Trends and challenges in biosimilars pricing and reimbursement policies in Europe and beyond

Abstract:
Biosimilars policies are more controversial than those for generics. However, it is only a question of time before progress in biosimilars matches that of generics worldwide.

Submitted: 21 April 2017; Revised: 28 April 2017; Accepted: 2 May 2017; Published online first: 15 May 2017

Healthcare systems worldwide are under increasing pressure due to the high prices of innovative drugs, especially for the treatment of cancer and chronic hepatitis C, and the ongoing economic crisis [1]. The costs of research and development for new medicines and patent protection have led to high prices throughout the pharmaceutical industry [2]. However, patent expiration of the first biological medicines, e.g. epoetin, filgrastim and somatropin, allowed biosimilar market entry, generating significant savings with no loss of quality, safety or efficacy [3, 4], as was previously observed for chemically-derived medicines and their generic copies [5]. The imminent introduction of several biosimilar monoclonal antibodies (rituximab and trastuzumab among the first) is expected to increase affordability for cancer treatments [6] and to further blur the line between manufacturers of brand-name drugs and copycat medicines. Increasing numbers of firms known for innovative drugs are turning their hands to producing biosimilars, as the cases of infliximab, etanercept and insulin glargine have recently showed [7].

Generics policies have been discussed in the literature for decades [8–11], while the most appropriate approach for biosimilars is a more novel and controversial topic [12–14]. Although Europe can claim the greatest experience (the European Medicines Agency [EMA] approved the first biosimilar in 2006 [15]), other nations are catching up. The US has recently developed a transparent list of licensed biosimilars and interchangeable biologicals, called the Purple Book [16], while Australia has extended its substitution policy from generics to biosimilars [17]. Despite recent progress, comparative and systematic evidence on biosimilars policies is lacking. This issue of GaBI Journal aims to address this knowledge gap through two large surveys [18, 19].

The first survey manuscript [18] was conducted by European Biopharmaceutical Enterprises (EBE) and examined policies for off-patent biologicals in 32 European countries (the EU-28 plus Norway, Serbia, Switzerland and Turkey). The survey investigated policies in the areas of Health Technology Assessment (HTA), tendering, internal reference pricing, International Nonproprietary Name (INN) prescribing, substitution, interchangeability and quotas. Eight out of 32 countries surveyed required HTA for biosimilars, while tendering on biologicals was widespread (81% of cases, 26 out of 32 countries). Almost half of the countries applied internal reference pricing to biosimilars, but only two countries established therapeutic groups (at the 4th level of the Anatomical Therapeutic Chemical [ATC] classification system). One third of the countries in the survey adopted INN prescribing, but half exempted biological medicines and the use of quotas for increasing biosimilar uptake was limited (22% of cases). Finally, although in most cases physicians still play a key role in treatment decisions, substitution occurred in 19% of the countries and was especially prominent in Eastern Europe. Furthermore, only half of the surveyed countries established an official position on interchangeability.

The second survey [19], Dr Vogler and colleagues investigated pricing, tendering, substitution and INN prescribing policies for biosimilars in 42 countries (the EU-28 plus countries within the European region as defined by the World Health Organization, Canada and South Africa). The similarities and differences between policies on generics and biosimilars were also explored. The results showed that biosimilar price link, where the biosimilar price is set at a fixed percentage of the originator price, has been adopted in only half of the countries in which a generic price link was already in force. Tendering appears to be an effective instrument to generate savings for payers, however, it is mainly applied in the inpatient sector. While generics substitution is in place in most of the surveyed countries, substituting a biosimilar with an originator at the community pharmacy level is permitted only in some countries, mainly in Central and Eastern Europe. Moreover, according to the authors, although INN prescribing appears to be widespread (81% of cases), it is mandatory only in one third of the countries.

