Savings from biosimilars expanding, but industry faces strong headwinds in U.S.

The BioCentury Show: PBM business models, the IRA, outmoded regulations limiting uptake of biosimilars

There is good news in this year’s Association for Accessible Medicines report on savings from biosimilars, including a 30% increase over the last year in savings attributed to biosimilars. The report also explores the economic, policy and regulatory headwinds that are preventing the industry from generating savings at a level that would have a dramatic effect on the U.S. healthcare system.

In an interview with The BioCentury Show, Craig Burton, executive director of AAM’s Biosimilars Council, called out business practices and government policies that are holding the industry back and discussed the ways a robust biosimilars market could promote biomedical innovation.

Burton argued that lower-cost versions of biologic drugs are critical because they create headroom that allows the U.S. healthcare system to continue to invest in new innovative medicines. He also pointed to data showing that by lowering prices biosimilars expand access to medicines.

Any celebration of the savings must be tempered by the realization that most biologic drugs will never face biosimilar competition and that when biosimilars beat the odds and make it onto the market they rarely achieve dominant market share.

As a result of PBM business models that perversely incentivize use of the highest-priced medicines, the average, combined market share for biosimilars remains under 20% and there are no biosimilars in the pipeline for more than 80% of biologics that are approaching loss of exclusivity.

Outmoded regulations unnecessarily increase development costs.

Government price-setting courtesy of the Inflation Reduction Act is further undermining the industry’s ability to earn a predictable return on investments that range from $100-$300 million per product.

Burton made the case for advancing policies that could energize biosimilars development and increase adoption, arguing that the IRA won’t cut Medicare prices as deeply as biosimilar competition and it does nothing to address the private market.