By: Monica Schroll, Olivia Brody-Bizar, Ashley Peake, Juan Camilo Roman, and Balazs Felcsuti
The much-anticipated launch of the first Humira biosimilar on January 31, 2023 by Amgen raises the question of the commercial prospects of the adalimumab biosimilars class, their ability to generate returns to their manufacturers, and whether they can deliver meaningful savings to the healthcare system. Given their administration under the pharmacy benefit, the adoption of Humira biosimilars hinges on manufacturers’ ability to negotiate favorable contracts with payers and PBMs, many of whom are incentivized by high rebates over low list prices. Pricing biosimilars with PBMs in mind will likely generate attractive returns on investment for early-to-market biosimilars but may only result in limited cost-savings for patients or the healthcare system at large. With similar pharmacy benefit dynamics governing the market access of other immunology biosimilars to come, future biosimilar manufacturers will need to develop their commercial strategies based on lessons learned from Amgen’s Amjevita.
Biosimilar Regulatory Framework with Plenty of Ambiguity
Aspiring to replicate the impact of the Hatch-Waxman Act on small molecule generics, the 2010 Affordable Care Act included the Biologics Price Competition and Innovation Act (BPCIA). The bill gave the FDA authority to implement a biosimilar approval pathway known as the 351(k) pathway  aiming to promote competition and cost-savings for high-priced biologics after patent expiration. It is projected that biosimilars have the potential to reduce spending on biologics by $38.4B from 2021 to 2025 , with nearly two-thirds of savings resulting from downward price pressure on the reference molecule. The incentives for manufacturers to develop biosimilars are the decreased timeline and development costs with the opportunity to potentially gain access to large revenue streams from entrenched treatment paradigms. FDA approval for biosimilars requires proof that the drug is similar to its reference biologic from both safety and efficacy standpoints, through analytical, non-clinical, and comparative clinical studies . The FDA can approve a biosimilar for an indication without conducting trials in that specific population by extrapolating data from a single study to demonstrate safety and efficacy across indications . This extrapolation only applies to molecules, not devices.
An added potential feature of the biosimilar pathway is the interchangeable designation, which allows for the auto-substitution of drugs dispensed at the retail pharmacy. Obtaining interchangeability requires an extra step with additional costs and risks. It is typically demonstrated through a “switching study,” where patients who alternate between brand and biosimilar are compared to patients who were only treated with the one reference product .
Even with the decreased R&D costs from originator biologics, biosimilars are fundamentally different from small molecule generics in that the significant development expenses prevent a generic-like price erosion of 80-90% over the originator’s price . In most therapeutic areas, net biosimilar prices are likely to settle at a 30-50% discount from the originator’s wholesale acquisition cost (WAC), limiting the potential cost savings the product can offer to payers [6, 7].
Autoimmune Indications as Attractive Biosimilar Targets
Autoimmune indications are attractive biosimilar targets due to the abundance of highly priced, branded biologics in the treatment paradigm with significant revenue streams. The autoimmune therapeutics market is expected to reach $150B+ worldwide by 2025 , higher than any other therapeutic area. Several of the top grossing drugs in immunology are facing loss of exclusivity and impending biosimilar competition .
Currently, the focus of immunology biosimilars is on Humira (adalimumab), a patient-administered TNF-alpha inhibitor. The most key patents of the product expired in January 2023. There are currently 10 manufacturers poised to launch biosimilars this year, including Amgen’s much-anticipated Amjevita which launched on January 31, 2023.
In order to project the anticipated market dynamics of adalimumab biosimilars, it is important to understand the historical success of launched biosimilars across geographies and therapeutic areas, as well as US-specific payer coverage dynamics.
History of Biosimilar Success Across Geographies and Therapeutic Areas
For historical comparison, it is best to look back on Remicade (infliximab) as the only autoimmune biosimilar to date that has been launched in both the US and EU. Infliximab biosimilars saw a 36% adoption by volume in the first three years post-launch in the EU compared to 13% in the US [Figure 4]. The single payer systems of key EU markets, and their ability to negotiate directly with manufacturers, were critical to quicker biosimilar uptake. Specifically, because infliximab is administered in the inpatient setting, there are centralized tender processes that determine adoption. The tender entails collecting bids from all pharmaceutical manufacturers and selecting the most competitively priced option among the offers. Biosimilars have historically been chosen over the reference product due to their lower price .