Both surveys [18, 19] reveal significant variation in biosimilar policies in Europe. However, while Dr Vogler and colleagues promote similarities between generics and biosimilars policies [18], the EBE (European Biopharmaceutical Enterprises) report suggests there is a need for unique policies that reflect the individual nature of biological medicines [19]. Incongruous findings on substitution and INN prescribing policies between the two studies also highlight the need for further clarifying research. Yet, both research groups [18, 19] agree on the importance of patient trust and physician engagement for a successful strategy to promote biosimilars [20].

In conclusion, one of the most important challenges for policymakers will be establishing effective measures to enhance biosimilar uptake, which will generate savings to fund innovation and ensure the sustainability of healthcare systems. Lessons from generics, along with recent biosimilar experience, should be considered to avoid repeating past mistakes and expected loss of savings. It seems to be only a question of time before progress in biosimilars matches that of generics, and not only in Europe [12].

Disclaimer

The opinions expressed in this article are the author’s own and do not reflect the view of the Veneto Region or the Medical University Hospital Authority with which the author is affiliated.

Competing interests: Participated in a paid Advisory Board meeting sponsored by Pfizer.

Provenance and peer review: Not commissioned; internally peer reviewed.

References
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Author: Alessandro Curto, MSSc, Coordinamento Regionale Unico sul Farmaco (CRUF), Regione del Veneto, IT-37122 Verona, Italy

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Regional tenders on biosimilars in Italy: potentially competitive?

Author byline as per print journal: Alessandro Curto, MSSc, Katelijne Van de Vooren, MSc, Roberta Lo Muto, MSc, Silvy Duranti, MBA, Professor Livio Garattini

Introduction: Health care in Italy is mainly delivered through the country’s National Health Service (NHS), a public service funded by general taxation. The system is highly decentralized and each one of the 20 Regional Health Authorities (RHAs) can establish a central organization for purchasing goods and services. Drugs are purchased via a tender process, which is similar to an auction; price quotations are invited from drug manufacturers before a decision is made on the preferred manufacturer.
There are three off-patent biologicals (somatropin, epoetin, filgrastim) for which biosimilars are already available in Italy. Here we present and analyse the various regional tenders referring to the three off-patent biologicals, in order to assess the potential level of competition.
Methods: To collect detailed information, we conducted a web-based analysis up to December 2012. Only eight RHAs have held tenders that include biosimilars. We analysed the main characteristics of these tenders, focusing in particular on the base quantities and base prices reported in the bids for each lot including one of the three off-patent biologicals considered. We then estimated the number of potential competitors for each.
Results: From the 24 tenders analysed, we retrieved 191 lots referring to the three off-patent biologicals. The prevailing practice in Italy is to launch very large tenders split into many lots. The need to continue a therapy that had already started, according to the current non-substitution policy, might explain the substantial number of lots restricted to original agents (around 30%). Nevertheless, the lack of potential competition, particularly for somatropin seems to be extensive and hard to justify.
Conclusion: In theory, the economic literature suggests that worthwhile savings can be achieved from public tenders. However, in practice this depends on how the bidders (manufacturers) and buyers (regional authorities) behave in the market.

Submitted: 4 April 2013; Revised: 27 May 2013; Accepted: 11 June 2013; Published online first: 25 June 2013

Introduction

Italy is the third largest national pharmaceutical market in Europe [1]. Health care is mainly delivered through the country’s National Health Service (NHS), a public service funded by general taxation, which provides universal coverage and comprehensive health care free at the point of delivery. The system is highly decentralized and 20 Regional Health Authorities (RHSs) are responsible for planning healthcare services and allocating financial resources. In principle, local autonomy implies stronger financial accountability, which leads regions to develop different economic strategies. To control and rationalize expenditure, each Italian RHA can establish a central organization for purchasing goods and services [2]. The regions differ widely in size, with residential populations ranging from around 130,000 (Valle d’Aosta) to 10,000,000 inhabitants (Lombardy), see Figure 1 [3]. Eight large regions are divided into ‘Vast Areas’ (VA), although only two of them (Emilia-Romagna and Tuscany) have appointed these organizations for drug purchasing.

