As drug companies continue to follow the growing trend adopting more environmentally friendly and socially conscious frameworks, many are choosing to highlight their biosimilar portfolios as an example of their efforts.
As climate change and other social issues rise on the public radar1, more companies have taken up the torch to prove that they are making efforts towards greater sustainability, especially in the pharmaceutical space.
Many drug companies have adopted an environmental, social, and corporate governance framework known as ESG. These frameworks are a way for corporations to evaluate how they are working on behalf of social goals that go beyond trying to maximize profits for shareholders. Companies with an ESG framework often release reports for investors that outline steps they’ve taken to increase their sustainability and social profiles. The reports allow companies to hold themselves accountable for their impact on the world and to offer greater transparency to investors and consumers.
However, beyond the traditional ways of increasing sustainability, like reducing greenhouse gas emission and water consumption, some biopharmaceuticals companies are including their biosimilar portfolios as another element of ESG.
How Do Biosimilars Impact Sustainability?
Drug production in general can have considerable influence on the environment and microbiota, particularly after active pharmaceutical ingredients (APIs) have been excreted. Although drug production itself results in increased carbon emissions and water utilization, sewage effluents containing APIs have been known to interfere with fish populations and contaminate water sources, largely due to the body’s inability to metabolize APIs easily.2
Biosimilar development allows companies to impact sustainability in 2 ways: these are biologic drugs, and they are priced lower than reference products.
Because biologics are created using living cells and cell processes, they are primarily composed of amino acid components, sugars, or nucleotides, all of which can be metabolized more easily than synthetic APIs and aren’t considered to pose any environmental risks, according to a report published in Drug Safety.3
Alas, biologic drugs are not perfect, especially when it comes to water consumption. Biologics require between 10 and 100 times more water during production compared with small-molecule drugs.4 On the bright side, the biotechnology industry has overall been working towards reducing use of costly and wasteful consumables and greater use of disposables, such as single-use bioreactors and other equipment, to reduce water consumption needed for cleaning and sterilizing equipment, according to an article from Clinical and Engineering News.5
“Innovation needs to be continued, and biosimilars are a pressure valve that allow health care systems to provide quality care while still reducing overall costs, and essentially can become a financial ‘legroom’ to fund innovation. In terms of environmental issues, the biopharmaceutical industry, including biosimilars, has less impact on the environment compared to other carbon-intensive industries such as automobile or steel,” according to Changho Cho, legal counsel of the ESG Office at Samsung Bioepis, in an interview with The Center for Biosimilars®.
The main benefit of biosimilars is the promise of reduced drug costs and health care savings, which could potentially add up to $100 billion for the United States alone by 2024 with greater utilization, according to IQVIA’s 2020 report.6
Millions of Americans are experiencing financial burden stemming from expensive health care procedures and medications. The total spending on health care has risen from $1.4 trillion in 2000 to $4.1 trillion in 2020. Spending on biologics alone accounted for 37% of the total US health care spending in 2017 despite only making up 2% of prescriptions.7
Biosimilars can provide financial benefits for the most vulnerable populations. Medicare Part D plans could have saved between $84 million and $143 million in 2019 if they adopted a biosimilar utilization rate of at least 60%.8 Biosimilars have also led to price decreases in the oncology space, which could amount to $1 billion in savings in the next 5 years.9 Some experts even suggest that more policies that promote greater biosimilar use could help to address some of the racial and ethnic disparities within the health care system.10
“Biosimilars offer treatment option of comparable efficacy and safety at a more affordable price, and that value of biosimilar is aligned with social values of ensuring equitable access for people who need treatment….Due to the nature of biosimilars, biosimilars are associated with creating ‘shared value’ for all stakeholders, including providers, payers, patients, as well as the society by reducing health care burdens,” Cho continued.
