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Column: Biosimilars offer savings, access

Stacie Phan

Millions of patients suffering from painful and chronic medical conditions could find it easier to access effective and more affordable treatment options with the growth of a nascent prescription drug sector known as biosimilars. For Michigan, where 60 percent of adults suffer from a chronic health condition, a robust biosimilars marketplace could have enormous benefits for residents in need of care while reining in ever-increasing health care spending.

While most Michigan residents may be unfamiliar with “biosimilars,” they are commonly used throughout Europe, Australia, South Korea and elsewhere to treat a range of conditions from cancer to autoimmune disorders. Many people in Michigan, however, are likely familiar with drugs such as Humira or Enbrel, which are examples of “biologics” — branded, highly specialized drugs that are made in living cells rather than through chemical synthesis like most drugs.

While biologics were a revolutionary medical breakthrough and remain enormously valuable, the time and investment associated with developing biologics — up to 15 years and more than $1.2 billion in some cases — coupled with the lack of competition in the marketplace has led to high prices for patients who use them. This can create a barrier to care while driving up costs throughout the nation’s entire health care system. In fact, while only 2 percent of the population uses biologic drugs, they account for 40 percent of prescription drug spending in the U.S.

A biosimilar, on the other hand, is essentially what its name implies — a highly similar version of a biologic that is designed to match its safety, quality and efficacy. In fact, the Food and Drug Administration (FDA) will approve a biosimilar only if there are no meaningful clinical differences from its biologic reference drug. As a result, patients and physicians can expect the same clinical results when using a biosimilar or the biologic reference drug.

Biosimilars can be far less expensive, because biosimilar producers can rely on safety and efficacy information from the reference product rather than repeating large-scale clinical trials. In fact, biosimilars are expected to cost up to 35 percent less than their reference drugs, and the Rand Corp. has predicted that by 2024, biosimilars will reduce direct spending on biologics in the U.S. by more than $54 billion.

For Michigan in particular, the emergence of biosimilars could help drive down the state’s ever-increasing health care spending rates. Total healthcare expenditures cost Michigan almost $80 million each year, making it one of the highest spenders in the country.

But despite the potential of biosimilars to help drive down health care spending, the U.S. has yet to realize growth in the market that has been experienced overseas. In Europe for example, where biosimilars have been used for more than a decade, there are more than 20 biosimilars on the market. Fortunately, there is good news coming from Washington that could eventually have a real impact in Michigan and across the country.

In recent months, the U.S. Food and Drug Administration (FDA) has approved four new biosimilars, bringing the total number of approvals to nine — with three currently available to patients. The FDA in October also launched a biosimilars awareness campaign aimed at better educating the medical community about the safety and efficacy of biosimilars — an approach that has helped the EU and Australia increase their acceptance and use.

And a recent decision by the Centers for Medicare & Medicaid Services to change a billing policy that jeopardized the long-term stability of the biosimilars market could also help pave the way for increased development of biosimilars. The CMS rule change to assign each biosimilar a unique billing code will lead to greater opportunity for increased competition, greater cost savings, and more choices for patients. In fact, the Biosimilars Forum estimates the new rule will reduce Medicare costs by $65 billion over ten years, a critical development for Michigan, which is among the states that spend the most on Medicare services.

These are critical steps toward building wider acceptance of biosimilars in the U.S., but there is more work to be done, and it is critical that policies continue to support a vibrant biosimilars marketplace.

Stacie Phan is president of the Biosimilars Forum.