Action required to address growing risk of ‘biosimilars void’

This so-called ‘biosimilars void’ was a hot topic of discussion at the recent Festival of Biologics in Basel, Switzerland, where concerns were raised regarding what the data says about the sustainability of the biosimilars market.

A range of actions are necessary to incentivise investment in new biosimilars, to close the potential biosimilars void that looms. That includes the way in which the industry itself engages with payers.

A growing biosimilars void

Biosimilars are medicines that receive regulatory approval with reference to originator biologic products (biologics) and compete with them in the market. Biologics contain active substances derived from biological sources, such as mammalian cells, and are often large, complex molecules with an inherent small degree of heterogeneity. This marks biosimilars out from small molecule generic medicines, where the active ingredient is chemically identical to the originator drug. Nevertheless, biosimilars are highly similar alternatives to the originator reference product.

The ability to bring biosimilars to market is impacted by a range of factors, not least the effect of patents, supplementary protection certificates and regulatory protections relating to originator biologics.

According to IQVIA data, while 110 biologic products are set to reach their loss of exclusivity (LoE) date in Europe by the end of 2032 – i.e. the date their primary compound patent or regulatory exclusivity period will expire – in many cases there are currently no biosimilar candidates under development to offer competition to those products upon their LoE.

Biologics with large markets, such as pembrolizumab (Keytruda), daratumumab (Darzalex) and nivolumab (Opdivo), are set to reach LoE during the next 10 years and will drive significant growth in the biosimilars sector, but this belies the wider issue of the fast-approaching biosimilars void. This issue, IQVIA said, is particularly the case in respect of “low-sales” biologics – those achieving less than €500 million in annual sales, which accounts for 84 of the 110 biologics IQVIA identified – where just 7% of biologics have a potential rival biosimilar candidate in the pipeline. Even with “high-sales” products, the candidacy rate is just 73%.

This latest data compares to earlier estimates from IQVIA concerning originator biologics products said to reach LoE by the end of 2027 – it said then that there was a biosimilar candidate in the pipeline for just 55% of those products. The latest data therefore suggests that the biosimilar void is growing.

While it is right that manufacturers that invest heavily in developing originator biologics products are able to achieve a fair return on investment during their period of exclusivity from patent and regulatory rights, there are potential health and economic costs to this so-called biosimilars void: a lack of competition in the market can maintain an elevated cost of biologic medicines and, amidst tight constraints on the budgets of public health systems across Europe, result in patients not obtaining access to innovative, effective treatments. Biosimilar market entry has been shown to increase access to these biologic medicines as their price decreases and they may be reimbursed by payers for a wider range of patients suffering from a disease, not just the most affected. The economic cycle of the healthcare market also relies on these biologic products decreasing in price as biosimilars enter the market, so that cost savings can be invested into reimbursing new, innovative medicines.

Typically, it takes between seven and 10 years for biosimilar medicines to be developed – this is because they are complex molecules to develop and manufacture and there are there are intricate and costly regulatory requirements to meet before products can be commercialised.

Given the long lead time, it seems likely that, at least in some of the examples IQVIA highlighted, there will be no biosimilar rival to biologics available on the market when those originator products reach LoE.

IQVIA has estimated that the biosimilars void could cost a minimum of circa €15 billion in lost savings for payers, which it says is approximately 25% of the total loss of exclusivity opportunity, by 2032.

IQVIA said: “With fewer entrants into the market, competition between the originators and biosimilar medicines could resemble competition between brand-name medicines, with fewer products, and a reduction in price discounts. Failure to address the barriers to the challenges of biosimilar development is likely to increase the financial burden of European healthcare systems while reducing their impact to improve patient access.”

Regulatory and procurement barriers

There is no single solution that will help address the biosimilars void. The issues that we highlighted in the aftermath of the Festival of Biologics last year remain valid.

For example, while a paper issued by the European Medicines Agency (EMA) in November 2023 that suggested that a relaxation of regulatory requirements around expensive comparative efficacy trials is under consideration, there has been no formal change in policy to-date.

The EMA, like many other regulators – including the US Food and Drugs Administration – requires comprehensive scientific comparative efficacy studies to be carried out by biosimilar manufacturers to evidence ‘biosimilarity’ between their product and the originator biologic their product is based on, so as to obtain a marketing authorisation of their own. This entails conducting expensive and time-consuming clinical trials with patients.

The EMA is out-of-step with the UK’s Medicines and Healthcare Regulatory Authority (MHRA) in respect of its approach to comparative efficacy trials, with the MHRA having updated its guidance in 2021 to state that a comparative efficacy trial may not be necessary in most cases if sound scientific rationale supports this approach. That move allows biosimilar manufacturers to rely more heavily on comparative analytical and functional data as well as what is known from clinical experience and quality attributes of the originator biologics product, to meet their regulatory requirements.

The EMA consulted on plans to adopt a more tailored approach to the need for clinical efficacy trials earlier this year. That consultation closed on 30 April 2024 and Out-Law has asked the EMA for an update on the initiative.

In addition to regulatory barriers, there also remain challenges with the procurement models in some European markets – a ‘winner takes all’ procurement is popular in some countries but, for manufacturers, this can affect their appetite to invest in developing new biosimilars – they need sufficient guarantees that there will be enough take-up of their products to justify the investment needed for development, and a procurement model that offers only one product manufacturer a route to a country’s market is viewed negatively in this respect by some within industry. That again was reflected in discussions at the Festival of Biologics this year.

Engaging with payers over product pipelines and budgets

One of the other challenges to bringing biosimilars to market is the short-term nature of budgeting by payers.

In UK terms, it is common for members of the business team within biosimilar manufacturers to be in regular contact with NHS representatives over pricing and reimbursement and to gauge what future tenders will be coming up.

Currently, pipelines are being discussed by payers only up to a couple of years ahead. While this is sufficient notice for those who might develop generic medicines to compete with small molecule originator products, a much longer-term view needs to be taken in respect of the need for biosimilar medicines given their much longer lead times for development.

The challenge for the biosimilars industry is to convince payers – and government policymakers who sit behind them – to shift to long-term budgeting so that they can move away from adopting transitory positions that offer insufficient certainty for biosimilars development.

Getting to that position would represent a step-change in approach by payers and help them achieve longer term savings in the procurement of medicines – and follow through on supportive rhetoric and policies – like the stated ambition for the NHS in England to enable 80% penetration of biosimilars into product markets.

Opportunities for biosimilar manufacturers

While there are challenges in making out a business case for biosimilar products, those in the market could see the potential biosimilars void as an opportunity. According to IQVIA data, there are 27% of the “high-sales” biologic candidates without biosimilars in development. Given the economic success of a biosimilar will depend in part on the calculation of how much competition the product will face, these medicines provide a unique opening.

For those biologics in the “low-sales” bracket, if companies can lobby for regulators to remove the expensive comparative efficacy trials and deepen their discussions with payers to look at a longer horizon scan for products, these may become viable candidates for production.

It is imperative that industry is able to develop these competitor molecules, in order to bring savings to struggling healthcare systems and ultimately to enable wider access to these life-changing products.