An analysis of policy impacts on the price developments of biological medicines after patent expiration
Published on 08 April 2025
Generics and Biosimilars Initiative Journal (GaBI Journal). 2025;14(1).9-23.
Introduction/Study objectives: A biosimilar is a biological medicine that is developed to be similar to an existing biological medicine (the ‘reference medicine’) for which marketing exclusivity rights have expired. The prices of such medicines are shaped by regulations onpharmaceutical pricing, or the policy of setting the price of a medicine at certain points in the pharmaceutical distribution chain |
Key points for decision makers
Biosimilars contribute to improving access to medicines, either through broadening the eligibility criteria of patients or enabling therapy options in the first place, all the while ensuring sustainable health budgets. Policymakers have not been able to realize the full potential of biosimilars, but there will be no ‘magic bullet’ to encourage the uptake of biosimilars. Incentives must be set at both price and volume level.
At the current stage of public discussion on biosimilars, demand-side policies must lay a focus on health professionals. Only if there is sufficient awareness of interchangeability and comparable efficacy will policies aimed
Introduction/Study objectives
A medicine passes through different ‘product lifecycle’ stages, which may bring about changes in the regulatory and policy environment of pharmaceuticals. Two key stages are the period under patent exclusivity, when the pharmaceutical product is on patent, and the period when patents on the medicines have expired and competitors enter the market. These competitors are called generics for chemical entities and biosimilars for biological medicines. While there is abundant literature on the prices and price developments of generic medicines [1-7], price studies on biosimilars are scarce.
Biosimilars have been in use since 2006; the hormones somatropin, erythropoietin, and filgrastim were the first active ingredients for which biosimilars received marketing authorization. However, expenditure on those products did not have a huge impact on pharmaceutical budgets and attention was not paid to potential savings until the launch of an infliximab biosimilar in 2013, the first biosimilar of a complex biological medicine [8]. Since then, this field has developed very dynamically, and in 2020, Troein P, Newton M, Scott K and Mulligan C [9] published a comprehensive description on the impact of biosimilar competition in Europe. The authors focus on the effects on price, volume, and market share after the launch of biosimilars on different European markets. They also suggest a set of key performance indicators to monitor the impact, namely yearly savings, access in terms of increased utilization, and competition within a therapy class.
Although competition is generally associated with downward pressure on prices in the off-patent market for pharmaceuticals [10-12], few studies have focussed on the prices of biosimilars. One of the first was conducted by Rovira J, Lindner L, Gimenez E, et al. [13], which looked into price variation ratios between the highest and the lowest country price. In this study – and subsequent studies on the impact of biosimilar competition – the analysis of prices was one dimension among others [14] or the focus was on composite measures like (public) pharmaceutical expenditures [15]. Since these studies examined the impact of the market entry of biosimilars, they did not investigate the regulatory environment as a driving factor for the outcomes.
When it comes to regulatory aspects of health systems the European Observatory on Health Systems and Policies offers – a very comprehensive description of the functioning of national health systems [16]. In the last 20 years, several projects in the area of pharmaceutical policies have been conducted or are still ongoing with the aim of developing a common taxonomy for terms as well as establishing a framework for international comparisons of policies [17, 18].
The rationale of these measures is to facilitate and promote a cross-country analysis of the impacts and implications of pharmaceutical policies. Vogler S, Schneider P, Zuba M, Busse R and Panteli D [19] build up on this taxonomy and survey which policies European countries have implemented in relation to biosimilar medicines and explored whether policies for biosimilar medicines differ from generic drug policies or not. The analysis revealed on the one hand differences in design of policies, for instance, the price difference between the originator medicine and the biosimilar was lower than the one between originator and generic drug. On the other hand, there exist also differences in the consistent application of supply-side policies to generics and biosimilars. In most of the countries with statutory International Nonproprietary Name (INN) prescribing, biosimilars are exempt from respective provisions. All those measures, and their application, impact competition and development of prices.
