Biosimilars: How Can Payers Get Long-Term Savings?

The term ‘biosimilar’ refers to an alternative similar version of an off-patent innovative originator biotechnology product (the ‘reference product’). Several biosimilars have been approved in Europe, and a number of top-selling biological medicines have lost, or will lose, patent protection over the next 5 years. We look at the experience in Europe so far. The USA has finally implemented a regulatory route for biosimilar approval. We recommend that European and US governments and payers take a strategic approach to get value for money from the use of biosimilars by (1) supporting and incentivising generation of high-quality comprehensive outcomes data on the effectiveness and safety of biosimilars and originator products; and (2) ensuring that incentives are in place for budget holders to benefit from price competition. This may create greater willingness on the part of budget holders and clinicians to use biosimilar and originator products with comparable outcomes interchangeably, and may drive down prices. Other options, such as direct price cuts for originator products or substitution rules without outcomes data, are likely to discourage biosimilar entry. With such approaches, governments may achieve a one-off cut in originator prices but may put at risk the creation of a more competitive market that would, in time, produce much greater savings. It was the creation of competitive markets for chemical generic drugs—notably, in the USA, the UK and Germany—rather than price control, that enabled payers to achieve the high discounts now taken for granted.