Survey: European Union Needs to Fine-tune Its Biosimilars Procurement

European Union countries are ahead of the United States in introducing biosimilars, and they rely on competitive bidding systems known as tenders to ensure that biosimilars or lowest-cost biologics get used in the clinic. But there is much variability in the way tenders are applied throughout health systems in the European Union, and the playing field isn’t always level for biosimilar manufacturers, according to a new study.

“Signals emerged across the board that some of the current tender approaches might negatively affect market dynamics for off-patent biologicals and biosimilars,” authors of the report said.

Tenders may be structured so that they favor the incumbent supplier—often the originator brand manufacturer—and purchasers may restrict tender awards to a single manufacturer, as opposed to a subset of competing producers, thereby driving others out of the market, they said.

“While price-driven single tender winners generally translate into welcomed large initial savings for health care systems, these might decrease supplier plurality in the market,” the authors wrote.

Tender awards may focus too heavily on achieving deep and immediate reductions in the cost of the relevant biologic and overlook better structuring that might lead to more reliable market sustainability, authors of the study said.

“The focus on generating short-term savings and the existence of originator-favoring tender practices were identified as elements that may limit timely competition from and market opportunity for biosimilar suppliers,” they wrote.

They surveyed hospital pharmacists and purchasers (N = 60) in the European union about their thoughts about and experiences with the tender process. Authors said 47 completed the survey. They also conducted interviews with purchasers and suppliers (N = 28).

In the European Union, public and nonpublic hospitals and clinics are encouraged to organize tenders to obtain lowest-cost biologics, but there are factors beyond price that also should be considered in tender awards, authors of the study said. Product or service differentiation, such as application devices and education or user support, can add value to a provider deal.

Relying on these broader criteria can also stimulate suppliers to innovate and “sustainably compete on value-adding criteria,” the authors said.

However, 46% of the survey and interview respondents indicated that tenders they are familiar with generally go to a single winner, and just 9% indicated that tenders are routinely structured to achieve multiple winning suppliers.

According to the study, 20% of tender contracts are based solely on the price of the biologics, 38% predominantly on price, 19% on price and other criteria equally, and 19% mostly on nonprice criteria.

Many factors that go into award decisions were listed. However, 29% of respondents said emergency delivery and 24/7 reachability of the supplier are important considerations, and 22% said they award based on efficacy and safety data that are issued post regulatory approval decisions.

Ensuring enough players are supplying biosimilars or originator product in the market requires that sufficient volume of demand exists, the authors said. Without enough demand for the underlying biologic, slim volumes allotted to individual suppliers may result in only shallow price discounts, they said.

In smaller countries or in small health care systems, single tender winner deals may still be the best option. In England, regions are divided so that manufacturers get a slice of the overall market, and this still allows for multiple supplier participants.

Prompt and efficient tenders were recommended because unnecessary delays in opening tenders and making awards could discourage participants, the authors said. Some suspicion was expressed by participants in the survey that there are deliberate delays in implementing new tenders, solely to “extend the originator’s market exclusivity artificially.”

In Italy, regional authorities are required to reopen supply agreements 60 days within the launch of a biosimilar, although the authors said this can be problematic if fresh rounds of bidding are opened for each new biosimilar. They also recommended that tender durations last from 12 months to 2 years—neither too frequent nor too seldom—which they said not only would encourage biosimilar manufacturers but also protect patients from too-frequent medication switches.

The study acknowledged that switching patients to biosimilars carries an initial cost, often in terms of additional clinic or hospital visits; however, the authors wrote that these costs are generally offset by the greater savings achievable from biosimilars. “Most purchasers argue that the cost of switching is marginal compared to the savings that are generally generated in a tender and will, as such, not play a decisive role in tender decisions.”

“Steep price erosion” attributed to tender contests demonstrates that companies are “willing to fiercely compete on price due to important advantages” associated with being first to market, participants said. The winning supplier is left in the position of being able to gather real-world data on the use of its biologic, which in turn can be used as a selling point. Further, the deeper the initial discount and the higher the cost of switching patients, the less encouraged purchasers will be to reopen tenders later on for another round of bids.

Reference

Barbier L, Simoens S, Soontjens C, et al. Off-patent biologicals and biosimilars tendering in Europe—a proposal towards more sustainable practices. Pharmaceuticals. 2021;14(6):499 doi:10.3390/ph14060499