Spherix Global Insights

May 16, 2024

Biosimilars are gaining ground. The IRA could push them further next year.

As commercial momentum builds, coverage incentives for the Medicare market are expected to favor biosimilars in 2025.

When biosimilar copies of AbbVie’s top-selling drug Humira arrived in 2023, the impact was hard to see. Now, that’s beginning to change as a few lower-cost versions gain ground.

Those inroads could be amplified by the Inflation Reduction Act, which may help boost the impact of biosimilar medicines on branded drugs.

Researchers at Harvard University examined the likely impact of the IRA on biosimilar coverage in Medicare and, in a new study, predicted that in 2025 the law will shift coverage from brand-name biologics to cheaper versions. Their findings come as other reports indicate biosimilars are finding their footing in the commercial market.

Biosimilar barriers

At the end of 2023, Humira biosimilars still had a minimal presence, earning low sales numbers and negligible market share in the he U.S. Humira biosimilar market share only reached 4% as of February 2024, according to a report from Samsung Bioepis, the maker of one of those Humira copycats. But after CVS Health made the decision to drop Humira from its formulary this year, biosimilar prescriptions are picking up.

The market penetration of biosimilars has been better in the commercial space than for Medicare and other government plans, said Luca Maini, one of the authors of the study and an assistant professor of health care policy at Harvard Medical School.

“[There’s] a little bit of a learning curve,” he said. “Physicians, patients and PBMs, and all the stakeholders, need to be comfortable with the idea that biosimilars … are just as safe and effective as originator biologics.”

Physicians have been reluctant to swap out brand-name biologics like Humira for biosimilars in the first few years of availability, according to a 2023 report by Spherix Global Insights.

Reimbursement design for Medicare has been another barrier that benefited biologics over biosimilars until 2022 when one of the first IRA provisions kicked in. The Medicare Part B changes increased biosimilar reimbursement rates, encouraging more competition with originator biologics.

Biologics are generally more intensive for patients compared to small molecule drugs, according to Maini, who said these drugs are likely administered in a physicians’ office or require training by a healthcare professional before they can be administered at home.

“It’s a lot harder for a biosimilar to immediately grab a large share of the market upon approval,” Maini said.

However, biosimilars are still making an impact, if AbbVie’s latest earnings are any indication. While still holding on to the majority of market share for Humira, AbbVie’s revenue declined at the start of the year, and that could lead the pharma to cut Humira’s prices further to maintain prescription volume.

“If biosimilars come in and make no money, that’s a problem because that is a signal to future biosimilar manufacturers that maybe it’s not a good idea to launch the medicines,” Maini said. “If a biosimilar makes no money but ends up reducing the price of the originator by 40% or 50%, that is a success to some degree.”

The list price of Humira, for example, rose 141% between 2013 and 2020, according to the American Journal of Managed Care’s Center for Biosimilars. AbbVie took many of these price hikes despite little new clinical data in recent years, the Institute for Clinical and Economic Review has noted.

Since biosimilars have become part of the equation — nine copycat versions of Humira were on the U.S. market by the end of 2023 — AbbVie has taken a hit, and the net price of Humira has fallen. The drug’s U.S. revenues fell 40% during the first three months of 2024, according to recent earnings.

IRA impacts

The IRA’s next biggest impact is expected to come from a change in the Medicare Part D benefit relating to catastrophic coverage through reduced federal subsidies.

“Medicare Part D tends to favor pricier reference biologic drugs over their generally cheaper biosimilar counterparts,” Maini and co-authors wrote in their analysis. “Two critical aspects of Medicare Part D benefit design likely contribute to this pattern: the federally mandated discounts for branded drugs for beneficiaries in the coverage gap and the federal subsidies given to plans during the catastrophic coverage phase.”

Currently, Medicare covers a significant portion of biologics once patients reach the catastrophic coverage phase, when out-of-pocket spending passes $8,000. At that point, Medicare covers 80% of the price of the drug, but the payment formula does not incentivize cheaper drugs.

“The patient is paying more money out of pocket and the plan is also paying more,” Maini said. “And that’s because the government ends up picking up more of the tab for the expensive product than for the cheaper product.”

By closing the coverage gap in the catastrophic phase, the payment shift may realign coverage decisions in favor of biosimilars, the study predicted.

Legislation has already had an impact. Following the implementation of the Bipartisan Budget Act of 2018, biosimilar coverage increased 23% due to changes in formulary coverage for Medicare Part D, the study found. Discounts for biosimilars in the legislation led to more coverage for these drugs, and the researchers anticipate a similar shift with the IRA starting in 2025.

“We should already see an effect with the new year,” Maini said. “Firms need some time to adjust to new conditions, but I would expect to see an effect right away.”

Source: BioPharma Dive: https://www.biopharmadive.com/news/biosimilars-inflation-reduction-act-humira-price-market/716024/