Review of NBER Working Paper Series. Biosimilar Competition: Early Learning
In March The National Bureau of Economic Research (NBER) released a working paper investigating how the integration of biosimilars into the market is impacting competition and drug prices. The authors focused their evaluation by following the price of 7 different reference biologics with recently approved biosimilars. Ultimately, they observed a 4-10% drop in price per biosimilar which is significantly smaller than the anticipated price impact of biosimilars.
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Based on the initial results of the study, three key observations were made:
The price of some biologics dropped immediately as biosimilars enter the market compared to traditional brands that typically hold their price the first year.
Some reference biologics maintain their higher price point. This lack of price reduction of the reference biologic leads to the uptake of the biosimilar. This shift from reference biologic to biosimilar ultimately leads to cost savings.
Competition based on price is more notable between products that have similar attributes compared to products with identifiable differences.
Overall, the cost saving when new biosimilars enter the market was not as significant as anticipated.
Why biosimilars faced these challenges:
There is an overall perception that “similarity” between reference biologics and biosimilars refers to meaningful differences. Educating providers about the safety and efficacy of biosimilars when compared to biologics will be critical for fostering competition.
The issue of homogenous product competition versus differentiated product competition is more apparent due to slight differences between biologic and biosimilar drugs.
There are significant challenges with interchangeability when pharmacists are dispensing biosimilars. Unlike traditional generic substitutions, some states do not allow automatic substitutions of interchangeable biosimilars by pharmacists.
Many biologics are physician administered, operating under reimbursement methods that do not foster competition
It is important to note our series on biosimilars is a working series. As more findings come out on this topic, we will update readers with new information. Continue to follow AxBlog for more from NBER on this topic as we continue to monitor and assess the unique challenges observed in this important biosimilars market.