According to a federal government Medicare Payment Advisory Commission report published last month, more than 40% of Medicare beneficiaries still have no access through their insurance to Humira-referenced biosimilars, despite several products having discounts of over 80% compared to the original Humira. When biosimilars are covered they’re usually on the same patient cost-sharing tier as Humira, which doesn’t favor their uptake. This is more than seven years after the first Humira-referenced biosimilar was approved by the Food and Drug Administration, and one year after biosimilars were permitted to launch in the U.S.
AbbVie now says it can protect Humira’s market share until 2025 or 2026, according to Endpoints News. Given that the autoimmune disease product has lost merely 2% of its market share since biosimilars launched in last year, AbbVie’s statement seems plausible.
Remarkably, Humira achieved $14.4 billion in sales last year, according to Friday’s earnings call from AbbVie.
The blockbuster drug was first given marketing authorization more than two decades ago. Since then it has amassed more than $210 billion in global sales. Almost immediately following Humira going off patent in 2016, the FDA began approving Humira-referenced biosimilars. A biosimilar is a medicine that is highly similar to a reference large molecule biologic, in this case, Humira (adalimumab). But none of the biosimilars could launch in the U.S. until 2023 due to patent litigation and a convoluted legal compromise, which de facto amounted to extending Humira’s monopolistic hold in the U.S. by seven years.
Moreover, once launched, biosimilars have failed to gain much traction owing to a Byzantine system of pricing and reimbursement which often involve rebate schemes.
Rebates are payments made by drug manufacturers to health plans or pharmacy benefit managers. In exchange, PBMs move market share towards a “preferred” product on the formulary or list of covered medications. They do this by positioning the product favorably, with lower patient cost-sharing and fewer coverage restrictions. Higher list-priced drugs often carry with them higher rebates, which can mean that PBMs may favor originator products such as Humira.
On the other hand, from a patient’s perspective a lower list-priced product would be preferred, given that cost-sharing is calculated as a percentage of the list price.
Medicare Part D (outpatient) plan coverage of Humira-referenced biosimilars has drawn scrutiny from the Office of the Inspector General, because these products are often either excluded from formulary or granted “parity tiering” which implies the same level of patient cost-sharing as the originator.
According to the OIG, the Medicare program could have saved tens of millions of dollars annually had there been an optimally functioning system in which biosimilars referencing both Humira and Enbrel (etanercept) were made available once the originators went off patent, and placed in preferred positions on formulary with lower out-of-pocket costs to beneficiaries. Enbrel is also an originator biologic used to treat autoimmune disease. It was first licensed more than 25 years ago and won’t face biosimilar competition until 2029, in spite of there being a biosimilar version, Erelzi, which was approved in 2016. Just as is the case with Humira, the reason for the prolonged delay is a lengthy court battle over patents.
Among other proponents of biosimilar adoption, the Biosimilars Forum supports a legislative discussion draft outlined in the Senate Finance Committee in the fall of 2023 to promote beneficiary access to “lower-cost biosimilars within the Medicare Part D program.”
Senators who back the proposal want Part D plans to meet certain coverage and cost-sharing requirements with respect to “high-discount” biosimilars by 2026, which are defined as offering at least a 45% discount compared to their reference biologics. Specifically, on a biannual basis, the legislative discussion draft foresees the Centers for Medicare and Medicaid Services releasing a list of biosimilars that qualify as high-discount biosimilars.
Looking at 40 highly rebated brand-name drugs and their generic equivalents, a General Accounting Office report found that about 25% of the Part D plans studied listed the brand-name drug on their formularies but not the generic or biosimilar alternative. A generic drug is bioequivalent to its originator small molecule counterpart.
The Federal Trade Commission announced in June 2022 that it would ramp up enforcement against rebate arrangements that block patient access to competing lower-cost drugs, warning that such rebates “can violate competition and consumer protection laws.”
The FTC also noted that rebates may shift costs and misalign incentives in ways that ultimately increase beneficiaries’ out-of-pocket costs, especially when generics and biosimilars are excluded from or not favored on formularies.
A Different Story for Biosimilars in Europe
The comparatively meager penetration of biosimilars in the U.S. stands in stark contrast to Europe where Humira-referenced biosimilars have been on the market for more than five years.
Patent disputes are among the reasons why biosimilars tend to have much later starts in the U.S. and therefore a significantly smaller impact than in Europe, where there is less expansive use of patent laws. By contrast, in Europe Humira lost its monopoly six years ago and competition and significant encroachment on market share by biosimilars ensued, practically right away.
Also, European payers’ purchasing practices invariably favor lower priced therapeutic alternatives once they enter the market. In deploying health technology assessment, for instance, entities such as the National Institute for Health and Care Excellence in the U.K., advise healthcare providers to use the lowest cost treatments when given the choice between equally effective alternatives.
On the other hand, in the U.S. rebate arrangements can sometimes lead to higher-priced treatments being preferred by payers and PBMs.
Such perverse incentive structures brought about by rebates don’t exist in Europe. Furthermore, European health systems tend to procure biosimilars on the basis of tendering. Tender offers follow formal procedures in which, say, hospitals implement a competitive bidding process for a particular contract, with the aim of containing pharmaceutical spending when treatment alternatives for a specific medicine are available. Given that biosimilars have lower price tags, they’re almost invariably the favored bids.
By the last quarter of 2019, within one year of Humira-referenced biosimilar entry into the European market, an average of 35% of patients across Europe had already switched to a biosimilar; in the U.K, the figure was 63% which was achieved just six months after biosimilars were allowed to compete; in Denmark, with its winner-takes-all tender, the number was 80% and was attained within three months of being on the market.
Besides rebate and patent battles, in the U.S. there are several regulatory barriers which biosimilar manufacturers in Europe don’t have to contend with. One is the seemingly redundant therapeutic interchangeability designation which must be obtained from the FDA in order to automatically switch a prescribed drug to another. In Europe, proving biosimilarity is sufficient for establishing therapeutic interchangeability in practice.
Second, only in the U.S. are meaningless four letter suffixes attached to biosimilars’ nonproprietary names while originator biologics do not have such suffixes. This can be confusing to physicians and patients alike.
It’s not surprising therefore that surveys show U.S. physicians are sometimes resistant to prescribing biosimilars. Evidently, 60% of physicians surveyed in a study conducted by Cardinal Health would only feel “comfortable” prescribing therapeutically interchangeable biosimilars and not those without the designation.
If we broaden the scope to include all therapeutic classes in which biosimilars have been approved, the European Medicines Agency has licensed more than twice as many biosimilars–93 in total, as of December of last year–as the U.S. And there has been much more rapid and extensive biosimilar uptake across most therapeutic classes in which biosimilars have been licensed.
U.S. patients, including Medicare beneficiaries, still suffer from a largely dysfunctional system in which impediments to biosimilar access raise patient out-of-pocket costs. In turn, this harms long-term sustainability of future biosimilar development.