Biosimilars

When biosimilar copies of AbbVie's top-selling drug Humira arrived in 2023, the impact was hard to see. Now, that's beginning to change as a few lower-cost versions gain ground.

Those inroads could be amplified by the Inflation Reduction Act, which may help boost the impact of biosimilar medicines on branded drugs.

Researchers at Harvard University examined the likely impact of the IRA on biosimilar coverage in Medicare and, in a new study, predicted that in 2025 the law will shift coverage from brand-name biologics to cheaper versions. Their findings come as other reports indicate biosimilars are finding their footing in the commercial market.

Biosimilar barriers

At the end of 2023, Humira biosimilars still had a minimal presence, earning low sales numbers and negligible market share in the he U.S. Humira biosimilar market share only reached 4% as of February 2024, according to a report from Samsung Bioepis, the maker of one of those Humira copycats. But after CVS Health made the decision to drop Humira from its formulary this year, biosimilar prescriptions are picking up.

The market penetration of biosimilars has been better in the commercial space than for Medicare and other government plans, said Luca Maini, one of the authors of the study and an assistant professor of health care policy at Harvard Medical School.

“[There’s] a little bit of a learning curve,” he said. “Physicians, patients and PBMs, and all the stakeholders, need to be comfortable with the idea that biosimilars … are just as safe and effective as originator biologics.”

Physicians have been reluctant to swap out brand-name biologics like Humira for biosimilars in the first few years of availability, according to a 2023 report by Spherix Global Insights.

Reimbursement design for Medicare has been another barrier that benefited biologics over biosimilars until 2022 when one of the first IRA provisions kicked in. The Medicare Part B changes increased biosimilar reimbursement rates, encouraging more competition with originator biologics.

Biologics are generally more intensive for patients compared to small molecule drugs, according to Maini, who said these drugs are likely administered in a physicians’ office or require training by a healthcare professional before they can be administered at home.

“It's a lot harder for a biosimilar to immediately grab a large share of the market upon approval,” Maini said.

However, biosimilars are still making an impact, if AbbVie’s latest earnings are any indication. While still holding on to the majority of market share for Humira, AbbVie’s revenue declined at the start of the year, and that could lead the pharma to cut Humira’s prices further to maintain prescription volume.

“If biosimilars come in and make no money, that's a problem because that is a signal to future biosimilar manufacturers that maybe it's not a good idea to launch the medicines,” Maini said. “If a biosimilar makes no money but ends up reducing the price of the originator by 40% or 50%, that is a success to some degree.”

The list price of Humira, for example, rose 141% between 2013 and 2020, according to the American Journal of Managed Care’s Center for Biosimilars. AbbVie took many of these price hikes despite little new clinical data in recent years, the Institute for Clinical and Economic Review has noted.

Since biosimilars have become part of the equation — nine copycat versions of Humira were on the U.S. market by the end of 2023 — AbbVie has taken a hit, and the net price of Humira has fallen. The drug’s U.S. revenues fell 40% during the first three months of 2024, according to recent earnings.

IRA impacts

The IRA's next biggest impact is expected to come from a change in the Medicare Part D benefit relating to catastrophic coverage through reduced federal subsidies.

“Medicare Part D tends to favor pricier reference biologic drugs over their generally cheaper biosimilar counterparts,” Maini and co-authors wrote in their analysis. “Two critical aspects of Medicare Part D benefit design likely contribute to this pattern: the federally mandated discounts for branded drugs for beneficiaries in the coverage gap and the federal subsidies given to plans during the catastrophic coverage phase.”

Currently, Medicare covers a significant portion of biologics once patients reach the catastrophic coverage phase, when out-of-pocket spending passes $8,000. At that point, Medicare covers 80% of the price of the drug, but the payment formula does not incentivize cheaper drugs.

“The patient is paying more money out of pocket and the plan is also paying more,” Maini said. “And that's because the government ends up picking up more of the tab for the expensive product than for the cheaper product.”

By closing the coverage gap in the catastrophic phase, the payment shift may realign coverage decisions in favor of biosimilars, the study predicted.

