Biosimilar biotech for medicines can help people and save money

The reality of biotechnology is that in order for novel new drugs to get cheap, they first have to be expensive. To bring a product to market, knowing it will fail 95% of the time before it gets there, requires a large amount of money and nerves of steel, along with patience enduring the regulatory process. Few in other areas of the private sector would then be happy that their billion dollars in research and development is soon made cheaply by companies who did nothing at all, but in America, that is how it goes. There is the expensive version and then it goes generic.

The cost is high if we want both cutting-edge science and to not have to wait for generic. There is a middle ground – a competing “biosimilar” version of complex biologic drugs could be used to treat illnesses such as cancer and rheumatoid arthritis could cut spending on biologics in the United States by $44 billion over the next decade, according to new analysis from the RAND Corporation.

In 2011, eight of the top 20 drugs in the United States in terms of sales were biologics and the annual spending on the drugs has grown three times faster than other prescription medications. That makes sense, those companies must get their money back, including for dozens of other drugs they tried and failed, or they exit the market, as has happened with antibiotics.

The U.S. Food and Drug Administration is developing regulations to govern the approval process for highly similar versions of the already-approved complex, protein-based biologics, which includes drugs such as insulin, monoclonal antibodies and a range of medications to treat other serious conditions. It should bridge the gap in cost before patent protection is lost without forcing science companies to leave the marketplace. The FDA’s approach to regulating small-molecule generic drugs cannot be applied to biologicals, which are complex molecules manufactured in living systems. The federal Affordable Care Act authorized the FDA to develop a regulatory framework for approval of biosimilars.

Draft materials released by the FDA suggest that not all biosimilars will be deemed interchangeable with their original counterparts. In addition, nearly all biosimilars will require at least one head-to-head clinical trial to confirm similarity to the original biologic, a more-strenuous process than required for standard generics.

While there is agreement that biosimilars will lead to health care savings, the magnitude of the savings is not clear. In order to create an estimate of the likely savings from biosimilars, RAND researchers created a framework to predict future use of the drugs, considering issues such as the effect of increased competition and acceptance of biosimilars by physicians, patients and payers.

The effort included examining the experience with biosimilar drugs in the European Union, where an approval process was created a decade ago and several biosimilars already have been approved.

They examined 2013 sales information for more than 100 biologics, including all blockbuster biologics with sales of more than $1 billion annually. In total, the drugs had sales of $66.3 billion in 2013 across all distribution channels.

Assuming that biosimilars will penetrate 60 percent of the market, RAND researchers estimate that savings from biosimilars would be $44.2 billion over 10 years or about 4 percent of the total sales for biologics over the same period.

A number of additional, yet-to-be determined issues ultimately will determine the size of the cost savings from biosimilars and who will benefit, according to RAND researchers.

Among those issues is how much future use of biologics grows as some patients decide to switch to the drugs once biosimilars make such treatment more affordable.

Some cost savings will accrue to patients, but physicians and hospitals also may benefit because biologicals often are purchased by health providers and administered in clinics and other treatment settings.

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