The FDA’s recent approval of the first biosimilar product in the U.S. is a notable event. A fully developed biosimilars market has the potential to improve patient outcomes and provide significant cost savings for the U.S. healthcare system. And, these benefits could be significant.
Just like generic drugs, which compete with chemical-based medicines that previously enjoyed market exclusivity, biosimilars compete with brand name medicines once their patents have expired. The introduction of biosimilars into a market spurs competition and innovation, and benefits patients by providing high quality health care services at more affordable prices.
However, there are substantial differences between the development process of biosimilars and their branded counterparts (known as biologics) and chemical-based generic drugs and their branded counterparts. These differences make the current regulatory system as it applies to chemical-based drugs inapplicable to the biologics markets.
Biologics are based on biological processes that use a living system or organism to develop the therapy. These medicines are much more complex to create. They are responsible for many innovative therapies that are already benefiting patients who are suffering from illnesses including rheumatoid arthritis, psoriasis, breast cancer, and Crohn’s disease.
Approximately one-third of all current pharmaceutical industry research and development is spent on biologics. Furthermore, the industry expects that by 2016, 10 of the top 20 bestselling drugs globally will be biologics.
Like most markets, a competitive biologics market can benefit consumers by lowering prices and increasing quality. Additionally, biosimilars have an impeccable safety track record in the EU, Japan, and Canada where biosimilars regularly compete against biologics.
Biosimilars are also proving to have a significant impact on drug prices. In the European Union, where biosimilars already compete with biologics, biosimilars typically sell at a 30 percent discount compared to branded biologic medicines.
A robust biosimilars market can also improve the efficacy of biologics. These drugs, referred to as “biobetters” or “biosuperiors,” leverage the learnings gained from the original biologics drug and can provide a therapeutically superior product. Thus, a robust market for biosimilars would increase the quality of pharmaceutical drugs in addition to exerting downward pressure on pharmaceutical prices.
According to the Federal Trade Commission, biosimilars have the potential to save the U.S. healthcare system $250 billion through 2022. Furthermore, the global biosimilars market, according to an analysis by Frost & Sullivan, “will see exponential growth” over the next decade. This growth will not just save the healthcare system money. It can also improve patient outcomes and be a significant economic driver. That is, if we let it happen.
The efficacy, safety, growth potential, and cost-savings potential of the biosimilars market all speak to the need for encouraging the development of this potentially vibrant high-innovation industry. However, regulatory changes are necessary to make this a reality.
Although the FDA has approved the first biosimilar product, it has not yet provided final guidance for approving an abbreviated licensure pathway for new biosimilar drugs. This is not the case in the EU. The EU has developed a pathway for approving biosimilar drugs and has, as a result, benefited from a much more robust biosimilar market.
A certain regulatory pathway makes a large difference in the growth of the biosimilars market. Compare the 1 approved biosimilar in the U.S. to the 6 in Japan, 8 in Australia or 20 across Europe. The lack of a certain regulatory pathway means that patients in the U.S. are missing out on the potential benefits from biosimilars that are already deemed safe and effective in other developed countries.
As the growth in the overall pharmaceutical market has historically illustrated, the growth in the high-tech pharmaceutical industry jobs tends to develop in the consumer markets that are profitable. For traditional pharmaceutical products, that market has been the U.S. for many years. A fully enforced licensure pathway will help ensure that the U.S. will be able to extend this lead into the biosimilars market.
The full potential of the biosimilar market will only be met when the FDA provides the necessary guidance, including a licensure pathway. Providing pharmaceutical manufacturers with such clarity will expedite the market entry process for biosimilars and empower one of the more innovative segments of the pharmaceutical market.