Legislation has already had an impact. Following the implementation of the Bipartisan Budget Act of 2018, biosimilar coverage increased 23% due to changes in formulary coverage for Medicare Part D, the study found. Discounts for biosimilars in the legislation led to more coverage for these drugs, and the researchers anticipate a similar shift with the IRA starting in 2025.

“We should already see an effect with the new year,” Maini said. “Firms need some time to adjust to new conditions, but I would expect to see an effect right away.”

Patents reward drugmakers for their inventions and, effectively, the large sums of money they invest in research and development. The legal monopoly that patents provide keeps generic copies at bay for many years, even decades, and allows pharmaceutical companies to set higher prices than they otherwise could.

Executive decisions are often closely linked to the patent life of blockbuster medicines. Ahead of so-called patent cliffs, when patent expirations permit waves of lookalike competitors to enter the market, companies typically seek to restock their pipelines by investing in R&D, licensing experimental therapies or acquiring other drugmakers.

A major patent cliff faces the pharma industry later this decade, putting more than $200 billion in annual revenue at risk through 2030. This will force companies into major decisions: Will they pour more money into research? Or will they buy their way out of trouble? 

Below, BioPharma Dive has compiled upcoming expiration dates for the key patents protecting the 30 top-selling drugs, by 2023 sales. We’ll be updating this database as the relevant dates and products change. If we’ve missed anything, or there’s any additional information you’d like to see, please reach out and let us know.

The standard term for patents granted in the U.S. is 20 years. Drugmakers usually will have already secured patents on a new drug ahead of any regulatory approval, meaning the protected time on market can be less.

There are strategies to offset this, however, as companies can piece together different forms of regulatory exclusivity, seek what’s known as patent term restoration or create “thickets” of various patents on everything from a dosing schedule to an injection device. 

These thickets — now the target of government scrutiny in the U.S. — can sometimes stave off generic competition for two decades or more. Enbrel, an inflammatory disease drug sold by Amgen, will have enjoyed more than 30 years of protected time on market when a key patent expires in 2029, for example. 

Boehringer Ingelheim will sell an unbranded version of its Humira biosimilar at a 92% discount to the list price of AbbVie drug for people who pay cash at pharmacies through the GoodRx price comparison platform, the companies said July 18, putting further price pressure on the pharmaceutical giant’s flagship medicine. 

The deal could help the privately-owned German drugmaker gain traction in an increasingly competitive market. In the wake of Humira’s U.S. patent expiration last year, 11 competitors have emerged with copycat drugs. Several are making strategic moves to boost their standing: Sandoz and Alvotech, for example, have cut deals with pharmacy benefits managers to gain preferred positions on drug formularies.

Boehringer launched its branded Humira biosimilar, Cyltezo, last July at a price 5% lower than Humira’s. It wasn’t alone in that strategy, as other companies, such as Amgen and Fresenius, also began selling biosimilars at small discounts to AbbVie’s drug. 

But Boehringer has struggled to grow sales. Sluggish uptake of Cyltezo led Boehringer to revamp its biosimilar sales strategy and lay off staff. Now it’s offering a steeper discount in a bid to turn its launch around. 

Through GoodRx, Boehringer’s unbranded biosimilar will be available at $550 per pack of two injection pens. At that price, a typical regimen of one shot every other week for rheumatoid arthritis, Crohn’s disease and other autoimmune disorders would yield an out-of-pocket cost of $7,150 a year. 

The Boehringer-GoodRx deal comes amid increasing signs of price and cost erosion for Humira and its lookalikes. AbbVie reported that Humira sales fell 40% year over year in the first three months of 2024. That decline is expected to continue in the wake of a decision by pharmacy benefit manager CVS Health to remove Humira from its national commercial formularies, a move that took effect on April 1. 

In a recent research note, Leerink Partners analyst David Risinger projected a 32% decline in year-over-year Humira sales when AbbVie reports second quarter results next week. 

AbbVie is relying on its newer autoimmune drugs, Skyrizi and Rinvoq, to offset the loss of Humira revenue. Skyrizi and Humira had nearly identical global sales in the first quarter, at $2 billion and $2.3 billion respectively, while Rinvoq generated $1.1 billion. 

