For US traction, biosimilars makers must get the payers on side
Barefaced audacity aside, Pfizer’s complaint that Johnson & Johnson is using “anticompetitive contracts” to protect Remicade in the US highlights the fact that the world’s biggest drugs market is still a long way from reaping the benefits of biosimilars. Benefits for payers and patients, that is – owners of the original products are no doubt delighted.
Third-quarter numbers on Remicade and its biosimilar rivals show just how little impact Pfizer and Merck & Co are having on Johnson & Johnson’s franchise. The slim 4.9% US market share Pfizer’s Inflectra was able to extract prompted Pfizer's chief executive, Ian Read, to acknowledge a political dimension to the lawsuit – to alert lawmakers to the ways branded drug owners could undermine pro-biosimilar laws.
The situation is very different in Europe, where bio-knockoffs have already made a big impact in the anti-TNF class – Remicade biosimilars are estimated to have captured around half the market in the region. In the US they have hardly made a dent; Merck launched the second Remicade biosimilar, Renflexis, over the summer in the US.
Fighting the battle
J&J said Remicade nine-month sales had only dipped 6% year on year, with market share erosion only making a minor impact. Exclusive contracts with providers to keep Remicade as a preferred product are thought to be largely responsible for J&J’s success in fending off Inflectra.
This is exactly what Pfizer is trying to undo with its lawsuit. It claims that J&J has violated federal antitrust laws and undermined the principal goals of the federal Biologics Price Competition and Innovation Act. Presumably it hopes that J&J can be forced to unwind these contracts.
In Pfizers’s third-quarter earnings call John Young, president of the group's essential health division, pointed out that Inflectra had achieved a 54% share in “closed” systems where payer and provider are combined, like the US Department of Veterans Affairs system, demonstrating that when allowed to compete on value Inflectra deserves to win. “Those are systems which prioritise healthcare cost savings over short-term rebating,” he said.
As for tactics keeping Remicade the top seller, general counsel Doug Lankler claimed that J&J had threatened to withhold rebates for buyers who switched to Inflectra or Renflexis, which constituted an anti-competitive practice.
Considerably lower prices would arguably be a much quicker and easier way to unseat Remicade. A look at the pipeline shows that this is unlikely to come about through greater competition from other infliximab biosimilars. Amgen is probably the closest to market, but is unlikely to launch until 2019 at the earliest.
In the EU there are two Remicade biosimilars on the market – Inflectra/Remsima from Pfizer and Celltrion and its partners, and Biogen’s Flixabi.
A further technical development that could aid Inflectra and other physician-administered biosimilars could come at any time. The Healthcare Common Procedure Coding System (HCPCS) administered by the Centers for Medicare and Medicaid Services (CMS) has a single code for Remicade and a separate one for all other biosimilars.
Bernstein analyst Ronny Gal said this allowed competition only among the biosimilar manufacturers as the ASP on that code would be defined by the lowest; since the branded product has a separate price for its code it is insulated from competition.
Mr Gal wrote this week that CMS had been revising the HCPCS either to give each biosimilar its own code or to group all products with the same active ingredient into a single code. The former would lead to less price competition, he said. With the US government keenly sensitive to drug pricing issues the latter could therefore become the favourite.
More rapid adoption of biosimilars in Europe has a lot to do with how healthcare systems are structured, giving payers more power than marketers, rather than any philosophical objection to biosimilars from US medical professionals. But uptake in the US will catch up, as efforts to loosen the powerful grip of manufacturers gather pace.