FDA Approves First “Biosimilar” Drug

May 21, 2015

The U.S. Food and Drug Administration (FDA) announced on March 6th that it has approved Zarxio, an immune system booster for patients receiving chemotherapy that has the distinction of being the first “biosimilar” to be approved for use in the United States.

What exactly is a “biosimilar,” and why is this development important to employers? Biosimilar drugs mimic biologic drugs, which are derived from living organisms such as humans, animals, microorganisms or yeast – but they do it at a lower cost.

By way of analogy, think of the difference between a name brand drug and a generic. Name brand drugs are invented first and when they lose their patents, generics follow, usually at lower prices. Examples of name brand drugs that now have generics include Lipitor, a cholesterol fighter, and Nexium, used to treat acid reflux. While there may be minor differences in how the name brand and generic are made, the FDA requires that they have the “same active ingredient, strength, dosage form, and route of administration as the brand name product.”

A biologic and a biosimilar have roughly the same relationship, although a generic is basically a copy of a brand name drug whereas, according to the FDA, a biosimilar drug “is highly similar to an FDA-approved biological product… and has no clinically meaningful differences in terms of safety and effectiveness…”

It’s much more difficult to replicate a biologic drug than a traditional name brand medication, however. A recent Kaiser Health News article uses the analogy of trying to recreate a favorite cocktail (the generic drug) versus trying to recreate a favorite glass of wine (the biosimilar). The latter process is much more nuanced and complicated.

That is one reason why the approval of Zarxio, which is a biosimilar for Neupogen, is so significant. Another is that biosimilars, like generics, are likely to be less expensive than their biologic counterparts. Neupogen, for example, can cost more than $3,500 per year.

Pricing for Zarxio will not be announced until the drug comes to market, which hinges on the outcome of a lawsuit filed against its manufacturer, Sandoz, in a federal appeals court by Amgen, the maker of Neupogen. Zarxio is currently sold in 40 countries, but its sale in the United States is blocked at least until oral arguments are heard in the case, which are scheduled for June 3rd. Resolution could take longer.

Regardless of the outcome of this lawsuit, biosimilars are expected to have a huge impact on U.S. employers, the pharmacy benefit managers that advise them on how to manage the increasingly high cost of prescription drugs, and American consumers who now use expensive name brand biologics. Global biosimilar sales are projected to hit $17 billion to $20 billion per year by 2020. A RAND Corporation analysis estimates that introducing competing biosimilar drugs for illnesses such as cancer and rheumatoid arthritis could reduce spending on biologics in the United States by $44 billion over the next decade.

With numerous biosimilars in the pipeline awaiting FDA approval, it’s likely that we’ll soon see a number of these lower-cost drugs on the market – to the benefit of both employers who sponsor prescription drug benefits and the people who use them.

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