The Rebate War: How Originator Companies Are Fighting Back Against Biosimilars

Originator biologic companies in the US may respond aggressively to biosimilar competition by significantly increasing rebates—by as much as 89%—and reducing net prices by up to 51%, demonstrating a strong effort to retain market share, according to a recent study.¹

The study, published in Expert Opinion on Biological Therapy, sheds light on the largely unexplored dynamics of US biologic markets with multiple biosimilar competitors. Additionally, it identified approval-level barriers as a key factor limiting biosimilar availability, emphasizing the need for policy interventions to enhance competition and maximize potential cost savings in the health care system.

This study shows both the market impact that biosimilars have on prices and the lengths originator companies will go to in order to maintain market share. | Image credit: Vladimir - stock.adobe.com

Researchers conducted the analysis to better understand the competitive dynamics of the biologic market, particularly in the context of multiple biosimilar competitors. A common talking point in the biosimilar space is that significant price erosion will be achieved after 5 biosimilar competitors enter the market.² This stems from the steep price reductions seen in the EU filgrastim market, which currently includes 7 biosimilars competing against the originator product (Neupogen).^2,3

The present study used data from the US Brand RX Net Pricing Tool from SSR Health, a private company that uses filings from publicly traded pharmaceutical companies to estimate drug pricing data.¹ Data covering 2015 to 2022 were used to analyze net prices and wholesale acquisition costs of originator biologics and their biosimilars. The analysis focused on 4 originator biologics—trastuzumab (Herceptin), pegfilgrastim (Neopogen), rituximab (Rituxan), and infliximab (Remicade)—after excluding bevacizumab (Avastin) due to unavailable pricing data.

The study employed descriptive statistics and interrupted time series analysis to evaluate the impact of biosimilar market entries on drug pricing and rebates. The analysis specifically looked at price changes per course of treatment and calculated rebate ratios.

As of December 31, 2022, trastuzumab had the most approved biosimilars (n = 5), followed by bevacizumab (n = 4), pegfilgrastim(n = 4), infliximab (n = 3), and rituximab (n = 3). The average time between biosimilar approval and market launch was 9 months, with notable variation in launch timing between competitors.

Key insights for each biologic included:

1. Trastuzumab
   • By April 2022, net prices had decreased by 12.97%, while list prices fell by 3.58% and rebates increased by 35.17%
   • By the study's end, net prices had dropped by 18.83%, and rebates had grown by 36.89%
2. Pegfilgrastim
   • After the second biosimilar entered in January 2019, net and list prices dropped significantly
   • By the fourth biosimilar entry, net prices had fallen by 47.17%, while list prices fell by 4.49%
   • Rebates increased by 51.71%, and by the end of the study, net prices were reduced by 61.23%
3. Infliximab
   • The initial drop in net prices was driven by increased rebates, but list prices began to decline after the second biosimilar entry
   • By the third biosimilar entry, net prices had dropped by 50.93%, and rebates had increased by 89.71%
   • By the study's end, net prices had decreased by 63.73%, and rebates had increased by 109.46%
4. Rituximab
   • The first biosimilar entered in November 2019, leading to significant reductions in net prices and an increase in rebates
   • By December 2022, net prices had fallen by 30.75%, list prices by 8.07%, and rebates had increased by 257.67%

The authors said that their results highlight the impact of biosimilar market entries on pricing, with significant reductions in net prices and increases in rebate discounts across all biologics studied.

“Regarding patient and insurer savings, it appears that a strategy encouraging the approval and launch of 1 or 2 biosimilars across as many drug markets as possible may be more effective in generating cost savings than a strategy focused on supporting the launch of multiple biosimilars (e.g., 3 or more) in a smaller selection of markets,” commented lead author Morgane Mouslim, a policy analyst advanced at the Hilltop Institute at the University of Maryland, Baltimore County, in a statement to The Center for Biosimilars^®.

The authors warned that rebate strategies may hinder biosimilar market penetration by maintaining favorable formulary positions for originator biologics. If originators can retain market share, biosimilars may struggle to sustain production, leading to reduced competition.

The study also highlights the importance of understanding net prices, which are influenced by rebates rather than list prices. This insight is crucial for accurately assessing the impact of biosimilar competition on originator prices. However, since rebates do not necessarily benefit patients directly, it remains uncertain whether patients experience cost savings.

Several limitations were identified, including the use of publicly traded company pricing data, excluding most privately produced biosimilars and focusing only on originator pricing, missing data for 1 reference biologic, and the inability to assess the impact of interchangeable biosimilars on pricing. Further research on market share and interchangeability is needed.

References

1. Mouslim M, Socal MP, Trujillo AJ. Dynamics of biological markets with multiple biosimilar competitors in the United States. Expert Opin Biol Ther. Published online October 9, 2024. doi:10.1080/14712598.2024.2412648

2. Diaz JI. The second wave of biosimilars: new scenarios, new rules. biosimilar development. December 15, 2020. Accessed November 22, 2024. https://www.biosimilardevelopment.com/doc/the-second-wave-of-biosimilars-new-scenarios-new-rules-0001

3. Biosimilar approvals. The Center for Biosimilars. Updated November 18, 2024. Accessed November 22, 2024. https://www.centerforbiosimilars.com/biosimilar-approvals