After years of trailing behind the European market, the United States finally approved its first biosimilar in March when the FDA gave the thumbs-up to Sandoz Inc’s Zarxio (filgrastim-sndz), which is biosimilar to Amgen Inc’s Neupogen (filgrastim).
Now that biosimilars are at long last a reality in the US market, the question arises: what kind of impact will they ultimately have?
A report released by the RAND Corporation in November 2014 estimated that cost savings in the US market from biosimilars will lead to a $44.2-billion reduction in direct spending on biologic drugs from 2014 to 2024, which represents 4% of total biologic spending for that time period. RAND cautioned, however, that the actual savings are dependent on the specifics of the final FDA regulations and the level of competition.
The pathway to approval for biosimilars is still littered with challenges in the form of regulatory issues, the need for consistent naming conventions, and the astronomical cost of research and development. In an interview with our daily news web site www.SpecialtyPharmacyTimes.com, economist Alex Brill estimated the research and development process for a biosimilar takes about 8 years, with a cost range of $100 million to $300 million.
As a result, Brill predicted that only blockbuster biologic drugs will be economically viable targets for biosimilar manufacturers. This leaves manufacturers walking a delicate tightrope as they try to balance the investment that goes into developing a biosimilar with the market share they can expect from their investment.
The potential role of biosimilars in developed markets may ultimately fail to reach its full potential, as the continual flood of patent-protected innovative products in the specialty pipeline replaces the older off-patent products that are targets for biosimilar competition. Additionally, once a biosimilar hits the market, the manufacturer of the reference product could just lower the cost of the original drug since they will most likely have long since recouped their original investment.
For a deeper look into the conundrum biosimilars represent to the specialty market, I urge you to read the editorial by our esteemed editor-in-chief Dan Steiber, RPh, as he explores the specialty pharmacy perspective.
While the approval of the first biosimilar is certainly cause for excitement, this new era still has a number of unanswered questions and variables that will affect the ultimate outcome. Stay tuned, as we will continue to cover the developing world of biosimilars while providing context and insight with this journal, Specialty Pharmacy Times, with our daily news web site, and with our thrice-weekly e-newsletters covering breaking news and clinical developments. SPT
Thank you for reading!
Mike HennessyChairman and CEO