eDigest
August 14, 2013
National drug spending could be cut by $250 billion between 2014 and 2024 if only 11 biosimilar versions of current best-selling biologics are approved during those 10 years, Express Scripts has forecasted (lab.express-scripts.com). The company’s vice president of research and analysis, Sharon Frazee, said the projection is based on an “uber-conservative” model and suggested the savings could even be higher.
“There are 92 patent expiries coming up,” Ms. Frazee said. “We only included the 11 that we believe are certainly going to have competitor biosimilars come to market.”
The analysis, which was presented at the Express Scripts Outcomes Symposium, compared a scenario in which 11 generic versions of current best-selling biologics would be available between 2014 and 2024 with one in which only the branded biologics would be available. In the biologics-only scenario, spending on the 11 drugs was estimated to increase from $33.6 billion in 2014 to $121 billion in 2024. In contrast, if the FDA were to approve 11 biosimilars, savings in 2024 would be $81.3 billion, Express Scripts projected. The cumulative savings between 2014 and 2024 would be $250 billion if these 11 biosimilars were approved.
Molly Burich, MSc, a market analyst not involved in the research, said the figure also could be lower than the analysis suggests.
“This report assumes biosimilars will be discounted at 30% relative to their branded competitors, but the thinking over the past few years has led to an erosion of this number down to between 20% and 25%,” said Ms. Burich, who is assistant director of Reimbursement Strategy and Health Policy at Xcenda, an AmerisourceBergen Consulting Services company based in Charlotte, N.C.
Biosimilar Landscape Hazy
One reason expectations have been curbed is that the FDA may create an onerous biosimilar approval pathway, Ms. Burich noted (see "FDA Plans for Biosimilar Approval Pathway," below). As a result, manufacturers might be required to submit extensive preapproval data and to conduct postmarketing studies.
Express Scripts did not take the costs of gathering these data into consideration when constructing its 30% discount rate, Ms. Frazee said. Instead, Express Scripts based the discount assumption on the historical costs of biosimilars, including those currently available in Europe.
Other costs that could cut into any savings include those associated with distributing drugs and providing physician reimbursement assistance and patient support programs.
“All of these elements will require a big investment on the part of biosimilar manufacturers and will have a significant impact on the discounts they can offer,” she said.
Both Ms. Burich and Ms. Frazee agreed that the extent to which a biosimilar will be used interchangeably with its branded competitor will mean the difference between small and large savings. Express Scripts assumed that 55% of the 11 biosimilars included in its model will be used interchangeably by payors and physicians by 2020, primarily in patients newly prescribed a biologic treatment. However, the degree of interchangeability could be lower or higher, Ms. Burich said.
“Interchangeability is a critical unknown and could have a huge impact on overall savings,” she noted.
Ms. Burich added that payors likely will follow FDA policy. Based on preliminary guidance, she said, the administration likely will be conservative in granting interchangeability—at least initially. However, “if biosimilar manufacturers can offer huge discounts, payors may go ahead and mandate that a biosimilar be used in new patients, at least.”
August 14, 2013
National drug spending could be cut by $250 billion between 2014 and 2024 if only 11 biosimilar versions of current best-selling biologics are approved during those 10 years, Express Scripts has forecasted (lab.express-scripts.com). The company’s vice president of research and analysis, Sharon Frazee, said the projection is based on an “uber-conservative” model and suggested the savings could even be higher.
“There are 92 patent expiries coming up,” Ms. Frazee said. “We only included the 11 that we believe are certainly going to have competitor biosimilars come to market.”
The analysis, which was presented at the Express Scripts Outcomes Symposium, compared a scenario in which 11 generic versions of current best-selling biologics would be available between 2014 and 2024 with one in which only the branded biologics would be available. In the biologics-only scenario, spending on the 11 drugs was estimated to increase from $33.6 billion in 2014 to $121 billion in 2024. In contrast, if the FDA were to approve 11 biosimilars, savings in 2024 would be $81.3 billion, Express Scripts projected. The cumulative savings between 2014 and 2024 would be $250 billion if these 11 biosimilars were approved.
Molly Burich, MSc, a market analyst not involved in the research, said the figure also could be lower than the analysis suggests.
“This report assumes biosimilars will be discounted at 30% relative to their branded competitors, but the thinking over the past few years has led to an erosion of this number down to between 20% and 25%,” said Ms. Burich, who is assistant director of Reimbursement Strategy and Health Policy at Xcenda, an AmerisourceBergen Consulting Services company based in Charlotte, N.C.
Biosimilar Landscape Hazy
One reason expectations have been curbed is that the FDA may create an onerous biosimilar approval pathway, Ms. Burich noted (see "FDA Plans for Biosimilar Approval Pathway," below). As a result, manufacturers might be required to submit extensive preapproval data and to conduct postmarketing studies.
Express Scripts did not take the costs of gathering these data into consideration when constructing its 30% discount rate, Ms. Frazee said. Instead, Express Scripts based the discount assumption on the historical costs of biosimilars, including those currently available in Europe.
Other costs that could cut into any savings include those associated with distributing drugs and providing physician reimbursement assistance and patient support programs.
“All of these elements will require a big investment on the part of biosimilar manufacturers and will have a significant impact on the discounts they can offer,” she said.
Both Ms. Burich and Ms. Frazee agreed that the extent to which a biosimilar will be used interchangeably with its branded competitor will mean the difference between small and large savings. Express Scripts assumed that 55% of the 11 biosimilars included in its model will be used interchangeably by payors and physicians by 2020, primarily in patients newly prescribed a biologic treatment. However, the degree of interchangeability could be lower or higher, Ms. Burich said.
“Interchangeability is a critical unknown and could have a huge impact on overall savings,” she noted.
Ms. Burich added that payors likely will follow FDA policy. Based on preliminary guidance, she said, the administration likely will be conservative in granting interchangeability—at least initially. However, “if biosimilar manufacturers can offer huge discounts, payors may go ahead and mandate that a biosimilar be used in new patients, at least.”
