Over 50 Biosimilars in 10 years — and the Pipeline is Still Full

As we pass 2024’s midpoint, 53 biosimilars have been approved in the United States; of those, 42 are now on the market. Those totals were reached 14 years after the pathway for these lower-cost biologics was created as part of the Affordable Care Act (ACA).

At times it has been a steep uphill battle for these lower-cost biologics, but recently enacted regulatory reforms promise to give them a bit of a tailwind going into 2025.

Over the past decade, the biosimilar market has moved forward in fits and starts, and not necessarily as hoped by advocates for the lower-cost biologics intended to compete with expensive biologics and lower healthcare costs. Hindered by regulatory and competitive obstacles, biosimilars have failed to achieve more than a fraction of the $54 billion in savings predicted by a much-vaunted 2017 Rand report on their market potential.

A recent example of the sluggish biosimilar uptake occurred last year when sales of AbbVie’s Humira (adalimumab) — which was for many years the top drug in sales revenue — hardly suffered despite the entry of nine biosimilar competitors. AbbVie accomplished this by locking in formulary placements for Humira that made it difficult for biosimilars to get even a toehold. AbbVie’s tactics helped Humira to retain a 95% share
of the market.

Profit margins

But the tide may be turning. CVS Caremark, CVS Health’s pharmacy benefit manager (PBM), announced that in April 2024 it would drop Humira from its formularies and replacing it with cheaper biosimilar options, including Sandoz’s Hyrimoz (adalimumab-adaz) and co-branded version of Humira. Evernorth’s Accredo specialty pharmacy has also said it would begin offering Humira biosimilars as opposed to originator product.

Much will depend on how much pressure PBMs exert on the profit margins of the biosimilar manufacturers, but PBM involvement could be interpreted as evidence that conditions are improving for biosimilars, which in the United States are approved for 17 different originator products. For the scores of biosimilars (80-plus) in the pipeline, only promising market conditions will convince their manufacturers to launch these products.

Luca Bertuzzi, Ph.D.

It has been slow going for biosimilars partly because of features of Medicare Part D that create a ready and willing market for higher-priced biologics. That may be changing, though, because of the reforms introduced by the Bipartisan Budget Act of 2018 and then the Inflation Reduction Act (IRA) of 2022, according to a recent study by Luca Bertuzzi, Ph.D., a health economist at Charles River Associates, and Luca Maini, Ph.D., an assistant professor in the Department of Health Care Policy at Harvard Medical School.

In their first three years after market entry (study years 2013-2020), biosimilars in the United States have consistently been 38% more likely to be covered by employer-sponsored plans than by Medicare Part D plans, Bertuzzi and Maini wrote in their Health Affairs study.

But the Bipartisan Budget Act has introduced manufacturer discounts for biosimilars that formerly applied only to originator drugs. And by capping beneficiaries’ out-of-pocket expenses, the IRA may make it financially attractive for plans to cover biosimilars.

The IRA’s $2,000 cap on out-of-pocket expenses takes effect in 2025. “As a result, plans would save $3,385 if a patient were to use Zarxio instead of Neupogen, which is three times what they save under current benefit designs,” Bertuzzi and Maini wrote. These kinds of regulatory tweaks may finally give biosimilars the fighting chance they were promised when the regulatory pathway for them in 2010 when the Biologics Price Competition and Innovation Act was folded into the ACA.

Bertuzzi notes that the market for generics of small-molecule brand-name drugs also had growing pains. “It took a few years for the current [generic] equilibrium to arise, being that in the vast majority of instances where a small-molecule branded drug goes off patent, within
12 months generic drugs have taken up 90% of the market share. I think it’s possible that was the expectation for biosimilars, but that didn’t happen, obviously, and part of it is that there is a learning curve.”

The reforms as described in Bertuzzi and Maini’s study in Health Affairs are necessary to keep the pressure on originator companies and ensure a competitive marketplace, in Bertuzzi’s view. “For the long-term health of the biosimilar market," he says, "we need biosimilars today to make enough money that it makes sense for them to enter the market."