Economists Probe Cost-Effectiveness of Biosimilars

January 7, 2021
Tony Hagen

Tony Hagen is senior managing editor for The Center for Biosimilars®.

Authors of a review found that biosimilar uptake and market share are not in themselves sufficient to establish whether these agents will lead to savings.

Biosimilar policy should aim to lower costs of care, as increasing biosimilar uptake is not necessarily a direct route to savings, argue the authors of an overview of the health economics of this rising class of agents. Multiple factors go into whether biosimilars improve access to care, but ultimately their success can best be measured by cost reduction, they wrote.

“We believe that biopharmaceutical policy should aim to create a competitive and sustainable market for off-patent reference biologics, biosimilars, and next-generation biologics with a view to making biologic therapy available to patients at the lowest cost, rather than to promote biosimilar uptake. This serves to maximize savings,” they wrote.

Their study was a scoping review of available literature on biosimilar health economics, which they said is a subject that has not been sufficiently addressed and requires more investigation. They focused mainly on the use of biosimilars and the consequent savings in the European Union, because biosimilars are more established there than in the United States.

Putting Together a True Picture

The authors concluded that biosimilar competition in the drug marketplace contributes to lower costs of health care, although that measure alone cannot provide a true picture of whether biosimilars are having the desired effect on cost and access to care. Further, they said, competition from biosimilars provides pharmaceutical companies with the initiative to develop new biologics that raise the quality and efficacy of care.

“Manufacturers may safeguard their economic viability by focusing on the development of new biologic therapies for which there is no biosimilar competition, as long as patents and exclusivities have not expired," the authors stated. This was the case for AbbVie, which moved on to the development of Janus kinase inhibitors as its adalimumab blockbuster medicine (Humira) moved closer to patent expiration, they wrote.

But not enough is known about how biosimilars affect drug competition and innovation once they enter the marketplace. The authors cited one study that suggested that genuine competition among rival brands begins when there are at least 2 biosimilars in the market for a single drug type.

Based on their analysis, they asserted that “the relevant outcome measure is the evolution in the average cost of biologic therapy over time instead of biosimilar market share.” The Netherlands achieved a 44% and 50% net reduction in per-patient hospital expenditure for etanercept and infliximab, respectively, between 2014 and 2018, and these results clearly indicate a successful biosimilar policy, they wrote. Although not the sole determinant for biosimilar cost savings, market share still is an important element of a competitive market for biologics, they said.

Lower-priced biosimilars can have a downward effect on the price of reference biologics through price competition among manufacturers, and a 5-year study in Italy of the market entry of rituximab biosimilars demonstrated that price competition accounted for 67% of savings achieved.

Some countries in Europe have placed less reliance on price competition and more on price regulation. In Spain, for instance, reference biologic prices must drop to the level of biosimilar prices, “although price competition can lead to further price reductions,” the authors wrote.

They included an evaluation of “tenders,” which in Europe are systems of awarding contracts to a single, at most a few, biosimilar manufacturers/providers. This causes initial competition among producers to win the tenders, but in cases where only 1 biosimilar wins the tender, there is a risk that other producers will lose interest in competing in future tender opportunities. This is an oft-cited criticism of the tender process.

"Multiple-winner tenders may generate the largest savings because they attain price decreases on all tendered products for all use indications,” the authors said, citing available evidence.

How the savings from cost reductions are employed is interesting, the authors wrote. A study in the United Kingdom evaluated whether more health gain resulted from using biosimilar adalimumab savings to treat patients with rheumatoid arthritis (an adalimumab indication) or patients with melanoma, hepatitis C, multiple sclerosis, Duchenne muscular dystrophy, or non–small cell lung cancer. The authors noted that the greatest cost-effectiveness resulted when those savings were spent on treating patients with hepatitis C.

Unclear Value of Nonmedical Switching

The authors said little information is available on whether nonmedical switching from reference to biosimilar products results in savings. However, in Scotland, the National Health Service is attempting to achieve savings through nonmedical switching, they said.

When trying to determine the true budget impact of biosimilar use, it’s important to consider such dynamics as evolution of the epidemiology of the disease, initiation of biologic-naïve patients on a biosimilar and switching practices, price competition with alternative therapies, and the effect of innovative new drugs. The authors said few budget-impact analyses have looked at biosimilar savings from such a wide perspective.

Narrowing it down to just reference vs biosimilar drugs, it is possible to achieve a picture of cost-effectiveness, they said. For example, a Canadian spending analysis looked at reference vs biosimilar cetuximab plus best supportive care in a population with metastatic colon cancer. The authors said the incremental cost-effectiveness ratio was $299,613 vs $261,126 per quality-adjusted life year for reference vs biosimilar cetuximab, respectively.

“The cost-effectiveness of biologic therapy can change through its lifecycle as a result of, for example, the market entry of biosimilars or of new innovative chemical or biologic medicines,” the authors said. They added that payer policies and rebates play a critical role in how much savings is achieved with biosimilars.

Further, competition introduced to the market via the arrival of second-generation biologics with different administration routes than first-generation biologics can influence the cost savings. “The administration form has implications,” they said. Important variables to consider include the health care setting in which the biologic is used (hospital vs home), biologic use in combination with chemotherapy, and type of dosing regimen (body-weighted adjusted dose vs fixed dose). Even a manufacturer’s value-added services, such as patient support, factor into the cost-effectiveness equation.


Simoens S, Vulto AG. A health economic guide to market access of biosimilars. Expert Opin Biol Ther. Published online November 18, 2020. doi:10.1080/14712598.2021.1849132