Taking on one of the world’s most lucrative drugs isn’t easy. The problem is so thorny that, among the companies challenging AbbVie’s arthritis treatment Humira with low-cost copies in the U.S., several strategies have emerged in the first months of direct competition.
The manufacturers of these generic biologics, or biosimilars, are battling to gain a place on insurers’ coverage lists. Success could mean a bigger slice of the $19 billion in U.S. sales that Humira earned AbbVie last year.
So far, most have chosen to price their biosimilar Humiras at only a small public discount, banking instead on offering insurers rebates in private negotiations. A few are trying something more radical with steep upfront price cuts.
The contrasting tactics highlight the intricacy of U.S. drug pricing, as well as reasons for why biosimilars have so far disappointed in making expensive biologic medicines more affordable and accessible to patients. That promise has, with a few exceptions, not materialized as quickly or as broadly as had been hoped.
While generic copies of pharmaceutical pills typically enter the market at prices well below their branded competitor, the same hasn’t been true of biosimilars.
Four of AbbVie’s new challengers have set a discount of just 5%, betting that behind-closed-door negotiations with insurer middlemen known as pharmacy benefit managers will result in rebate deals sufficient to gain coverage.
Two launched their copies at deep discounts to Humira, as low as 15% of the drug’s nearly $7,000 list price for a four-week supply.
Others, though, are hedging their bets. Amgen, Biocon and Sandoz have all gone with high- and low-price products to suit different types of healthcare buyers. (Amgen, which was the first to launch a biosimilar Humira in January, chose a narrower split than Biocon and Sandoz did.)
“There are definitely some dynamics here that are creating an obvious divide,” Fran Gregory, vice president of emerging therapies at pharmaceutical distributor Cardinal Health. “It’s highly influenced by the payers and PBMs.”
Boehringer Ingelheim, which launched its biosimilar at a 5% discount to Humira, claims it is “competitively priced.” Called Cyltezo, Boehringer’s drug is the only biosimilar approved so far as an “interchangeable,” or able to be substituted directly by pharmacists without a specific prescription.
“We recognize the potential benefits of a two-price strategy and are pursuing this approach for implementation in 2024,” said Stephen Pagnotta, Boehringer’s biosimilar commercial lead, in an email. “This approach will allow us to provide different pricing options to meet the diverse needs of patients and improve accessibility.”
Pharma companies will be watching the post-monopoly market for Humira closely, in part because no biologic drug has faced so much competition in such short order.
How pricing for Humira biosimilars shifts over time may carry wider lessons as more biologic copycats pour onto the market in the coming years. For AbbVie, the competitive balance could determine whether the sales decline it expects results from lower prices it can match, or whether it loses volume it can’t replace.
Christopher Raymond, an analyst at Piper Sandler, recently surveyed around 400 physicians, and concluded Humira is currently retaining market share in rheumatoid arthritis, its main indication. According to the findings, declining use of the drug in digestive and skin conditions has been offset by a new product, Skyrizi, that AbbVie introduced as a Humira successor.
“Based on this feedback, while price is clearly a drag on this franchise, we think Humira as a brand is likely to be stickier than investors may anticipate,” Raymond wrote in a July 20 note to clients.
Such scenarios have been commonplace with biosimilar launches. Inflectra, an alternative to Johnson & Johnson’s Remicade and one of the first biosimilars launched in the U.S., struggled to make headway when it first arrived. Its maker, Pfizer, eventually sued J&J alleging anticompetitive practices. They settled the case in 2021.
Over time, competition has had more of an impact. Nearly seven years after the launch of Inflectra, the average sales price of Remicade and its biosimilars has dropped by 68%, according to a report from biosimilar manufacturer Samsung Bioepis. Biosimilars now account for nearly half of the market.
Other factors may play a role, too. According to Samsung, biosimilars of cancer treatments have made greater inroads more quickly than those for immune-related disorders, like Humira and Remicade. Lookalikes to Roche cancer drugs Avastin and Herceptin have taken, respectively, 85% and 83% market share, for instance.
That’s due in part to “value-based” payment models, which reward doctors for reducing overall costs. Autoimmune drugs like Humira and Remicade are also taken for many years, making it harder to switch patients stable on branded drugs to a biosimilar.
“Providers are ready, able and willing to prescribe biosimilars to patients who are naive to treatment,” said Gregory. But branded products may be harder to replace among patients already taking them. Many of those drugs remain on PBM formularies, she said.
Two of the three largest PBMs in the U.S., Cigna Healthcare’s Express Scripts and United Healthcare’s Optum, have already updated their coverage lists in the wake of Humira biosimilars launching.
In a statement, Aetna’s CVS Caremark said it is “reviewing the availability of additional entrants and plan[s] to recommend coverage of one or more of these products.”
The choices PBMs make can significantly impact consumers’ out-of-pocket costs. For example, they can end up paying more for deeply rebated products because cost-sharing is sometimes based on drugs’ list price. In response, policymakers have called for greater transparency into PBM practices and how they pass on rebates.
“The PBMs have a financial model that they’ve been living with for years,” Gregory said. “That financial model will not change overnight. But I think it will change over time.”