Biosimilars, knockoffs of biologic drugs, are expected to reap billions of dollars in savings for the U.S. healthcare system. So with two biosimilars on the market and more lining up, you would think payers would be planning a celebration. Think again. They say that with drugmakers significantly jacking up prices on their biologics in advance of competition, they expect little if any significant relief when the copies roll in.
Biologics are a prime target for cost savings. Consultant IMS Health tells the Wall Street Journal that in the past 5 years, spending on the cell-based drugs has almost doubled, hitting $128.7 billion in 2015. They made up 54% of the increase in prescription-drug spending overall since 2010. An Express Scripts report this year has pegged savings at about $40 million in the next 5 years from biosimilars.
But some of the increase in biologics spending comes from drugmakers raising prices and reducing discounts on their drugs in advance of expected competition. Take AbbVie’s ($ABBV) $8-billion-a-year seller Humira, which has a dozen biosimilars lining up to swoop in when its patent expires later this year, the Wall Street Journal reports. AbbVie has raised the price of the arthritis drug 8 times in the past three years, increasing its price 73% to about $49,000 a year before discounts. When biosimilars hit, payers tell the newspaper they expect the knockoffs to cost about what Humira cost before those price hikes took place, drastically offsetting their savings.
Humira’s cost “accelerated as the anticipated launch date for copycat versions drew nearer,” Richard Evans with consultant SSR Health told the Wall Street Journal. By the end of last year, a year’s treatment with Humira averaged $27,665 after discounts, up 49% from three years earlier, according to SSR’s analysis.
That is why Jim Carlson, a VP at OmedaRx, the pharmacy division of Cambia Health Solutions in Portland, OR, told the WSJ “We’re not expecting to see anything close to the price relief we saw with traditional medicines when the generics become available.”
AbbVie gave the standard industry answer on the price increases, that the list price does not reflect discounts given to payers and that the price of its drug reflects its value.
The same thing happened with Amgen’s ($AMGN) cancer-care drug Neupogen, the first drug to face biosimilar competition, although the numbers were not nearly as dramatic. Amgen raised its price 15.7% in the three years before competition, WSJ reports. The biosimilar from Novartis ($NVS) came on the market last year at a 15% discount to Neupogen, giving payers some relief but not what everyone might have expected.
“I really don’t expect big relief from biosimilars,” says Steven Marciniak, vice president of pharmacy programs at Grand Rapids, MI-based insurer Priority Health.
Even Novartis CEO Joe Jimenez was pretty nonchalant about the watershed event last year, when the Swiss-based company won approval for the first biosimilar in the U.S. He said he didn’t think the market would notice much relief until 2020 when a host of pricey antibody biologics lose their patents.
Those kinds of predictions can be disappointing for someone like Leticia Hughes of Smiths Grove, KY, whose 12-year-old son Ashton takes Humira for juvenile arthritis and Crohn’s disease. Until she got new insurance, the family in the months before hitting their deductible limit was paying $2,200 out-of-pocket for the drug, more than their rent payment.
They rent, Ms. Hughes told the newspaper, because of the cost of Ashton’s care, which includes a dozen drugs. “We don’t feel we can afford to buy a house with our medical expenses.”
- read the Wall Street Journal story
Specialty-drug spending set for double-digit leaps over the next 3 years: Express Scripts
The biosimilars are coming. But how long will it be till they can make their mark?
Novartis CEO Jimenez shrugs off biosimilars in the short term