regarding the potential savings opportunity from the adoption of biosimilars, the challenge so far has been the limited price advantage over their respective reference biologics," wrote Cowen analysts in a March note.
FDA chief Scott Gottlieb has been outspoken in his desire to see more of the cheaper biologic copies reach patients and has criticized branded drugmakers for slowing their arrival. Perhaps more importantly, the regulator has teased new policies that could make it easier for biosimilar makers to develop the drugs, as well as examine how interchangeability could be determined.
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