Learnings from cross-border biosimilar pricing policies in Europe

KEYWORDS:

• Biosimilar
• europe
• policy
• price
• procurement
• sustainability

1. Introduction

Biologics rank among the most expensive medicines on the market and represent about one-third of the total pharmaceutical spending [1]. To contain expenditures associated with biologics, which is especially relevant in the oncology space, policy-makers have taken an interest to foster the uptake of lower-priced biosimilars [2,3]. Numerous analyses have shown that the market presence of biosimilars triggers list- and real price reductions in both non-innovator and innovator products, either through price competition or mandatory price cuts. Estimates indicate that global list price savings from biosimilars could reach USD 300 billion by 2025 [4]. In practice, further savings are realized arising from confidential discounts, although actual numbers may vary between molecules and markets.

In addition to capitalizing on biosimilars’ cost-savings potential, policy-makers in lower-income countries (eg, Central and Eastern Europe; CEE) count on biosimilars to expand patients’ access to biologics, which are often not cost effective at international launch prices. To meet local cost containment objectives, lower income countries have relied on confidential discounts granted by pharmaceutical companies. Despite potential discounts, it has been observed that countries without robust local frameworks for Health Technology Assessment (HTA) tend to adopt a high-price, low-volume model [5]. This implies reliance on access restrictions to ensure financial sustainability, and explains the lower overall use of biologics with respect to higher income countries in Europe. Hence, the primary policy objective of biosimilars in lower-income countries is to expand patient access.

The aim of this Editorial is to discuss lessons derived from European biosimilar pricing policy trends and propose future avenues for sustainable biosimilar pricing. This Editorial focuses specifically on biosimilar pricing policy trends in higher-income and lower-income European countries.

2. Impact of biosimilar regulatory framework on pricing

Evidence requirements imposed for the regulatory approval of biopharmaceuticals are a key driver of R&D costs and thus the price of biosimilars. In this respect regulatory pathways and the type and amount of evidence that they require differ across jurisdictions, hence raising the price of marketing a biosimilar. Therefore, efforts to reach more uniformity in regulatory pathways could have a positive impact on biosimilar pricing [6]. Furthermore, discussions about the added value of phase III clinical trials in demonstrating biosimilarity are being waged in the international literature and by some regulatory agencies (eg, the European Medicines Agency) [7]. If, based on the scientific state of the art, regulatory agencies would conclude that there is less or even no need for such studies, this would be expected to translate into lower biosimilar prices [7,8].

3. Pricing regulation

To capture the financial benefits of biosimilar market entry, many countries regulate biosimilar prices by drawing on measures such as external and/or internal reference pricing, linkage with the price of the reference product, establishment of a maximum price for a biosimilar. For instance, a recent analysis indicated that European countries that resort to price linkage set biosimilar prices at 15%–50% (with 20%–30% being the most common) below the price of the reference product. Sometimes, price linkage measures also require similar reductions in the price of the reference product following biosimilar availability [9], also mechanisms of price competition are expected to adjust the price of the reference product even without a formal regulation. It should be noted that pricing regulation may affect market entry of (subsequent) biosimilars. For instance, when a country implements an internal reference pricing system, successive reductions in the level of the reference price imposed by regulation or as a result of market dynamics may deter biosimilars to enter or remain on the market.

Lower-income countries apply similar policy tools, and blind price bids. Further, external reference pricing is also applied in some countries with limited HTA capacities, which is surprising as this policy tool cannot consider confidential discounts offered to other countries with higher negotiation power. Applying price linkage mechanisms requires the originator to be reimbursed, which may not pertain to lower-income countries due to more restrictive cost-effectiveness criteria. If biosimilar market entry is delayed, patent expiry itself may be used to mandate a price cut for the off-patent originator.

A potentially anti-competitive practice is allowing originator companies to compensate the national pharmaceutical budget for the higher list price of their products with a confidential payback, and thus reaching the same confidential price level as that of biosimilars. The literature indicates that when the originator product and its respective biosimilars are available at the same or similar price levels, prescribers and patients tend to prefer the originator [10,11]. This choice is partly influenced by promotional activities organized by innovator companies, which generally emphasize potential challenges related to switching from originators to biosimilars (eg, immunogenicity risks, nocebo effect). The influence of these promotional activities may be accentuated in countries where prescribers have lower salaries, thus are especially vulnerable to receiving direct or indirect financial compensations from pharmaceutical companies. Delisting the off-patent originator from reimbursement in case of sufficient number of biosimilar competitors may thus enhance price competition among biologicals. It is necessary to reflect on how persistently low biosimilar adoption can limit the potential to leverage biosimilar competition, and on the negative impact limited competition can have on the reliable supply of affordable biologics in the long term, an aspect particularly relevant for lower-income countries with restricted access to biologics.