By and large, doctors appear to be comfortable prescribing biosimilar drugs, the copycat version of biologic medicines like inflammatory disease drug Humira or eye treatment Lucentis. But they aren’t yet sure the discounts offered are enough to justify switching patients who are stable on the brand-name products, according to an annual report from healthcare distributor Cardinal Health released in February 2023.

The report’s authors surveyed 300 specialists in rheumatology, gastroenterology and dermatology who have patients eligible to use Humira biosimilars. In all three specialties, more doctors agreed than disagreed with the statement, “today, the economics of biosimilars are not favorable enough to motivate me to switch from the reference products,” including a majority of rheumatologists. A large portion of physicians in each specialty neither agreed nor disagreed.

Separately, just under one third of 64 surveyed ophthalmologists said “not enough financial incentive” was a primary concern with prescribing biosimilars to Lucentis.

Yet a majority of physicians from the three Humira-prescribing specialties said they were “very” or “somewhat” comfortable prescribing biosimilars, including 100% of gastroenterologists. Among the ophthalmologists, 48% said they were “uncomfortable from a clinical standpoint” among their primary concerns prescribing biosimilars.

When asked which patients they are most likely to prescribe a biosimilar, the most common response among the Humira-prescribing specialists was “existing patients for whom payers have mandated a biosimilar,” suggesting that insurers’ policies will drive uptake. However, 40% of rheumatologists said “new patients” would be the most likely people to get a biosimilar prescription.

Publication of the report came weeks after the launch of Amgen’s Amjevita, the first biosimilar to AbbVie’s Humira available in the U.S., and seven months after the launch of Biogen and Samsung Bioepis’ Byooviz, the first biosimilar to Lucentis available in the U.S.

Early biosimilar uptake in the U.S. has mostly disappointed as prices, rebates, patient assistance and insurance coverage have allowed original branded products to retain substantial market share. Cancer drugs have seen some of the fastest adoption patterns, in part because of value-based payment models that encouraged the use of lower-cost medicines.

In a Congressional hearing July 24, lawmakers from both parties pressed executives from the largest pharmacy benefit managers in the nation — CVS Caremark, UnitedHealth Group’s Optum Rx and Cigna’s Express Scripts — on the role their companies play in prescription drug costs.

While congressional hearings on PBMs have ticked up in frequency, it is rare for lawmakers to hear directly from top decision-makers at the companies. The last time was in 2019, when a different group of executives appeared before the Senate Finance Committee.

That changed yesterday when Adam Kautzner, president of Express Scripts; David Joyner, president of CVS Caremark; and Patrick Conway, CEO of Optum Rx, testified in front of the House Committee on Oversight and Accountability. Collectively, their companies control approximately 80% of the U.S. prescription market.

The hearing was the third in a string of congressional hearings targeting PBMs and began just hours after committee Chairman James Comer, R-Ky., released a new report summarizing a 32-month investigation into how PBMs raise prices and reduce consumer choice.

PBMs are middlemen in the pharmaceutical supply chain that negotiate drug prices with pharmaceutical managers on behalf of insurers and employers, and reimburse pharmacies for dispensing prescriptions.

The companies maintain that they lower drug costs for their clients. However, they face rising public criticism over their opaque and complex business practices. About one-third of people reporting in a recent KFF survey they did not take a medication they need because of high costs.

PBMs are also facing a number of lawsuits from state attorneys general and independent pharmacies, as well as pressure from the federal government.

The Federal Trade Commission is reportedly preparing to sue CVS Caremark, Express Scripts and Optum Rx over how they negotiate drugs with pharmaceutical manufacturers, according to The Wall Street Journal. The lawsuit follows an FTC report earlier this month about how PBMs’ business practices contribute to higher costs and less consumer choice.

The Pharmaceutical Care Management Association, the PBM industry lobby, criticized the report as one-sided and built upon anecdotes.

The House committee report could add more fuel to the fire, attacking the industry for steering patients to pharmacies the PBM owns and favoring more expensive brand-name drugs on their formularies, which result in higher rebates paid to them by drugmakers.

The report found 300 examples of the three PBMs preferring medications that cost at least $500 more per claim than a safe alternative medication excluded from their formularies.