Adalimumab biosimilars were launched in the EU in 2018 and gained a 60% volume share [Figure 4] in the first three years. The more robust adoption of adalimumab than infliximab in the EU is likely due to the maturation of the biosimilar program by the time adalimumab launched, lending to centralized processes, physician comfort, and predilection to provide low-cost options. However, we need to be cautious not to draw far-reaching conclusions from adalimumab adoption in the EU to the US market given the more favorable European biosimilar dynamics, including outpatient drug tender processes, single-payer system incentives, prescribing guidelines, and volume quotas for biosimilars. Notably, though each country in the EU has different policies, all work towards aggressively driving the adoption of lower-cost drug options .
US Payer Dynamics at Play for Autoimmune Biosimilars
The healthcare system in the US is much more complex and biosimilar adoption varies across therapeutic areas. To date, there have been nine biologics with launched biosimilars in the US, with the majority in oncology [Figure 4]. Oncology biosimilars have historically seen higher uptake compared to autoimmune diseases due to the unique dynamics that incentivize the use of lower cost medications. Firstly, biosimilar prescriptions are supported by the American Society of Clinical Oncology (ASCO) , with guidelines specifically demarcating where prescribing is appropriate. Secondly, biosimilars are increasingly included in oncology clinical pathways (OCPs), that have detailed, evidence-backed protocols for delivering cancer care that outline treatment paradigms for specific cancer types and subpopulations [9, 10]. Thirdly, the Centers for Medicare and Medicaid Services (CMS) oncology care model (OCM) for Medicare patients incorporated a performance-based payment that rewarded participating clinicians for lowering the total cost of care while achieving quality outcomes. Reviewing medical procedure claims, IQVIA reported that clinicians participating in OCM used biosimilars for 76% of their new-to-brand patients, compared to non-participating clinicians who used it in 64% of new-to-brand patients in the first two years after biosimilar launch . Lastly, originators of oncology biologics that have lost exclusivity have taken a less aggressive approach to patent protection and litigation, resulting in quicker market share volume gain by biosimilar manufacturers.
The dynamics that govern the adoption of autoimmune biosimilars in the US differ significantly from the unique care system of oncology as well as from the centralized single payer systems of most EU countries. Prior to 2023, infliximab, insulin, and more recently rituximab were the only autoimmune biosimilar drugs launched in the US. Since launch, the lowest priced biosimilars for each of these drugs have not gained greater than 50% market share by volume compared to the branded originator [6, 11]. The most significant factor influencing uptake for autoimmune biosimilar drugs in the US is medical versus pharmacy benefit drug coverage. Self-administered drugs are covered under the pharmacy benefit, with payers and pharmacy benefit managers (PBMs) being the key stakeholders, while drugs administered by a provider are paid for under the medical benefit, where payers and providers are the key stakeholders.
For therapeutic areas without incentives to choose a low-cost option (e.g., oncology), providers who administer drugs under medical benefit coverage are generally reimbursed at a lower rate when using the biosimilar products . While it is a barrier, the misalignment of provider incentives has not completely prohibited the adoption of biosimilars in autoimmune indications covered under the medical benefit, as seen with infliximab. Infliximab biosimilars got a slow start in comparison to other therapeutic areas and geographies, with only 13% adoption in the first three years post-launch. However, by 2022 infliximab biosimilars eroded the Remicade volume share by 46% . Pfizer’s Inflectra, the first to market, captured 29% of the market in 2022 , outcompeting all other biosimilar competitors. Infliximab serves as an example of biosimilar success for a medical benefit-covered autoimmune drug in the US.
Drugs covered under the pharmacy benefit are governed by a complex system of arrangements between PBMs, health plans, and biopharma companies that predominantly result in favoring high list prices and higher rebates. For our purposes, covered lives fall under PBM management or those covered directly by the payers.