Several studies have looked into the impacts of pharmaceutical regulation on prices. Brekke KR, Holmas TH and Straume OR [20] examine the impact of changes in the regulatory environment on competition between originator and generic medicines and how this affected pharmaceutical expenditures in Norway. The authors developed a vertical differentiation model in which two different policies were considered in the formula of the theoretical model while the time when the policy was implemented served as a ‘structural break’. Kanavos PG and Vandoros S [21] investigated the determinants of originator branded prescription medicine prices and used different regulatory aspects as variables in their regression. The empirical model included the existence of: (1) a Health Technology Assessment (HTA) procedure; (2) External Price Referencing (EPR); (3) Internal Price Referencing (EPR); and (4) the free pricing of medicines. A follow-up study focussed on the effects of regulatory provisions on prices for the sub-group of pharmaceuticals [22]. Stargardt T [23] assessed the effects of competition, the effects of regulation, and their combined effects on the prices of medicines. The authors developed a hierarchical model in which quarterly changes in prices were modelled as a function of competition and regulation that consisted of three policy measures: (1) price freezes; (2) reference pricing, which was further differentiated into three subtypes; and (3) the design of co-payment regimes.
The last few years have witnessed a growing interest in and relevance of biosimilars that is reflected in the increasing number of publications. While most of the studies focus on questions regarding the interchangeability and substitutability of biosimilars with their reference medicines, fewer studies investigate health economic aspects. Among the existing investigations, the research questions are related to savings potentials and total public healthcare budgets, either on an aggregated level [15, 24] or in a national context [25]. Existing research centres around outcomes, or the impact of biosimilar competition on defined indicators, rather than determinants and driving factors of price developments.
This study contributes to the literature by assessing the health economic effects of the market entry of biosimilars, analysing the effect of the regulatory environment on the price development of biological medicines. It draws on the recent patent expiration of so-called blockbuster biological medicines in terms of global sales, which provides an ideal opportunity to assess the price developments of biological medicines and identify possible driving factors. This study builds on literature exploring the importance and significance of regulatory aspects but aims to flesh out those approaches that either focus on one national market [20, 23] or consider only a few policy measures for pharmaceutical pricing in the off-patent market [21, 23]. This study surveys the list prices of biological medicines before and after the entry of the first biosimilar and examines how different policy measures or competition impact on the development of list prices while also considering other factors like the characteristics of the included medicines or the countries surveyed.
Funding sources
The authors and their contributors listed in the Acknowledgement section, had free access to the national price databases accessible through the Pharma Price Information (PPI) service of the Austrian Public Health Institute. The support of the Austrian Federal Ministry of Health to maintain the PPI service is gratefully acknowledged.
No specific funding was received for writing this article.
Competing interests: The authors declare that they have no conflicts of interest.
Provenance and peer review: Not commissioned; externally peer reviewed.
Authors
Peter Schneider1, MA
Alexander Guggenberger2, BSc, MSc
Siegfried Eisenberg3, BSc, MSc, PhD
Lukas Rainer4, BSc, MSc
1WHO Collaborating Centre for Pharmaceutical Pricing and Reimbursement Policies, Pharmacoeconomics Department, Gesundheit Österreich GmbH (GÖG/Austrian Public Health Institute), Vienna, Austria
2Department of Economics, Paris Lodron University, Salzburg, Austria
3Health Economics and Health Policy, Institute for Advanced Studies, Vienna, Austria
4Department of Health Law and Hospitals, Province of Tyrol, Innsbruck, Austria
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Author for correspondence: Dr Peter Schneider, MA, WHO Collaborating Centre for Pharmaceutical Pricing and Reimbursement Policies, Pharmacoeconomics Department, Gesundheit Österreich GmbH (GÖG / Austrian National Public Health Institute), Vienna, Austria |
Disclosure of Conflict of Interest Statement is available upon request.
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