4. Link between value-based pricing and evidence-based prescribing policies

We argue that value-based pricing (VBP) (i.e. the price of a medicine reflects its cost-effectiveness) needs to play a role in determining which product is used in which treatment line. When several biologics are available in the same treatment line with similar health gains for a specific patient group, price erosion due to patent expiry generally makes the biosimilar more cost-effective than other medicines. Therefore, it is necessary to revise therapeutic guidelines and financial protocols when patents of high-priced biologics expire. These guidelines should prefer first-line use of biosimilars over more expensive medicines that do not add significant value, and restrict the use of cost-effective next-generation biologics to later treatment lines for non-responders.

We observe that, when the reference product loses its exclusivities, manufacturers sometimes market a new formulation aiming to reduce price competition in a market subsegment [12]. For instance, a subcutaneous product is launched when biosimilars of the intravenous reference product enter the market. We believe that VBP should also be applied to such market dynamics. Specifically, a new formulation should be priced commensurate with its added value as compared to the biosimilar with the initial formulation or, if it fails to demonstrate added value, should not receive a price premium and be reserved for a minority of patients with special individual needs.

5. Tender pricing/pricing linked to procurement

In European hospital markets, biologics are largely procured via tendering (ie, process for the acquisition of pharmaceuticals based on competitive bidding) [13]. When procuring biologics centrally, some payers have determined separate tender lines even for direct competitors (eg, originators and their respective biosimilars) so that the outcome of tender negotiations would not drive switching to biosimilars. Furthermore, some CEE and Southern European countries announced separate tender lines for biological treatment-naïve and established patients [14]. Currently, as switching has become more accepted by payers, single-winner procedures have been allowed for tender lots in which the originator and its respective biosimilars are grouped together.

However, the practice of single-winner tenders needs to be revisited, with studies pointing to the benefits of implementing multi-winner tenders (including multiple award criteria in addition to price) [15]. As a result, Norway for example has moved from issuing single-winner to multi-winner tenders [16]. Also, practices such as signing long-term contracts with the originator right before biosimilar availability, reported in CEE and Southern European countries, have been viewed as anti-competitive [11]. Additional flexibility can be introduced to the system by amending the quotas/theoretical volumes determined in the tendering framework according to the actual demand, meaning that winning a tendering framework does not necessarily imply a guaranteed purchase from the payer.

6. Price sustainability

Even though current pricing and procurement approaches for biosimilars are effective at realizing steep price reductions and important short-term biosimilar savings, there are concerns about how these approaches can negatively impact price sustainability in the long term. For instance, a recent report concluded that falling prices in the off-patent market play a crucial role in shortages of medicines in Europe [17]. In Northern/Western European countries, which have pioneered the implementation of this type of policies, there has been an ongoing debate on how to balance short-term objectives (based on increasing biosimilar uptake and savings) with long-term sustainability objectives (based on fostering competition and reliable supply). Multi-stakeholder discussions support the need to move away from ad-hoc policies implemented with a short-term vision and toward more comprehensive frameworks that favor a long-term strategy. We argue that the initiative of policy-makers is instrumental to trigger this shift in thinking to prioritize long-term solutions.

However, the need for reformed biosimilar policy frameworks comes at a time when manufacturers face increasing costs as a result of inflationary pressure on raw materials, energy and labor [18]; and as a result of additional requirements imposed by policy makers. For example, if the EU wishes to support its strategic independence from other regions in the world and have a guaranteed supply of medicines [19], this implies that manufacturers need to keep excess stock or build additional or even redundant manufacturing capacity. Therefore, we argue that when informing the design of prospective pricing models, it is crucial to consider the supply-side perspective and the economic viability of biosimilar markets, in addition to the demand-side perspective. The same pertains to country level industrial policies.