Drugs receiving authorization from EMA can be marketed in Italy only after the Italian Agency for Medicines (AIFA; Agenzia Italiana del Farmaco) has decided on their reimbursability and negotiated a price on behalf of the NHS. Since 2001, a reference price system has existed, although limited to off-patent drugs containing the same substance. AIFA issues a monthly ‘Transparency List’ (TL) of off-patent products considered equivalent and their reference prices.

The Decree Law 219/06, based on the European Directive 2001/83/EC and its subsequent modifications, includes the only Italian specific regulation on biosimilars. AIFA takes the position of EMA, stating that biosimilars cannot be considered identical, because of their complex intrinsic character and manufacturing process [4]. Therefore, the pharmacist is not allowed to substitute automatically, unlike the situation for generics. Consequently, biosimilars are not included in the TL and the decision to prescribe either the original agent or the biosimilar is entirely handled by physicians, particularly hospital consultants in the case of the three off-patent biologicals (somatropin, epoetin, filgrastim) for which biosimilars are available in Italy so far.

The current global economic crisis has hit Italy harder than some other major EU countries and the national and regional governments have cut budgets in all areas to save money [5], including health care. With a tighter budget and accountability for overspending on hospital drugs, RHAs are expected to exploit to the utmost the potential savings induced by widespread consumption of biosimilars [6, 7]. Furthermore, the forthcoming patent expiry of some very expensive biologicals (like bevacizumab, cetuximab and trastuzumab) [8] makes it even more important to enhance price competition. Here we present and analyse the various tenders referring to the three off-patent biologicals conducted so far at regional and VA level, in order to assess the potential level of competition. During the tender process, which is similar to an auction, price quotations are invited from drug manufacturers before a decision is made on the preferred manufacturer. The aim is to provide quality drugs at the lowest possible cost when needed.

Italian market situation

Eight of the 12 biosimilars approved by EMA are licensed in Italy, covering three different biologicals (somatropin, epoetin, filgrastim) marketed by four companies. Table 1 gives a simplified picture of all the products and dosages reimbursed in Italy for each of the three off-patent biologicals (by anatomical therapeutic chemical code). The official prices of all these products have kept steady during the study period.

Although all regions have established a central purchasing authority, only eight RHAs have held public tenders to procure biosimilars for their hospitals so far, see Table 2. Twenty-four tenders including the three off-patent biologicals took place during the study period. The total number of lots in each tender was very high on average (811) since most bids referred to a huge number of drugs. The procedure was always open to all interested companies.

Methods

To collect detailed information on regional (and VA) biosimilar tenders, we conducted a web-based analysis up to December 2012. We divided our team into two project groups. Since it is now mandatory in Italy to publish regional tenders in the European Official Bulletin, the first group (VK and DS) started from this [9], searching by: i) product group and classification (using the Common Procurement Vocabulary code, CPV); ii) location (using the geographical coding system for nations and regions, NUTS2); and iii) main activity (focusing on ‘health’). The second group (CA and LMR) analysed separately the information on the Regional Central Purchasing Authorities’ websites, as a ‘secondary source’ for validation.

We analysed the main characteristics of tenders, focusing in particular on the base quantities and base prices reported in the bids for each lot including one of the three off-patent biologicals considered. According to the type of lot, we then estimated the number of potential competitors for each. A lot was classified as ‘simple’ when it referred to only one dosage and ‘composite’ for more than one. Finally, we examined the correlation between base price, base quantity and the time trend of tenders.

To complete background information and discuss the formulation and results of public procurement in their regions, we conducted semi-structured interviews with the pharmaceutical managers of three of the eight RHAs, which held tenders that included biosimilars.

Results

From the 24 tenders analysed, we retrieved 191 lots referring to the three off-patent biologicals; the lowest price/best offer was always the criterion for awarding the tender. Table 3 shows the main information on lots by region. Figure 2 shows the correlations by lot between base price with base quantity and with time. Here below we summarize the main results for each of the three biologicals ordered according to their market launch.

