The cost of cancer care in the United States—and its seemingly inexorable rate of growth—has been widely discussed and lamented. The cost of biologic therapies is frequently cited as a driver of this growth, and one that could be addressed with the introduction of less expensive therapeutic options.
Many in the medical community hope that the introduction of biosimilars for commonly used oncology therapeutics in the U.S. will begin to bend the cost curve and improve patient access to life-extending therapies. To realize the promise of significant savings and improved patient access, though, there are two conditions: First, biosimilars need to be priced at a meaningful discount to their reference products. Zarxio, a biosimilar version of filgrastim—and the first biosimilar approved in the U.S. through the FDA’s abbreviated 351(k) pathway, which states that a biosimilar can’t have any “meaningful differences” from its reference product—is priced at a discount of approximately 15% less than its reference product, Amgen’s Neupogen. This is consistent with the predicted discount of 15 to 30% that many experts, including the U.S. Federal Trade Commission, expect for biosimilars.
While some have suggested that biosimilars could be discounted as much as 50% when the market matures, manufacturers are unlikely to offer this level of discount unless they believe that the only way to differentiate their product is through price. In this scenario, prices will spiral quickly as manufacturers compete in a market that they will have turned into a commodity market. It’s obviously in the manufacturers’ best interest to compete on dimensions other than price in an effort to avoid a race to the bottom, minimizing incentives to significantly reduce prices in the short term.
The second condition required to realize these savings is that physicians must prescribe biosimilars in place of a reference product. Today in the U.S., physicians have very little financial incentive to prescribe biosimilars over the reference product, except in some cases where physicians participate in an accountable care organization. Even for practices that purchase buy-and-bill therapies, which might be attracted to a lower price point for the product, there’s no real financial incentive to prescribe biosimilars. Reimbursement, as measured by total dollars, would be the same for a biosimilar as it would be for a reference product.
So what can change? Payers may create policies that require physicians to prescribe biosimilars, but there’s little historical evidence that payers are willing or able to strictly control prescribing beyond managing to the approved product label in oncology. The expanded use of clinical pathways in oncology can only influence the choice of a biosimilar over a reference product where those pathways identify a specific biosimilar, though this seems unlikely to be adopted as common practice in the short term.
Physicians may also decide to prescribe biosimilars to help reduce patients’ co-pays and co-insurance, though manufacturers are very likely to offer co-pay assistance that minimizes differences in patient out-of-pocket costs between a reference product and the biosimilar, greatly reducing or eliminating this incentive.
As of now, without steeper discounts for biosimilars than most informed participants expect, or rapid growth in payer controls in oncology, we may see much slower adoption than is needed to realize the promise of significant cost savings from biosimilars. In other words, the market conditions and incentives aren’t set up to encourage adoption. For both biosimilar and reference product manufacturers, differentiating on experience, patient services and other non-clinical aspects can be difficult, but there’s no time like the present to start.