Further, it appears necessary to account for the different maturity status of European biosimilar markets [20]. In Northern/Western Europe there are already signals of compromised price sustainability. CEE countries are however still transitioning from a situation of dominance by originator products toward more competitive environments; thus, in CEE so far there are limited signs of sustainability issues. However, due to the global nature of biosimilar development projects, compromised sustainability is also expected to have an impact on lower-income European countries. Accounting for the risk of compromised sustainability is of special relevance for these countries, which have more limited resources and face larger unmet medical needs. Interestingly, in CEE there is a general lack of government industrial policies supporting biosimilars manufactured by domestic companies despite the magnitude of R&D cost of biosimilars (compared to de novo innovation) may be bearable for local manufacturers specialized in small molecule off-patent pharmaceuticals.

7. Expert opinion

In an era of constrained pharmaceutical budgets, biosimilars offer an instrument to save costs, while maintaining the safety and efficacy of biologic therapy. Despite the robust regulatory approval process of biosimilars and extensive real-world evidence corroborating their therapeutic equivalence to the reference product, the market share of biosimilars remains low in certain jurisdictions. This implies, amongst other things that not all prescribers have favored biosimilar adoption. Therefore, we argue that beyond their clinical duties, prescribers also have a financial responsibility to select the most affordable products amongst therapeutically equivalent alternatives [21]. Preferring any other products imposes an opportunity cost, especially in access-restricted environments. Physician’s/prescriber’s education and awareness is therefore crucial to increase biosimilar uptake. Prescribers and patients are advised to engage in shared decision-making, potentially forming the patient’s attitude toward biosimilars. Finally, healthcare providers also play an important role in boosting biosimilar uptake through prescribing targets. To achieve this objective, health care providers have implemented various measures, including educational activities (organized for prescribers or beneficiaries) and benefit-sharing agreements [22,23].

Aggressive pricing policies and tendering mechanisms are threatening biosimilar price sustainability in mature markets. As a result, there are reports of biosimilar supply moving from low-priced markets in Europe to the higher-priced US market, and of manufacturers either disinvesting biosimilar R&D or selling their biosimilar division [24]. As biosimilar markets evolve, there is a need to periodically revise pricing policies and move away from mechanisms that lead to excessive price erosions, also development of national and EU level industrial policies. Several actions can be taken to foster price sustainability, which should not consider a biosimilar product in isolation but within its therapeutic environment.

For example, a recent cost-utility analysis has shown that adalimumab biosimilars are likely to be cost-effective as compared to on-patent janus kinase inhibitors in treating moderate-to-severe rheumatoid arthritis in several European countries [25]. Hence, we advocate that biosimilars that demonstrate an added value with respect to newer generations of biologic (or chemical) medicines, should have a preferred status among treatment lines.

Also, the literature has shown that conducting class reviews following biosimilar availability can increase patients’ access to biologics, by lowering reimbursement restrictions previously established for these products. However, this methodology has been seldomly applied in practice. Therefore, a recommended approach would be to systematically initiate class reviews when biosimilars become available. Further, it may be relevant to raise the price of these products to the willingness to pay of payers (often represented by cost effectiveness thresholds in many European countries) as an incentive for developers to keep marketing biosimilars, even though we acknowledge that such a measure is controversial as it reduces the cost-saving potential of biosimilars.

In conclusion, at a time when biosimilar prices across Europe are under intense pressure, we believe that policy-makers need to implement smart pricing policies that achieve a balance between generating savings and increasing access to health care on the one hand and providing incentives for manufacturers to develop and market biosimilars on the other hand.

Declaration of interest

S Simoens is one of the founders of the KU Leuven Fund on Market Analysis of Biologics and Biosimilars following Loss of Exclusivity (MABEL). S Simoens was involved in a stakeholder roundtable on biologics and biosimilars sponsored by Amgen, Pfizer and MSD; he has participated in advisory board meetings for Pfizer, Organon and Amgen; he has contributed to studies on biologics and biosimilars for Hospira, Celltrion, Mundipharma, Pfizer and Biogen; and he has had speaking engagements for Abbott, Amgen, Biogen, Celltrion and Sandoz.

A Inotai is an employee of Syreon Research Institute (SRI). In this position, he has contributed to studies on biologics and biosimilars for Egis Pharmaceuticals PLC and Medicines for Europe.

The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed.

Reviewer disclosures

Peer reviewers on this manuscript have no relevant financial or other relationships to disclose.

Additional information

Funding

This paper was not funded.