1) Somatropin
All the lots were simple (related to a single dosage) and around 40% concerned only one potential competitor, amounting to 85% of the total volumes tendered. Correlation between base price and base quantity or time was negligible (the line represents regression analysis). Unlike the two other biologicals, there were no lots in which the original agent competed with biosimilars.

2) Epoetin
Epoetin was the only off-patent biological for which we found composite lots, i.e. more than one dosage. Ten out of 51 lots were limited to the original agent and 11 to biosimilars only. The volumes referring to just one competitor amounted to around 20% of the total tendered. We found only negligible correlations between base price and base quantity or time for this biological.

3) Filgrastim
All the lots were simple, i.e. related to a single dosage. Around one third were limited to a single product (mainly the original agent), preventing potential competition on 4% of the total volumes put under tender. Half the lots were open to all five potential competitors, in theory allowing maximum competition according to the current market situation. We found a moderately negative relation between base price and base quantity and base price with time.

Discussion

The main limitation of our survey is that it relied on information retrieved from the Internet. Especially in regions with less modern IT systems or complex interfaces, we may have missed some documents. However, we opted for this tool since all acts and administrative measures from Italian public authorities have had to be published online since January 2011 (Law 69/2009). Another major intrinsic limit is the lack of awarded prices in the analysis, as not all prices were available on the Internet. To our knowledge, however, this study is the first to describe the main characteristics of public tenders for procuring off-patent biologicals at hospitals in Italy, and indeed in Europe.

In general, the prevailing practice in Italy is to launch very large tenders divided into many lots. Most of the 191 lots referring to the three off-patent biologicals were ‘simple type’, potentially less open to competition than composite lots. Competition was further limited, as there was only one potential competitor for many lots, due to the strict requirements for each lot. The need to continue a therapy that had already started, according to the current non-substitution policy, may explain the substantial number of lots restricted to original agents (around 30%), while fewer lots were restricted to biosimilars (around 13%), which may have been aimed at enhancing their market success, and preserving them from aggressive under-pricing by the original agent which could become an insurmountable barrier for their wider use.

Nevertheless, the lack of potential competition, particularly for somatropin, seems to be extensive and hard to justify in Italian regional tenders. Although it was the first biological patent to expire, somatropin has just one biosimilar marketed and the least overlap of packages available among the licensed products, most lots referring to single dosages. The potential level of competition was higher for epoetin and filgrastim tenders. Both have three biosimilars marketed and more overlap of dosages. Epoetin was the only biological for which composite lots were tendered, a type of lot that should foster more competition in theory. Filgrastim was the only biological for which we found some relation between base price and base quantity, and base price decreased over time too, a trend which should support the hypothesis that awarded prices declined as well.

In theory, worthwhile savings may be achieved from tenders [10]. However, in practice this depends on how the bidders (manufacturers) and buyers (regional authorities) behave in the market. What happens in the Italian regional tenders on off-patent biologicals does not seem to foster much competition. From the supply side, central authorities have allowed manufacturers to launch several packages with different dosages and forms, in order to differentiate their products from one another. On the demand side, regional authorities do not seem to exploit their purchasing power to the full by tendering many piecemeal lots that are restricted to only one product. This behaviour, which might stem from concern about legal litigation with ‘losers of tenders’ (this has happened quite frequently in Italy [11]) seems mainly to favour the marketing strategies of pharmaceutical companies, rather than generating potential savings for the NHS.

Competing interests: None.

Provenance and peer review: Not commissioned; externally peer reviewed.

Authors

Alessandro Curto, MSSc
Katelijne Van de Vooren, MSc
Roberta Lo Muto, MSc
Silvy Duranti, MBA
Professor Livio Garattini
Centre for Health Economics (CESAV), Istituto di Ricerche Farmacologiche Mario Negri (IRCCS), IT-24020 Ranica (BG), Italy

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Author for correspondence: Professor Livio Garattini, Centre for Health Economics (CESAV), Istituto di Ricerche Farmacologiche Mario Negri (IRCCS), IT-24020 Ranica (BG), Italy

Disclosure of Conflict of Interest Statement is available upon request.

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