PBMs, the companies that manage prescription drug benefits on behalf of health insurers, Medicare Part D drug plans, large employers, and other payers are compensated partially through the rebates they obtain from drug manufacturers for health plans. Rebates are calculated as a percentage of a drug’s list price (or WAC), therefore PBMs receive a larger rebate for drugs with a higher WAC compared to drugs with a lower WAC. The difference between the list price and the amount the PBMs pay is passed onto patients via their copayment or coinsurance for the prescription, with the exact amount depending on their insurance plan [13, 14]. PBM dynamics lead to biosimilars launching at a relatively high list price, significant rebates, and patient out-of-pocket expenses.
Conversely, the segment of the market not covered by PBMs (employees who contract with health plans for administrative services only (ASO), the uninsured, or those covered under Medicaid) prefer a low list price to access the drugs, due to their cost-sensitivity with coinsurance or deductible prices [13, 14]. Biosimilar manufacturers need to consider the implications in both markets when determining a pricing strategy, which dictates the incentives for payers to cover the drug.
The only historical example of a pharmacy benefit-covered drug in the US with launched biosimilars is long-acting insulin. Biosimilar insulins have struggled to gain uptake in the pharmacy benefit space. Insulin glargine lost exclusivity in 2016, with three biosimilars launching over the course of six years. Since loss of exclusivity (LOE), insulin glargine biosimilars have reached just 28% market share by volume  against originators Lantus and Toujeo. Viatris has taken two different approaches to increase uptake of its biosimilar, Semglee, among PBMs since launch. After seeing poor initial uptake, Viatris first sought an interchangeability designation for Semglee that allows for auto-substitution at retail pharmacies. Second, Viatris implemented a dual pricing scheme , including a high list price (5% lower than the reference product’s WAC) to get PBM adoption and a low list price (65% lower) for the rest of the market. There are not universal decisions among PBMs based on these pricing schemes alone. PBMs must also consider who will be able to generate volume demand. For example, Express Scripts prefers high list price Semglee, and excludes Lantus, the reference product, and low-priced Semglee. On the other hand, CVS Caremark prefers Basaglar and OptumRX prefers Lantus. While the originator Lantus maintains the highest market share by volume, the interchangeable, high-list/high-rebate version of Semglee has gained the highest adoption among its various options, with 60% of new-to-brand prescriptions .
What Does this Mean for Humira (adalimumab)?
Even with the historical context of other biosimilar launches and coverage dynamics, the reality is that there is no analog that adequately describes the situation for Humira, making the anticipated success of adalimumab biosimilars difficult to predict. Due to Humira’s $20B annual market , companies have jumped into the development of adalimumab biosimilars because even a small percentage of the market will yield an attractive return on the investment. If an adalimumab biosimilar is able to capture even 5-10% of the ~$20B annual Humira sales, there is reason to justify the $100M+ R&D costs . Though $100M is a large investment that likely only larger pharma companies can afford, development costs are still an order of magnitude lower and significantly de-risked compared to a novel biologic, since the pivotal trial requirements are fewer than for novel drugs and biosimilars have the ability to gain approval in multiple indications from few trials. This was evidenced by Amgen’s Amjevita where analytical and non-clinical studies were performed to demonstrate safety and efficacy comparable to the reference product, as well as three Phase III studies. The Phase III studies consisted of one trial in psoriasis (N=350, length ~2 years) and two trials in Rheumatoid Arthritis (N=467, length ~2 years and N=526 length ~1 year) . These 3 trials were able to secure FDA approval in 7 indications [18, 19], proving the time and cost-savings of the biosimilar pathway compared to new development pathways.
The Ultimate Question Is: Can adalimumab Biosimilars Capture any Meaningful Market Share? And Can Future Autoimmune Biosimilars Follow Suit?
