Another FDA move designed to chase value based pricing, says GlobalData
On Wednesday (18 July) the FDA unveiled the ‘Biosimilar Action Plan’ (BAP), which aims to promote the development and accessibility of biosimilars in the US healthcare market.
Rahael Maladwala, Pharma Analyst at GlobalData, a leading data and analytics company, offers his view on what this means for the price of branded biologic molecules:
The BAP is another FDA initiative that looks to increase competition for biologics and in turn, reduce prices
“We believe that this is another positive step in the chase for value based pricing. The US has long had a problem with the cost of drugs, with the high annual cost of therapy (ACOT), proving to be a burden for healthcare providers and payers; and as such, a move to ‘value based’ pricing, where cost effectiveness is taken into account as well as safety and efficacy, has been in the making for a while. The BAP is another FDA initiative that looks to increase competition for biologics and in turn, reduce prices.”
Biosimilars are biopharmaceutical drugs that have been designed to have active properties. They are similar to branded molecules that have already been licensed. Due to the complexity of these molecules, biosimilars do not have to be exact copies of the original molecule, but within a 20% range of similarity, as well as going through separate clinical studies to prove safety and efficacy comparable to the original molecule.
“While clinical development of biosimilars still works out to be relatively expensive, compared to small molecule generics, it is far cheaper than discovering and developing an original molecule. These savings can translate into a lower priced drug, which encourages the original drug maker to lower their prices, to remain competitive. The situation that the FDA hopes to replicate is Mylan’s Copaxone biosimilar approval; this is less than half the price of the original molecule, and might force Teva to lower their price.
“The BAP looks to help facilitate the development and approval of biosimilars in America; it will use the expertise from the FDA to promote biosimilar competition by reducing tactics used to stifle follow-on product approval. Ultimately, the FDA want to encourage competition for biologic molecules, in the hope that it leads to more cost effective pricing; reducing the burden on the state. If all goes as planned, expect to see an influx of biosimilar approvals over the coming years.”