Winegarden: Biosimilars Market Lacks Oomph

The current biosimilar-generated savings in the US health care market is $4.1 billion, as opposed to $10.3 billion in potential savings, according to Wayne Winegarden, PhD, a senior fellow in Business and Economics at the Pacific Research Institute (PRI) in San Francisco and director of PRI’s Center for Medical Economics and Innovation.

“The bad news is that the growth [of biosimilars] that has occurred pales in comparison to what we could be accruing,” said Winegarden at a recent employer issues webinar hosted by the Pacific Business Group on Health and the Integrated Benefits Institute.

Partly how to accomplish the full $10.3 billion in savings is by allowing all 9 classes of approved biosimilars to enter the market, he said. Currently, adalimumab and etanercept biosimilars are held back by patent protections on originator products.

The Generic Comparison

Winegarden held up the example of generic drugs as an illustration of how drug price trends can be tamed by the introduction of lower-cost alternatives.

In the United States, national health expenditures have been soaring. From 1960 to 2018, the average annual growth rate was 8.8%, and the rise in cost for prescription medicine has not been that far behind: 8.7%. But the rise of generic medicines has made a difference. From 2017 to 2018, the annual growth rate of national health expenditures was 4.6% and the rate of increase in prescription drugs was 2.5%, Winegarden noted.

Generics save the health care system $292.6 billion annually, but that cost suppression effect is not happening yet with biosimilars, he said.

“Biologics are very important in terms of their health impact. They have led to significant increases in our survival rates for cancer. But we’ve gotten to the point where competition should be coming in and controlling costs, like we saw in the generic market, but we’re not seeing that develop,” and because of that phenomenon, that’s where that $10.3 billion in savings is being left on the table. We have some types of market obstructions that are stopping that competitive process from controlling drug expenditures,” Winegarden said.

The 2019 overall increase in net specialty drug spending, which includes biologics and biosimilars, was 11.6% vs -5.0% for traditional drugs, and 2.3% overall, Winegarden said. From 2017 to 2018, the increase in biologics and generics spending in the United States was $10.9 billion and $3.91 billion, respectively, he said, citing IQVIA data.

By contrast, biosimilars command a greater than 50% share of the market for biologics in the European Union. In 5 European Union countries, epoetin alpha biosimilars have a 100% share of the market and a 66% average share across 24 countries in that zone. This competition has resulted in a 27% decline in the price of epoetin alpha prior to the market entry of these biosimilars.

Discounts Are Impressive

However, in the United States, where biosimilars are considered far behind those in Europe, some of the price discounts they have achieved are dramatic, nonetheless. The cost of infliximab has declined 45% since these biosimilars arrived on market; pegfilgrastim, 24.7%; epoetin alpha, 29.6%; and filgrastim, 52.6%, Winegarden said.

Still, total market share is slender overall. Other than for filgrastim, biosimilars each represent less than one-fifth of the market for their respective drug types in the United States, Winegarden said.

“This demonstrates that when we talk about drug affordability problems, we’re talking about the lack of biosimilars in the biologics market,” he said.

In a recent interview with The Center for Biosimilars®, Winegarden discussed the shortfall in savings.