Joseph P. Fuhr Jr, PhD, professor emeritus of economics at Widener University in Chester, Pennsylvania, and an expert on antitrust health economics and pharmacoeconomics discusses how future biosimilar competition will affect consumers and market development.
The Center for Biosimilars® (CfB): Hello I'm Matthew Gavidia. Today on the MJH Life Sciences News Network, The Center for Biosimilars® is pleased to welcome Dr Joseph P. Fuhr Jr, professor emeritus of economics at Widener University in Chester, Pennsylvania, who is an expert on antitrust health economics and pharmacoeconomics issues.
To get started, Joe, can you discuss why it is important to have a robust biosimilar market in the United States?
Fuhr: Yes, it's important to have biosimilar competition in the United States because competition decreases price and increases access. It gives the originator the incentive to replace the product now facing competition with new products to increase the company's revenue stream. Also, it frees up money to pay for those new products.
CfB: Can you tell us about the high cost of bringing a biosimilar to market and what that signifies?
Fuhr: Yes, it is estimated to cost between $100 to $200 million in around 5 to 6 years to develop a biosimilar. Amgen spends around $200 million to develop a biosimilar. It takes about $1 to $5 million and about 3 to 5 years to develop a generic. Thus, biosimilar firms must generate considerably more revenue to get a return on investment.
CfB: What other barriers are there for bringing biosimilar to market?
Fuhr: Besides the high costs of research and development, [there is] FDA approval, including for manufacturing site acceptability; originators' response litigation, especially involving patents; stakeholder education; required postmarketing [pharmacovigilance]; the lack of automatic substitution at the pharmacy level; and biobetter development, which is the second generation of the originator product.
CfB: What type of companies are ideally suited for biosimilar development?
Fuhr: Established biopharmaceutical firms that have already developed biologics are ideally suited because they have already had the experience and expertise in developing biologics.
CfB: There have been many biosimilar developers so far, but not all of them are sticking around. Why is that?
Fuhr: The most compelling reason is that they believe they cannot get a return on investment. Some are leaving due to lack of expertise and others are leaving because of considerable competition in particular markets.
CfB: Will market dynamics give us the right number of biosimilars and the right number of companies? How well is the market functioning right now?
Fuhr: In any developing market, there are firms that will succeed and others that will fail. It's just the way a new market develops. Eventually the market will be in equilibrium with the right number of firms. The US market is presently not functioning very well. But it took many years for the generic market to develop.
CfB: We have as many as 5 approved adalimumab biosimilars lined up for 2023 and many more in the works. Is this a good situation for consumers or for the biosimilar companies themselves?
Fuhr: It would have been better if the biosimilars could have entered earlier, since that would have brought prices down sooner. It will be interesting to see how low prices will go in 2023 and how many more firms will enter [the market]. More firms entering will be good for consumers, but bad for biosimilar companies, because more entry will lead to lower prices. With the dynamics of the market, we'll see some firms eventually leaving the market.
CfB: For companies losing revenue from blockbuster drugs going off patent, do you see biosimilars as offering significant replacement revenue?
Fuhr: Some originator companies have decided not to enter the biosimilar market and [instead] concentrate on making up loss revenues through new products. Others are looking for a combination of new products and biosimilars.
CfB: Are we seeing sufficient discounts now from biosimilars or is it too early?
Fuhr: It depends on how you define significant. One would not expect prices in the US biosimilar market to fall percentagewise as much as they have in the generic market. However, even though the percentage may be lower, the actual decrease would be much greater because of the considerably higher price of biologics. A 90% decrease in the price of a $100 drug results in a $90 savings, whereas a 40% decrease in a $220,000 biologic will result in an $88,000 savings.
CfB: There are now 5 trastuzumab biosimilars on the market. What sort of pricing effects do you anticipate here?
Fuhr: Generally, the more competitors, the greater the discounts. So, we should see considerable discounts in this market.
CfB: What are the dynamics of very rapid and steep discounts caused by biosimilars, such as those that have been noted in Europe, and how might this affect the level of competition among biosimilar companies?
Fuhr: The deep discounts in Europe have helped consumers and the countries paying for them considerably in the short run. However, such deep discounts will make it more difficult for biosimilar firms to get a return on investment, and that's leading to fewer firms entering the market and possibly lower price discounts in the long run.
CfB: What will a mature biosimilar market look like? [Will it look] something like they have in Europe?
Fuhr: Probably not. For the most part, Europe is a single-payer system, whereas, in the United States, we have multiple payers. So, one would expect a different market as a result of the multiple payers.
CfB: Do you see biosimilar competition ultimately bringing down the cost of specialty medicines significantly for the American health care consumer?
Fuhr: The market will eventually evolve, which should lead to more competition and considerable savings. If the market does not evolve, the United States will see price controls, which will lead to less innovation. This will adversely affect consumers because fewer drugs that [are lifesaving] or increase quality of life will be developed. Biosimilars are a grand experiment. If competition doesn't work in this market, that is where the government will get involved and put in price controls.
CfB: To learn more, visit our website at centerforbiosimilars.com, I'm Matthew Gavidia. Thanks for joining us.