Specialty pharmacies must be prepared to innovate as biosimilars hit the US market.
Biosimilars are named as such because they are clinically similar, not identical, to the innovator product they intend to compete with.
Aptly, these products have thus far been treated in a similar, not identical, fashion to the established brand-generic paradigm. This treatment has been the subject of a great deal of attention and speculation, though the clinical and financial impact of this new type of product has yet to affect the industry. As more biologic products lose marketing exclusivity, the market will begin to saturate with competitors coveting a specialty pharmacy market share. Still in its infancy, the future of biosimilars is slowly beginning to take shape. How this transpires is crucial to the future of specialty pharmacy, as biosimilar competition will likely become a cornerstone of the industry.
Biosimilar Approval: Not Your Typical Generics
Just as with all medications, the FDA is responsible for the approval of new biosimilar therapies. While there are currently only 2 products approved, the framework for classification is evolving similar to non-biologic generic products. Instead of simply proving similar bioavailability, as is required for small-molecule therapies, biosimilars must prove a similar clinical effect, which has led to an entirely different means of classification.
The Orange Book, established as part of the Hatch-Watchman Act of 1984, is the industry standard for understanding brand and generic interchangeability.1 The reference is successful due to its blend of comprehensive simplicity, as brand/generic entities of non-biologic origin can be deemed bioequivalent (A-rated) or non-bioequivalent (B-rated).2 However, products of biologic origin cannot be chemically identical, complicating the well-known brand/generic paradigm.
As part of the Affordable Care Act (ACA), the Biologics Price Competition and Innovation Act of 2009 established the Purple Book.3 The Purple Book is comprised of 2 overlapping lists, 1 maintained by the Center for Biologic Evaluation and Research and the other by the Center for Drug Evaluation and Research. These lists are comprised of vaccines and other biological drug products, including:4
Officially, the FDA defines a biosimilar as, “…a type of biological product that [is] licensed (approved) by FDA because [it is] highly similar to an already FDA-approved biological product…and [has] been shown to have no clinically meaningful differences from the reference product.”5 A product dubbed to be interchangeable is considered to be biosimilar, as well as, “…is expected to produce the same clinical result as the reference product in any given patient.”5
To date, the only approved products are labeled only as biosimilar, the difference between “no clinically meaningful differences,” and, “expected to produce the same clinical result,” remains unclear. However, this designation is essential based on the nomenclature of current laws.
As the FDA sets precedent for approving biosimilars, each individual state must enact legislation for the prescribing and substitution of these products in practice. So far, only 22 states and Puerto Rico have enacted legislation pertaining to the implementation of biosimilar therapies.6 Of the states with active laws, there are some common threads. First, all legislation requires some form of communication regarding substitution with prescribers relating product interchange. Each law permits prescribers to prevent substitution on the basis of medical necessity, and also requires the dispensing pharmacy to maintain a record of the products dispensed. All of the enacted laws also require the substituted product to be approved as interchangeable, providing no guidance for the use of products approved solely as biosimilar.
This discrepancy between the wording of the laws, requiring interchangeable products, and the nature of current approvals, as merely biosimilar, will rapidly become controversial. Although there are currently only 2 biosimilar products approved, IMS reports upwards of 50 products in the pipeline.6 As more products receive marketing approval from the FDA, these contradictory forces must harmonize to achieve the desired goal of biosimilars: cost savings.
Biosimilar Stakes: Competition and Cost-Savings
Just as the approval and interchange of biologics is more complicated than small-molecule therapies, the production and cost savings is similarly more sophisticated. A generic entity of a molecule listed in the Orange Book may take a few million-dollar investment to receive approval. This funding is focused on proving bioequivalence primarily through pharmacokinetic data, as the chemical entity is identical to the innovator product. A biosimilar product may require an investment in excess of $100 million, and multiple years of research to obtain biosimilar and/or interchangeable status.7
Despite the high development costs, it is expected that biosimilar/interchangeable competition will provide downward pressure on costs by introducing competition to a currently monopolized market. Indeed, third party payers, especially the government, have a vested interest in suppressing the seemingly exponential rise in specialty drug prices. This notion alone suggests that laws will slowly, but surely, evolve to favor the use of biosimilars.
At the present moment, specialty pharmacy providers (SPPs) are relegated to the sidelines as this facet of the industry begins to take shape. As with any emerging situation, extreme diligence should be observed in preparing and adapting the business model at the SPP to best accommodate any anticipated changes. Failure to do so could result in the pharmacy performing only similarly, not identically, to an innovative leader in the market.
About the Author
Christopher Ogurchak earned his PharmD degree from the Duquesne University in 2011. Chris served as a pharmacy manager at an independent pharmacy in Southwestern Pennsylvania before transitioning to CVS Specialty Pharmacy as a clinical pharmacist. He is currently enrolled in the Masters of Science in Pharmacy Business Administration (MSPBA) program at the University of Pittsburgh, a 12-month, executive-style graduate education program designed for working professionals striving to be tomorrow’s leaders in the business of medicines.