Does biosimilar competition impact the reimbursement policy of the originator reference products?

Does biosimilar competition impact the reimbursement policy of the originator reference products?

Given the excessive costs associated with biological and biosimilar drugs, the price behavior of this class of medicines is particularly important from industry and societal perspective. It is known that the availability of biosimilars can lead to rapid price reductions, particularly in markets where drugs are purchased through tendering processes. We analyze the situation in Poland on the example of selected biological drugs (anti-TNF: adalimumab, etanercept, infliximab) for the treatment of rheumatoid arthritis (RA) under the drug program.

First, access to biosimilars is not equal for the analyzed INNs in the treatment of RA in Poland. Adalimumab was not having a biosimilar price until January 2019 – it reflects the originator company’s efforts to extend patent protection as long as possible which has led to increased brand value. The price per 1 mg of adalimumab remained stable for a prolonged period, not including the tap caused by the renegotiation of reimbursement conditions. Ultimately, just less than 2 years after the first biosimilar drug was launched, price erosion rapidly reached over 90%. This translates into the conclusion that currently one year of adalimumab therapy is the least expensive compared to the other INNs analyzed – even though it was the most expensive therapy for a long time.

The situation is completely different for infliximab – here the first biosimilar drugs entered the market already in January 2014. After unexpected price fluctuations, erosion of the price of the originator reached about 36% in the first year of reimbursement. Each time another biosimilar drug enters reimbursement, it results in a further 20% price reduction, but this process is relatively slow and stretched over time. Currently, the price erosion for infliximab reaches up to 86%. It is the second cheapest therapeutic option among the molecules analyzed. It is worth mentioning, however, that this position has not changed over the years, which may indicate that the rate of price erosion may also depend on the competitive landscape.

The situation is parallel for etanercept – the introduction of a biosimilar in July 2016 led to a price per 1 mg drop of just 11%, but each subsequent month showed a slow decline in price so that it eroded by another 20% over the next year. Similarly, the introduction of another biosimilar led to only a small price adjustment at first – eventually leading to a 75% reduction. This example shows that the magnitude of price erosion is most likely affected by the number of biosimilars available. Prices will fall slowest when there is only limited competition (as in etanercept), while the presence of four competitors on the market leads to a more aggressive pricing policy. Currently, the cost of annual etanercept therapy is two times higher than the other molecules analyzed.

The average penetration of analyzed biosimilars in 2020 was 79% (vs accessible market) and is even higher this year. This segment has grown tremendously over the past two years, primarily due to the rapid entry of adalimumab biosimilars, which have quickly taken over 70% share (vs reference product). We saw an analogous situation in 2014/2015 with infliximab biosimilars. However, therapy with this INN has not been as widespread, so the overall biosimilar market grew by only about 7% at that time. The situation with etanercept was different – the process was drawn out over time. In the first year, uptake was about 15% (vs reference product) and slowly increased to the current 70%.

Comment – Power BI report

Access to biosimilars leads to price erosion, but the mechanism and size of the price reduction depends on many factors. In some cases, the decline is extremely rapid, whilst in others the decline can take many years. The sudden price drop observed for adalimumab, was due to the long patent protection (which has led to increased value of the brand) and rapid entry of biosimilars on the reimbursement list. A more moderate price decline was observed for drugs with a small number of competitors (etanercept) and with access to biosimilars spread over time (infliximab).

The average penetration of analyzed biosimilars in 2020 was 79% (vs accessible market) and is even higher this year.