The executives arrived on the Hill armed with a report of their own, published by economic consulting firm Compass Lexecon, seeking to refute the committee’s narrative. The executives argued PBMs pass through almost all rebates to plan sponsors and have operating margins below 5% in recent years.

Representatives weren’t buying it.

“On one hand we have PBMs claiming to reduce prescription drug prices, and on the other hand we have the Federal Trade Commission, we have major media outlets like The New York Times and we have at least eight different attorneys generals, Democrats and Republicans, who all say PBMs are inflating drug costs,” said Rep. Raja Krishnamoorthi, D-Ill.

“This is why just about every state now is taking up PBM reform,” Comer said. “There’s a credibility issue.”

Executives maintained their services provided cost savings for consumers. Optum Rx offered more than $2,000 in average savings per consumer annually, according to Conway. Kautzner said Express Scripts saved its clients $64 billion last year and kept out-of-pocket costs on a per-prescription basis at $15, “despite brand manufacturers raising drug prices on 60% of those products.”

Joyner, meanwhile, blamed the pharmaceutical industry, stating “little or no competition” for brand-name drugs spurs high prices. He said PBMs serve as a necessary tool to lower costs, offering the example of AbbVie’s autoimmune drug Humira. CVS dropped Humira from its major formularies in April and now only covers cheaper biosimilars, Joyner said, resulting in $500 million in savings for employers and health plans.

“Let me be clear, we do not contribute to the rising list prices,” Joyner said. “Hampering our ability to negotiate lower drug cost only benefits the pharmaceutical manufacturers. These drug manufacturers who testified on Capitol Hill said they would not lower the list prices if rebates were eliminated. It would only remove an essential tool and our ability to deliver lower cost for medications.”

Representatives also pressed executives on whether they routinely steered patients toward pharmacies they owned, citing concerns from independent pharmacists who say PBMs are running them out of business.

Krishnamoorthi cited CMS figures showing price concession fees pharmacies pay to PBMs increased 107,400% between 2010 and 2020 — a rate of increase she said “literally staggers the imagination.”

The executives maintained they do not steer patients toward preferred pharmacies and would not commit to altering policies.

“We do provide patient options, including home delivery, and will continue to provide those options for patients,” Optum’s Conway said.

“We carry out the benefit designs that our clients choose,” said Kautzner.

Cigna’s chief executive is pledging to be more aggressive in defending its pharmacy benefit manager amid mounting public criticism of the drug middlemen — and as its PBM, Express Scripts, continues to drive soaring revenue for the insurance giant.

That includes heavier lobbying in Washington, sponsoring more research into the value of PBMs and working more with independent pharmacists, which have been some of PBMs’ loudest critics, CEO David Cordani told investors on an Aug. 1 call to discuss the payer’s second quarter results.

PBMs sit between pharmaceutical manufacturers and payers in the drug supply chain, negotiating prices for drugs to sit on payers’ formularies and reimbursing pharmacies for dispensing prescriptions.

On the call, Cordani repeated a mainstay argument of the industry — that they’re the only actor in the pharmaceutical supply chain that work to bring down costs — but acknowledged PBMs need to do more to communicate their value.

Congress, antitrust regulators, third-party pharmacies, patient advocates and more continue to accuse PBMs of profiteering amid a slew of negative research and media reports focusing on how PBMs contribute to higher drug costs and fewer choices for patients.

“The environment calls on us to be proactive” in communicating PBMs’ value, though “our industry negotiations to drive these results can at times create friction in the system,” Cordani said. 

“We challenge ourselves to be much more aggressive related to communication and engagement,” the CEO added later in the call.

With his comments, Cordani is looking to protect a division from disruption that is the single largest revenue driver for his company.

Express Scripts, which Cigna acquired for $67 billion six years ago, brought in $26.6 billion in revenue in the second quarter — 44% of Cigna’s entire topline.

Express Scripts is a part of Evernorth, which also includes specialty pharmacy Accredo, medical benefit manager Evicore and Cigna’s other health service product lines.

In the second quarter, Evernorth’s revenue jumped 30% year over year to almost $49.6 billion. Adjusted income from operations before taxes was $1.6 billion, up 7% year over year, thanks to the migration of Centene’s lucrative prescription drug contract and growth in specialty pharmacy.