Amgen’s Amjevita, the first adalimumab biosimilar to launch in the US, provides a glimpse into how companies are planning to gain market share. Amgen approached the Amjevita launch with a clear understanding of the hurdles pharmacy benefit-covered biosimilars face and unique strategies to combat them, including dual pricing, prioritizing speed in R&D to be first-to-market, and deploying considerable sales and marketing resources. Amgen’s dual-pricing strategy for Amjevita targets both PBM-covered and non-PBM-covered market segments to maximize uptake, similar to what insulin biosimilars did . The first Amjevita National Drug Code (NCD) is priced at a 55% discount off WAC with the intention of leveraging a competitive position as the “best-priced” adalimumab for Medicaid and uninsured patients. The second Amjevita NCD is priced at a 5% discount off WAC , which allows for larger rebate amounts that are advantageous for PBMs. It is anticipated that competition between originator and biosimilar manufacturers will drive higher rebates and lower net prices. Additionally, Amgen did not initially seek interchangeability for its low concentration version , a strategy to get to market first in a tight race. Although it is most beneficial for drugs sold in retail pharmacies, interchangeability is not as advantageous for drugs sold in specialty pharmacies since most states prohibit auto-substitution in specialty pharmacies [16, 22]. Interchangeability designations are further complicated by the variety of Humira formulations. Interchangeability would only allow for auto-substitution with its exact match – e.g., citrate/citrate-free or high/low concentration, etc. . However, the interchangeability designation may influence providers, since drugs with the designation will have data demonstrating that efficacy is not impacted when patients switch from a drug to its biosimilar version. Drugs without the designation will not have data to support the same claim . Amgen plans to tackle interchangeability once it attains market share and expects its Phase III interchangeability study results in H1 2023 . Finally, Amgen is putting the same promotional effort behind Amjevita as it would for a novel drug launch. Amgen announced it will also provide a suite of patient hub services , including nurse support, financial assistance, and reimbursement support for both prescribers and patients, similar to what would be expected of a branded biologic. The benefit of being first to market along with the sales and marketing efforts will likely result in Amjevita as the lead adalimumab biosimilar, as seen with historical biosimilar markets.
Although Abbvie is bracing for a $13B decline of Humira revenue in 2023, down ~37% from 2022 , the declines in sales are likely being driven by price over volume losses to biosimilars due to the defense strategies AbbVie is employing. Biosimilar competition will force AbbVie to offer stronger rebates to maintain share and AbbVie’s strong contracts will help dampen the biosimilar uptake. The erosion of Humira will not only be attributed to adalimumab biosimilars, but also to switching patients to other drugs. AbbVie will focus on switching patients from Humira to its follow-on originator drugs Skyrizi and Rinvoq, which have proven to be superior to adalimumab, bolstering its broader autoimmune portfolio revenues.
Future of Adalimumab Market and Implications for Future Autoimmune Biosimilars
The future market for adalimumab will likely be split between AbbVie, Amgen, and the second-to-market biosimilar, which is currently a very tight race [Figure 3]. Once the two major biosimilars are launched and the market becomes crowded, it will be difficult for the next eight biosimilars to gain market share and it is likely that many will drop out altogether. It is important to note that companies are employing other strategies to win market share when biosimilars are already on the market. Boehringer Ingelheim and Pfizer are launching with interchangeability [22, 23] in hopes that they will be the first to have the designation and drive uptake.
With all eyes on the success of adalimumab biosimilar launches, future autoimmune biosimilars manufacturers will develop their strategies based on lessons learned from adalimumab. We expect that the adalimumab biosimilar launches will reveal how the PBM rebate dynamics could interfere with the original intent of biosimilars: launching with high list prices to allow large rebates to PBMs may not generate the hoped-for amount of cost-savings for the healthcare system or the patient. In turn, this could contribute to continued political scrutiny on drug prices in the US, as evidenced by the notable focus of the recent Inflation Reduction Act on the high cost of insulin, despite the availability of biosimilars .
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Monica Schroll, Engagement Manager and member of the metabolics and autoimmune practice at Health Advances
Olivia Brody-Bizar, Senior Analyst and member of the metabolics and autoimmune practice at Health Advances
Ashley Peake, Analyst and member of the metabolics and autoimmune practice at Health Advances
Juan Camilo Roman, Vice President, Leader of Health Advances’ market access practice
Balazs Felcsuti, Partner, Leader of Health Advances’ autoimmune practice