Monday, June 17, 2024

Economics Corner: How Biosimilars Have Changed Biotech Pricing

When the FDA introduced ground rules for approving biosimilars, there was much debate over  how much impact there would be on biotech drug prices.   

Now that a number of years have passed, a team from Stanford, Penn, and USC has just brought together some important data.   

Historic data suggests that drug prices drop when several generic entrants are competing against a costly originator drug.  (With small molecules, like Prozac, multiple generic makers usually do enter the market).   New work confirms that the same seems to apply for trastuzumab (Herceptin), based on a 2023 paper by Horn et al.  

  • The first biosimilar was priced 15% below Herceptin (e.g. "shadow pricing" which avoids triggering a price war).  
  • The fifth biosimilar was 58% below the originator brand.   
  • In addition, the originator price fell 29% between 2019 and 2022.   
  • Biosimilar market shared (with 3 biosimilars) reached 32%.   

Horn et al. (2023)  Biosimilar competition and payments in Medicare: The case of trastuzumab.   JCO Oncol Pract 19:e476-83.

See a similar article assessing similar public data, from Chen et al. in Health Affairs (PMID 37276475).


FDA has a webpage on generic drug competition and pricing, including a graph of price vs number of competitors. 


Of related interest, a 2023 Health Affairs article on innovative payment models for ultra high cost drugs (Horrow & Kesselheim).   And similarly, Zhang & Shugarman write about value based "financing" for cell and gene therapies in J Med Econ 2024.


AI Corner

I asked Chat GPT to illustrate Zhang & Shugarman and it came up with this pair.

See a new short history of trastuzumab in Nature.