Richard G. Frank, PhD, a health economist at Harvard Medical School and the former deputy assistant secretary for planning and evaluation at HHS, has penned a new perspective paper in the New England Journal of Medicine in which he warns that, if biosimilars continue their trajectory, they could fail to deliver on their promise to provide cost savings to the US health system.
Richard G. Frank, PhD, a health economist at Harvard Medical School and the former deputy assistant secretary for planning and evaluation at HHS, has penned a new perspective paper in the New England Journal of Medicine in which he warns that, if biosimilars continue their trajectory, they could fail to deliver on their promise to provide cost savings to the US health system.
Frank points out that only an estimated $3.2 billion (3%) of US biologic drug spending is currently subject to competition from biosimilars. That is a disappointing figure given that spending on biologic drugs has been averaging a 10% annual increase recently.
So what’s holding biosimilars back? Frank says that physicians are “naturally hesitant” to prescribe biosimilars because they lack familiarity with these products, “especially given that regulations create the impression that a biosimilar may not be all that similar to its originator.” The FDA’s use of 4-letter suffixes appended to the names of biosimilars may give prescribers the undue impression that the clinical effects of a biosimilar could have a meaningful difference from those of the reference drug, and “Perceived differences between competing products weaken price competition.” Frank suggests that an alternative tracking method could include use of the biosimilar’s brand name for pharmacovigilance efforts.
Like many other stakeholders, Frank has concerns about interchangeability designations for biosimilars. Because pharmacy-level substitution hinges upon a designation of interchangeability—which has not yet been granted to any product by the FDA—the cost savings that could be produced by this practice are yet to become a reality.
Furthermore, the FDA has not yet finalized its guidance on demonstrating interchangeability. Says Frank, “…the FDA requires that equivalent clinical results occur within the same patient if the biosimilar replaces the reference product. The FDA has not been clear about whether this requirement involves meeting an additional standard or producing more data. Conducting extra clinical studies is a very expensive activity, so clarity on this point is important.”
Other factors hindering biosimilar uptake, says Frank, include the fact that Medicare’s reimbursement policies for these products are “at best neutral with respect to choice of product on the basis of price,” rather than actively promoting price competition. Furthermore, reference product sponsors’ secrecy about manufacturing processes adds an additional hurdle in bringing biosimilars to the marketplace.
“Although a number of these factors may separately have modest effects, together they are additive and most likely contribute to the slow development of competition in the biologics market,” says Frank. “If the impediments continue, important savings will probably be left on the table.”
Reference
Frank RG. Friction in the path to use of biosimilar drugs [published online February 28, 2018]. N Engl J Med. doi: 10.1056/NEJMp1714908.
Biosimilar Market Development Requires Strategic Flexibility and Global Partnerships
April 29th 2025Thriving in the evolving biosimilar market demands bold collaboration, early global partnerships, and a fresh approach to development strategies to overcome uncertainty and drive future success.
Will the FTC Be More PBM-Friendly Under a Second Trump Administration?
February 23rd 2025On this episode of Not So Different, we explore the Federal Trade Commission’s (FTC) second interim report on pharmacy benefit managers (PBMs) with Joe Wisniewski from Turquoise Health, discussing key issues like preferential reimbursement, drug pricing transparency, biosimilars, shifting regulations, and how a second Trump administration could reshape PBM practices.
President Trump Signs Executive Order to Bring Down Drug Prices
April 16th 2025To help bring down sky-high drug prices, President Donald Trump signed an executive order pushing for faster biosimilar development, more transparency, and tougher rules on pharmacy benefit managers—aiming to save billions and make meds more affordable for everyone.
Biosimilars Policy Roundup for September 2024—Podcast Edition
October 6th 2024On this episode of Not So Different, we discuss the FDA's approval of a new biosimilar for treating retinal conditions, which took place in September 2024 alongside other major industry developments, including ongoing legal disputes and broader trends in market dynamics and regulatory challenges.
Experts Pressure Congress to Remove Roadblocks for Biosimilars
April 12th 2025Lawmakers and expert witnesses emphasized the potential of biosimilars to lower health care costs by overcoming barriers like pharmacy benefit manager practices, limited awareness, and regulatory delays to improve access and competition in chronic disease management during a recent congressional hearing.