To maintain that growth, Cigna is banking on continued adoption of biosimilars and GLP-1s, medications traditionally used for diabetes that have showed efficacy in use cases as varied as weight loss, infertility treatments, sleep apnea and Alzheimer’s disease.

In March, Cigna announced a cost-sharing agreement for GLP-1s covered in a condition management program, to insulate health plan and employer clients from the soaring costs of the medication — and ensure Evernorth can benefit from continued demand.

Cigna has enrolled more than 2 million people in that program, called EncircleRx, to date, according to Eric Palmer, Evernorth CEO.

“Looking ahead, we expect the use of these medications to continue to grow, and that is part of the growth algorithm for Evernorth overall,” Palmer said.

Evernorth is also seeing “meaningful uptake” of its interchangeable biosimilar for Humira, which became available for eligible Accredo patients for $0 out-of-pocket cost in June, according to Palmer.

Evernorth is producing the biosimilar for AbbVie’s frequently prescribed immune disease drug through an affiliated distributor and agreements with multiple manufacturers.

It’s still early, but after seeing demand over the past five weeks, biosimilars could eventually grow to make up one-fifth of Accredo’s book of business, Palmer said.

As for Cigna’s insurance business, the payer saw higher medical utilization among its members in the quarter, in line with its peers. Areas like facility-based services (including the emergency room) and mental health services were elevated, but generally in line with expectations, CFO Brian Evanko told investors.

The majority of Cigna’s business comes from offering employer-sponsored insurance, which has sheltered the payer from the worst of utilization increases in Medicare Advantage. Cigna reported a medical loss ratio — a marker of spending on patient care — of 82.3% in the quarter.

Cigna is planning on getting out of Medicare coverage altogether, having agreed in January to sell its Medicare business to Chicago-based insurer Health Care Service Corporation. That deal remains on track to close early next year, management said on the call.

Insurer CVS Health is getting into the market for lookalike biologic drugs, announcing in late August the founding of a subsidiary called Cordavis to work directly with manufacturers of biosimilars in the U.S.

Alongside the announcement, CVS said it’s contracting with Novartis’ Sandoz division to sell under a private label its biosimilar to AbbVie’s Humira, called Hyrimoz, at an 80% discount to Humira’s price of nearly $7,000 a month, beginning in 2024. When Sandoz launched Hyrimoz, it set a price of about $6,600 a month.

Among the three big U.S. pharmaceutical benefit managers, only CVS Caremark hadn’t committed to covering a Humira biosimilar from the wave that entered the market in July. The insurer has now signaled its intent to invest more deeply by transforming from just a buyer into a commercialization partner as well.

While biosimilars have thrived overseas, the U.S. market hasn’t been nearly as favorable to these biologic drugs, which are “highly similar” to branded products and have no clinically meaningful differences.

The peculiarities of the U.S. drug market have served as barriers, including the number of payers, manufacturers’ practice of offering volume-based discounts to payers and the difficulty in switching stable patients from one product to another. One area in which biosimilars have been adopted more quickly is in cancer, due in part to insurer incentives.

The market for Humira biosimilars is unique by virtue of the number of entrants, with eight separate companies now marketing a low-cost alternative to the top-selling arthritis drug in the U.S. Humira’s tens of billions of dollars in U.S. sales last year helped spur that competition, as developing biosimilars is a far more expensive endeavor than making generic pills. Smaller markets, therefore, haven’t been as attractive.

With Cordavis, CVS appears to be testing ways to counter some of those headwinds. “Through our direct involvement, we will expand the supply chain and ensure biosimilar availability in the market,” said Prem Shah, CVS’ Chief Pharmacy Officer, in a statement. CVS noted that it might work with companies to co-produce biosimilars as well.

Even with the difficulties biosimilars have faced, analysts project their sales could reach $100 billion by 2029. A “patent cliff” of some of the pharmaceutical industry’s biggest sellers like Merck & Co.’s Keytruda, Johnson & Johnson’s Darzalex and Amgen’s Enbrel will put $200 billion in annual revenue at risk by the end of the decade.