How ESG Reports Differ From Each Other
Many of the big biopharmaceutical companies have released or are planning to release at least 1 ESG or social responsibility report that mentions their work in biosimilar development, including Amgen, Pfizer, Novartis, Biogen, Shanghai Henlius Biotech, Biocon, Viatris, Samsung Bioepis, and Alvotech. Alas, not all ESG reports are the same.
Some only mention biosimilars a few times and without specific information or data on how biosimilars have impacted their environmental and social impact. Others mention biosimilars throughout their reports with some figures and information on the financial benefits of biosimilars. And some, namely Samsung Bioepis, are a cut above the rest, including extensive information on the financial and environmental impact that biosimilars can have on the companies themselves, their investors, and most importantly, patients.
“It's up to the biopharmaceutical companies to let people understand what they’re doing. And that's the whole purpose of being transparent of reporting and validating your data and things like that. I would say it's really up to each company to put out information, to be judged by that information, to be tracked on that information, and to set targets on [how to improve] that,” said Ming Li, chief strategy officer at Alvotech, in another interview with The Center for Biosimilars®.
Alvotech plans to follow in Samsung Bioepis’ footsteps by releasing its own extensive ESG report in the near future. Samsung Bioepis and Alvotech have an additional edge in terms of ESG report quality in that they are the only 2 companies that produce only biosimilars, meaning that by nature biosimilars impact every element of their environmental and social impact. Li and Cho both confirmed that their companies’ ESG reports will be updated annually.
“In order to really participate in this corporate sustainability movement, it's definitely more than just developing biosimilars…. I think some companies are focusing more broadly on corporate sustainability….and you can tell by how comprehensive disclosures are. And how comprehensive they've implemented ESG across the way they operate as a company. So, I think that, clearly, if you're just mentioning it, it’s more lip service,” Li commented.
Cho mentioned Samsung Bioepis’ commitment to having business operations align with global ESG efforts and environmental requirements, including putting forth more efforts towards reducing greenhouse gas emission, energy consumption, water consumption, and waste disposal.
“Because we are managing end-to-end business from biosimilar development, manufacturing, supply chain management to commercialization, we are involved in various activities that impact the environment, society, and community, and it is our responsibility to stay compliant, ethical, and environment-conscious when we develop, produce, and distribute our products…without supply shortages or disruptions,” said Cho.
What’s Location Got to Do With It?
One aspect of biosimilars that can help the environment is the location in which they are being manufactured and developed. Alvotech, a company based in Reykjavik, Iceland, may have an environmental advantage because, by law, the company must comply with social and environmental regulations, according to Li.
“Iceland is a country that operates on its own separate energy grid. Almost all of the power produced in the country is from hydroelectric and geothermal means, so the risk of having [energy] come from coal-fired plants and elsewhere is very low. And obviously, there's a benefit to producing through geothermal and hydroelectric means because, by definition, it means your scope 2 emissions is also very close to zero,” he explained.
More specifically, 85% of houses in Iceland are heated using geothermal energy and renewable energy accounts for nearly 100% of energy production, making it the world's largest green energy producer per capita and largest electricity producer per capita, according the Government of Iceland.11 On the other hand, according to the US Energy Information Administration, only 12% of the energy produced in the United States comes from renewable sources, considerably lower than that produced by petroleum (35%) and natural gas (34%).12
Additionally, Li talked about how far Iceland has advanced policies that ensure equal pay between men and women, which enables Alvotech to address some form of gender inequality. Geographically, Iceland is also a good place to manufacture biopharmaceuticals because its access to water is plentiful and its access to wildfires and severe storms is limited.
Li added, “Long term, what we hope to do is to be able to really put in a comprehensive platform, not just say that we're making biosimilars and that we're making them in Iceland with geothermal energy, but really put in a comprehensive platform. And we hope that not only has a potential impact on what we're sharing with investors as far as our commitment to stakeholder capitalism, but also from a market point of view. I think as this becomes important to buyers, to payers, to sovereigns, and elsewhere, we want to be a part of that going forward.”