IGBA Takes Aim at Pricing Pressure and Post–COVID-19 Protectionism

In a white paper, the International Generic and Biosimilar Medicines Association (IGBA) describes industry dynamics that it says affect market sustainability and patient access.

When COVID-19 first hit, individuals responded by hoarding drugs and countries began to talk of protectionist measures. Some, including the United States, responded with calls to strengthen domestic pharmaceutical manufacturing to protect against sudden disruptions in drug supply.

However, local drug manufacturing may be impractical and could lead to higher costs and further shortages, the International Generic and Biosimilar Medicines Association (IGBA), a trade association of generics and biosimilars producers, contends in a new whitepaper.

“While the pandemic has revealed the vulnerability of global supply chains, a radical and uncoordinated shift to fully localized manufacturing would have detrimental effects on the generics and biosimilars industry by driving cost increases and ultimately endangering global access to medicines,” the group states.

The group argues that manufacturers may not be able to scale up pharmaceutical plants in individual markets and that governmental pressure to foster local pharmaceutical manufacturing and supply chain reinforcement puts most of the expense and burden on companies that, at the same time, are contending with downward pricing pressures that limit their resources for infrastructure development.

Paper Overview

Their paper looks at trends affecting the production and competitiveness of generic and biosimilar medications and recommends policy solutions to help with the sustainability and success of these lower-cost products.

The group calls for alignment of regulatory guidelines across global markets to make it easier for manufacturers to participate in diverse regional economies. “Convergence of approval pathways across markets will enable more cost-effective development by removing the need for market-specific development.”

They also argue for greater reliance on advanced analytical techniques (as opposed to clinical trials involving patients) for qualifying biosimilars for marketing approval. “Increasingly advanced analytical technology will be applicable to demonstrate robust evidence of biosimilarity,” they state.

“Consistent recognition of this fact across markets would significantly simplify development processes for biosimilar companies and free up substantial resources for new product development. Similarly, requirements for large-scale, patient end point studies for complex generics such as inhalers and long-acting injectables need to be revisited.”

Excessive Patenting

The IGBA paper addresses heavy patenting of drugs by originator companies, a process they say regulators and legislators ought to counter by placing limits on product exclusivity. “Generic and biosimilar companies can only live up to their vision of expanding patient access to high-quality and affordable medicines if they are granted the chance to market their products as soon as appropriate protection periods for originator products have expired,” they wrote.

Capping exclusivity periods in a “timely” way would accomplish 2 objectives, they said. First, it would induce generics and biosimilars producers to bring competing, lower-cost products to market; and second, it would spur originator companies to devote their resources to pursuing “the next level of development innovation,” or better drugs.

In accord with such an objective would be the establishment of “internationally consistent” approaches to granting patent protections to originator products and well-aligned litigation systems across national borders so that patent protections can be challenged, IGBA says in the paper.

Biosimilar Savings

The group estimates that the US health care system saved $313 billion in 2019 by using generics and another $2.2 billion from biosimilars. In the European Union, where biosimilars are more widely used, the market for biosimilars measures $9.9 billion and amounts to 8% of the total biologics market.

EU biosimilar list price reductions appear to have cut medical spending by 5% since 2014 and “up to 67% for established classes such as erythropoetin,” the group states, although it says the actual reductions might be greater if privately negotiated drug price reductions are included.

The group states that biosimilar adoption has accelerated and in some markets “has reached high levels.” In Germany, for instance, biosimilar versions of adalimumab, bevacizumab, and rituximab account for 72%, 80%, and 85% of market share, respectively.

Despite negative factors cited above, the group says that double digit growth in the global biosimilars market is likely.

Much of the drive for this expansion will come from favorable regulatory policies and increasing stakeholder acceptance in the United States, the group says. “As a result, cumulative savings from biosimilars are expected to reach $285 billion globally over the next 5 years, with annual savings exceeding $100 billion in 2025 alone.”

Conditions Favor Early Entrants

But competition and downward pricing pressure, such as the European tender system of awarding supply contracts only to limited numbers of manufacturers, increases the risks and potential loss, such that only the first biosimilar entrants in a market may actually recoup their costs of development, IGBA states.

“Biosimilar launches have witnessed accelerated price erosion curves across markets. In recent [anti-tumor necrosis factor] product launches, erosion of prices reaches 25% on average at the time of entry of the first biosimilar. In products with a significant number of competitors (5 or more) and market modalities making strong use of tenders, erosion can reach up to 70% relatively quickly,” IGBA says.

If the pricing pressure is not managed well, “this could create unfavorable economics and lead to significant negative impact on availability and access of critical products,” the group says.