The Booming Biosimilar Market of 2020

The biosimilar market is finally beginning to fulfill its promise.

The latest data show that provider-administered biosimilar drugs are successfully displacing their reference biological products. As I predicted last year, newer biosimilars are being adopted quickly, and their prices are declining rapidly. What’s more, manufacturers of reference products are cutting drug prices to defend their market shares.

Last year, Dr. Scott Gottlieb, a former FDA commissioner, argued that we shouldn’t give up on biosimilars and prematurely regulate prices. As you will see below, Dr. Gottlieb was right.

The material in today’s article is adapted from our forthcoming 2020–21 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors, now available for preorder at special discounted launch pricing.

THE CLONE WARS

Twenty of the 28 FDA-approved biosimilars are provider-administered products covered primarily under a patient’s medical benefit. Many innovator drugs now compete with multiple biosimilar versions, including Herceptin (5 versions) and Remicade (4).

The chart below shows the unit market share for the biosimilar versions of seven reference provider-administered biologics. Note that the biosimilars for these products are being marketed as brand alternatives, not as interchangeable generics. As you can see, biosimilar adoption rates for the newest categories are spiking upwards.

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Here are brief overviews of the products shown above:

• Neupogen. Zarxio, a biosimilar version of Amgen’s Neupogen, was launched in September 2015. By mid-2020, Zarxio, Nivestym, and Granix had captured nearly three-quarters of the unit market share in the filgrastim category. The average sales prices (ASPs) for the biosimilars are 40% to 50% below Neupogen’s ASP.

• Avastin and Herceptin. As I predicted last year, the biosimilars of Genentech’s Herceptin and Avastin oncology products have rapidly penetrated the market. For Avastin, Amgen’s Mvasi had nearly 39% of the unit market share and Pfizer’s Zirabev had nearly 4% of unit market share. Genentech executives surely have a bad feeling about this.
  
  Both products have ASPs that are about 20% to 22% below the reference product’s ASP. Herceptin now faces competition from five biosimilars. Amgen’s Kanjinti was the first to launch and has the highest market share, at more than 30% of total units.

• Epogen. The biosimilar Retacrit, which is marketed by Pfizer, launched at a 33% list price discount to Epogen, the reference product marketed by Amgen. Its market share was more than 30% as of July 2020, less than two years after launch.

• Neulasta. The three biosimilars of Neulasta—Mylan’s Fulphila, Coherus’s Udenyca, and Sandoz’s Ziextenzo—had 30% market share in July 2020, about two years after the first product’s launch. The biosimilars’ gains have come primarily at the expense of the Neulasta syringe. Neulasta has retained share with its OnPro injector.

• Rituxan. Teva’s Truxima, the first biosimilar of Rituxan, had 18% of the unit market share as of July 2020, less than one year after the product’s launch. Pfizer’s Ruxience launched in early 2020 and had about 5% of the unit market share. The ASPs for both products were more than 25% below that of the reference product.

• Remicade. Inflectra, a biosimilar version of Johnson & Johnson’s Remicade, was launched in October 2016. Inflectra is marketed by Pfizer. Renflexis, a second biosimilar of Remicade, was launched in July 2017. Renflexis is marketed by Merck. The combined market share for the two biosimilars was only 16% as of July 2020.
  
  This slow adoption of Remicade biosimilars illustrates the influence of price competition. For example, Johnson & Johnson appears to have offered discounts and rebates to retain Remicade’s share. Consequently, the drug’s net revenues have declined by $629 million (-51%) from the third quarter of 2016 (before the launch of biosimilars) to the second quarter of 2020. Remicade’s ASP has dropped by about 45% since the biosimilars’ launch.
  
  Payer and prescriber decisions matter, too. For 2019, 79% of commercial lives were in plans that preferred Remicade over its biosimilars. Remicade is a long-term maintenance therapy, which may be deterring some physicians from switching stable patients to a biosimilar.

NEVER TELL ME THE ODDS

The adoption rates above are translating into big savings. As you can see in the chart below, Ronny Gal at Bernstein calculates that biosimilar savings are now $6.5 billion (annualized) and growing.

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This doesn’t mean that the biosimilar market is filled with sunshine and wookies, however.

Buy-and-bill reimbursement dynamics affect the substitution of provider-administered biosimilars, although these impacts are not straightforward. For a deep dive into buy-and-bill, see Chapters 3 and 6 of our 2020–21 Economic Report on Pharmaceutical Wholesalers and Specialty Distributors.

Payers and providers are also slowing biosimilar adoption. For example, biosimilars are often not preferred over reference products at many of the largest U.S. commercial health plans. (source) Physician preferences can slow adoption, too. A 2019 survey found that a majority (61%) of oncology physicians still prefer not to use biosimilars, use them only for supportive care, or prefer not to switch patients. (source) The data above show that these attitudes may be slowly starting to change.

Some have argued that we should “throw in the towel” on biosimilars and begin regulating their prices. I find this lack of faith disturbing.

As I concluded in my review last year, regulatory and legislative changes could help by altering incentives for providers, physicians, and payers. But such changes are not our only hope.

We should all recognize the power of market forces. Biosimilar adoption is increasing, competition is accelerating, and prices are dropping. That's why 2020 represents an important inflection point. As Dr. Gottlieb often says: “Do. Or do not. There is no try.”