By Karen Taylor and Pratik Avhad, Centre for Health Solutions
Two months ago, I participated in a Westminster Health Forum panel discussing Biologics and Biosimilars. My remit was to discuss the cost effectiveness of biosimilars and their contribution to value for money in pharma spending. This week’s blog shares the findings from the research we did for the presentation.
Why the focus on biologics and biosimilars, and why now?
Biologics came to prominence in the late 1990s. They comprise a wide range of products such as vaccines, blood and blood components, allergenics, somatic cells, gene therapy, tissues, and recombinant therapeutic proteins. Biologics have revolutionised the treatment of a number of complex debilitating and life limited conditions, such as cancers and autoimmune inflammatory diseases, multiple sclerosis and Crohn’s disease. Gene-based and cellular biologics, for example, which are at the forefront of biomedical research, are used increasingly to treat a variety of conditions for which no other treatments are available.
In contrast to most drugs that are chemically synthesised, with a known ‘small molecule’ structure, most biologics are manufactured in living sources, and are often very large, complex molecules that are not easily identified or characterised. Biologics can be composed of sugars, proteins, or nucleic acids or complex combinations of these substances, isolated from a variety of natural sources – human, animal or microorganism. Their production generally involves complex biotechnology and other cutting-edge technologies.
Some biologics – like those used to treat cancer, produce a drug-like response when they act on a target cell or protein in the body. Other biologics, known as monoclonal antibodies, treat cancers and autoimmune conditions (such as rheumatoid arthritis, psoriasis, psoriatic arthritis and Crohn’s disease), by blocking specific interactions in the immune system, which regular drugs can’t do. Monoclonal antibodies are the most rapidly growing type of biologic drug. Biologics — like blood transfusions, tissue transplants and gene therapy, help improve the way the body responds to health challenges. Gene therapy treatment in which doctors insert, replace, or manipulate a gene to help treat a disease, is still considered experimental. Although offering the prospect of a ‘cure’ this comes at a very high cost. Gene therapies, therefore, are usually reserved for patients who have difficult-to-treat conditions for which no treatment exists or for which all other treatments have failed.
Biosimilar medicines are ‘highly similar and therapeutically equivalent’ to the original or reference biological medicine. Biosimilars are also more complex to manufacture and its more difficult to determine therapeutic equivalence, than is the case for a generic version of a chemically synthesised drug.
As biologics lose their patent protection, a growing number of companies have launched biosimilars across different therapeutic areas. The first biosimilars received their marketing authorisation from the European Commission in 2006; by April 2019, there were 59 biosimilars approved in Europe, compared to just 19 approved in the US.1 Currently, there are also more than 1,040 biosimilar products in the biopharma R&D pipeline, globally.2
What’s the market value and potential savings from biosimilars
Market forecasts suggest the biosimilar market will to grow at 32 per cent (CAGR) from 2018-23, with 42 per cent of the growth coming from Europe.3 By 2023 biosimilar competition in the biologics market will be three-times larger than it is today.4 Major drivers for this growth are:
- the loss of exclusivity of blockbuster biologics - by the end of 2022-23, only two of the current top 20 original biopharma drug brands by sales will not be facing generic or biosimilar competition5
- government cost saving initiatives
- the emergence of financially strong big pharma and generic market participants from emerging markets.
Currently, across ten developed markets, market forecasters suggest that $45 billion of biotech spending is exposed to biosimilar competition, and another $52 billion will go off patent from 2019 to 20226. In the US, spending on biologics reached $125.5 billion in 2018, cost savings from switching to biosimilars are projected to be between $40 and $250 billion by 2025.7 In the EU5 savings will be more than €10 billion by 2020.8
The UK’s position
In 2017-18, NHS England spent £2.88 billion on the top 15 medicines, with biologics and biosimilars accounting for 83 per cent of this spend.9 Indeed, six of the top ten medicines by spend prescribed in NHS hospitals are biological products. Currently, there are 15 ‘reference’ (or originator) biological medicines with 35 biosimilars authorised for use under 53 brand names. As the UK biosimilar market develops, increased competition between biological medicines has the potential to deliver significant savings to the NHS. In 2017, NHS England saved £324 million by switching from using ten expensive medicines to better value biosimilars and generics.10 NHS England estimate that savings through an increased uptake of the best value biologics, including biosimilars, could be at least £400 to £500 million per year by 2020-21.11
In 2018, the UK had the highest penetration of biosimilars across EU5 countries. Denmark and Norway lead the overall EU position in biosimilar penetration (see Figure 1).12 Leading countries are encouraging adoption through setting biosimilar penetration goals and/or introducing quotas for adoption. The UK also instigated a gainsharing policy to split savings between funders and prescribers.13
Figure 1. The UK has made strides to become a market leader in biosimilar adoption
Biosimilar penetration as of October 2018
Source: IQVIA, 2019
Part of the drive behind the UK’s success in improving penetration, is the 2017 NHS Commissioning Framework for Biological Medicines (including biosimilar medicines), which was aimed at helping the NHS to maximise the value for patients from the amount it spends on these medicines.14 It also created headroom for funding innovative treatments and/or improvements in pathways of care. A key performance target for Trusts is the adoption of best value generic/ biologic products, which rewards:
- adoption of best value generic/ biologic products in 90 per cent of new patients within one quarter of guidance being made available
- adoption of best value generic/ biologic products in 80 per cent of applicable existing patients within one year of being made available.
In addition, the 2017/2019 Commissioning for Quality and Innovation (CQUIN) framework outlines incentives available to Trusts if they can demonstrate the above.15
Today, biologics often represent the cutting-edge of biomedical research and, in time, may offer the most effective means to treat a variety of medical illnesses and conditions that presently have no other treatments available. However, providing new medicines costs money. Medicines policy has always had to reconcile competing objectives – providing patients with good access to effective drugs, ensuring spending on medicines is affordable and incentivising manufacturers to continue developing innovative products. Encouraging the introduction of biosimilars into the market is a cost-effective way of supporting patient access to innovative medicines, and balancing affordability.
NHS spending on medicines has increased on average by five per cent a year since 2010-11, hospital spending on medicines over the same period has grown by 12 per cent a year.16 The 2019 NHS Long Term Plan is clear that the NHS must take action to maximise the value it derives for patients from the money it spends on medicines.17 While biosimilar medicines are more challenging and expensive to develop than generic medicines, and may not offer the same percentage of price reductions as traditional generic medicines, there are nevertheless significant savings associated with increased competition. Introducing competition between different biological medicines, including biosimilar medicines, creates increased choice for patients and clinicians, and is an effective way of supporting innovation, balancing patient choice and enabling significant savings to be realised.