Biosimilar Cost Savings Disappoint

September 11, 2015

by Amanda Conschafter, blog editor

Biosimilar cost savings have arrived. But they are proving much less robust than proponents had hoped. Zarxio, the first approved U.S. biosimilar, launched this month costing only 15 percent less than its brand-name reference product. And a new Milliman study suggests that employers could save less than one percent of total health care costs as a result of biosimilars. After years of regulatory policy designed to speed biosimilars to market, the underwhelming cost benefit now has many wondering: Did the means justify the ends?

Regulators and policymakers have been lured by biosimilars’ promise of cost savings for some time. A 2008 estimate from the Congressional Budget Office predicted that biosimilars would offer 40 percent savings four years after their introduction. Congress then approved an abbreviated regulatory pathway for the copycat drugs in 2010. Shortly after the first biosimilar approval application was filed in 2014, Express Scripts projected that biosimilars would save $250 billion over 10 years.

FDA’s regulatory approach to biosimilars has reflected the rush for savings. To the chagrin of federal policymakers, the FDA applied a “placeholder” naming system to Zarxio. The temporary approach allowed the FDA to approve the drug even though it had not yet established an official naming system.

Likewise, the FDA approved prescribing information to accompany Zarxio that largely conveyed data from the reference product instead of the biosimilar itself. Physicians have expressed concerns that prescribing information should provide clinical trials data and safety information specific to the biosimilar—largely because non-identical biosimilars may affect patients differently than reference biologics do.

Finally, the FDA approved Zarxio for certain uses, or indications, even though it had not been thoroughly tested for them. Known as “indication extrapolation,” the process allows biosimilars to receive some or all of their reference product’s indications—without the robust clinical trials required of the biologic for the same approved uses.

READ: Unresolved Policy Issues Impact Patient Access to Biosimilars

Regulatory shortcuts can expedite biosimilars’ availability to patients. But they can also undermine physician confidence in the medicines, hindering widespread adoption of biosimilars. Without clear FDA guidance that protects patient safety, regulators may discover that modestly-discounted biosimilars are one deal that patients and health care providers just aren’t buying.

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