Generic drugs generally cost 80 percent less than brand-name drugs, so hopes were high when a law enacted in 2010 paved the way for competition among the highest-priced drugs of all, known as biologics.
But, as these competing drugs start to appear on the market, consumers aren't reaping a windfall.
On Monday, Pfizer said it would start selling Inflectra, its version of the blockbuster rheumatoid arthritis drug Remicade, in late November. But Inflectra, the second so-called biosimilar set to hit the market, isn't exactly a steal.
Truven Health Analytics
Note: Chart shows the highest annual price, according to wholesale acquisition cost, for a vial containing 100 milligrams of powder for preparing an intravenous solution.
Truven Health Analytics
The wholesale acquisition cost (a benchmark price in the drug industry) for Inflectra is $946 a vial, only 15 percent off $1,113 for a comparable vial of Johnson & Johnson's Remicade, according to data from Truven Health Analytics. (The WAC price doesn't reflect rebates drugmakers typically offer.)
Early indications are that the prices for these substitute medications will only lop 15 or 20 percent off the price, said Dr. Mark McClellan, director of the Duke-Margolis Center for Health Policy, at a Tuesday meeting in Washington, D.C.
That discount is a far cry from the one for standard generic drugs, McClellan said at a forum hosted by Duke and Friends of Cancer Research. "On the other hand, 15 to 20 percent of a very big price – a very large number — is still a big number."
Steady price increases for Remicade mean that Inflectra, even at a 15 percent discount, will cost about what Remicade did in 2014.
Pricing this new class of drugs is just one challenge. Drugmakers will also have to persuade consumers and physicians that they are every bit as good as the drugs they would replace. Because these biotech drugs are similar but not identical to the brand-name medicines they mimic, pharmacists generally are restricted from substituting one for the other automatically, unlike most traditional generics.
The case for biosimilars as these new medicines are sometimes called isn't quite as straightforward as it is for standard generics. Typical drugs are simple molecules, so generic versions can be built atom by atom to be identical with the original.
These new "biologic" drugs are complex biological molecules. These drugs are produced in living cells. As a result, even the brand-name drugs vary a bit from batch to batch. The generic versions of these drugs, known as biosimilars, also vary. The Food and Drug Administration considers them essentially the same as the original drug, as long as their variations fall into the same range as the brand-name biologics.
So far, scientists have found no meaningful differences between these drugs and their mimics. Europe, which is a decade ahead of the United States in developing these drugs, has gathered 400 million patient life-years of data (which, for example, would be studies of 40 million people for 10 years), and hasn't identified any safety issues, said Lisa Bell, senior vice president of regulatory affairs for Coherus Biosciences.
The latest reassuring data, announced at a meeting Tuesday in Vienna, Austria, come from a government-funded study in Norway of 481 patients, half of whom switched from brand-name Remicade to another biosimilar called Remsima. After a year of follow-up, there was no meaningful differences between the two groups (though there were nonsignificant findings that provided potential fodder for skeptics).
In Europe, governments have a big hand in deciding which drugs are made available to patients in government-sponsored health systems. The system in the United States is a much more complicated picture, involving patients, doctors, insurance companies, middlemen and government providers such as Medicare. Doctors, in particular, have a big voice and will need to be convinced that the substitutes are just as good as the original drugs.
For example, doctors routinely prescribe Herceptin to treat certain forms of breast cancer. Dr. Richard Schilsky, senior vice president and chief medical officer of the American Society of Clinical Oncology, said a competitive product was shown to be at least as good as the original drug in a study that measured the likelihood that a woman taking the drug would suffer a relapse. But Herceptin has a 25-year-history that looks not only at relapse rates, but at long-term survival and other significant endpoints.
"At what point does the doctor and the patient have the confidence to make that switch" to the substitute brand, Schilsky asked at the meeting in Washington.
A patient may or may not see any savings, given the convoluted system of insurance and medical reimbursement in this country.
And the doctor may have a financial incentive to opt for the more expensive drug, including some cancer drugs. Currently, Medicare bases some payments to doctors on the price of chemotherapy drugs, so doctors make more when they prescribe more expensive drugs, Schilsky noted. (He said his organization is trying to change that payment system).
Time is running short to sort out all these issues. Leah Christl, at the FDA's Center for Drug Evaluation and Research, says that as of Oct. 5, the agency is processing 66 projects involving biosimilar drugs, which are potentially substitutes for 20 existing medications. Four products have already been licensed, though only one, Sandoz's Zarxio, is currently on the market, she said. Inflectra will be the second.
These applications all result from the 2010 law called the Biologics Price Competition and Innovation Act. It remains to be seen whether the hoped-for price competition will make a significant dent in American health care costs.