We called in a previous post for a new definition of healthcare innovation – specifically, one that includes value. One need look no further than branded pharmas’ (and biotechs’) growing love affair with biosimilars for proof that at least some companies understand – or at least claim — that innovation is about more than novel targets and mechanisms of action.
“Shot through with innovation,” is how Merck BioVentures’ president Mike Kamarck describes the biosimilar enterprise. Kamarck, in a recent piece in IN VIVO, points to newer, more efficient production techniques, and clever, corner-cutting clinical trial design. But the end-goal of these measures is a kind of innovation that matters to patients and providers: pricing innovation. Cheaper drugs of equivalent high quality.
Sure, as they explain and justify their forays into creating copies of complex biologics like Rituxan or Enbrel, so the likes of Merck and Pfizer prefer to put the emphasis on quality not price. “These [products] should be more than a price play; it’s about comfort and quality, and having a choice of [a product] you can trust,” which is also affordable, said Pfizer’s general manager, biosimilars, Diem Nguyen earlier this year.
But as more branded players enter this fast-evolving universe of copy-cat large molecules, it’s price, not branded-level quality, that becomes the differentiating factor. Sure, delivery (nice injector-pens) and support services matter too, but only if the added benefit of those peripherals can be shown to justify any premium over a competitor.
What about Europe? Okay, so Europe’s lukewarm experience with first-generation biosimilars certainly showed that price, alone, isn’t enough to secure biosimilar uptake. Even biosimilar pioneer Sandoz admits that. Biosimilars accounted for less than $400 million in sales in 2010, according to IMS.
Part of the problem was doctors’ lack of confidence in prescribing drugs that have relatively limited supporting clinical data. But it was also a result of scare-mongering tactics by some of the same players now jumping aboard the biosimilars bandwagon. Antiquated laws and systems that didn’t allow payers (mostly governments) to fully exploit such drugs have also been a challenge.
Those hurdles are falling. As time passes without any significant safety issues reported — it’s been five years since the first biosimilar was launched in Europe – doctors’ confidence is growing. So is the number of positive stories from the likes of Sandoz.
With the hurdles removed (allowing consumers and payers to assume a certain level of quality and reliability), the story reverts again to price.
Granted, the high cost of developing a biosimilar, compounded by continued regulatory uncertainty in the US, has significantly weeded out the competition. So we’re not going to see a half-dozen competitors on each drug; nor, therefore, small-molecule-generic-style pricing cliffs.
These are precisely the dynamics that the innovator-turned-biosimilar-friendly firms are banking on to make the adventure worth their while.
So long as it is, though, price (or ‘value’) will necessarily be a part of their promotional message. And that’s not a bad message to be practicing as the entire drugs universe, novel and copycat alike, moves towards an infinitely more price-sensitive future.
Image based on flickrer Volt Kraken’s Copy Cat courtesy of Creative Commons.