Commercial Uncertainty Remains as US Biosimilar Pipeline Matures

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With the recent announcement of the U.S. Food and Drug Administration's (FDA) acceptance of a submission for approval of a second biosimilar to Remicade (infliximab), questions remain for biologics manufacturers, payers, prescribers, and others as to how a mature biosimilars pipeline will begin to evolve in the United States and whether a sustainable competitive specialty market will develop.
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This is the third instance of two biosimilars to the same reference product under review at the FDA (a filgrastim biosimilar was submitted in early 2015 and a second biosimilar, pegfilgrastim, later in 2015). To date, the FDA has approved two biosimilars, Zarxio® (filgrastim-sndz) to Neupogen® (filgrastim) and Inflectra® (infliximab-dyyb) to Remicade® (infliximab), and announced that their Arthritis Advisory Committee will review a third to Humira® (adalimumab) on July 12, 2016, and a fourth to Enbrel®(Etanercept) on July 13, 2016.

To distinguish them from their reference products and other competing biosimilars, the agency has included four-letter suffixes in the nonproprietary names (also called proper names) of the first two biosimilars. The FDA also proposed adding suffixes to the nonproprietary names of the reference products.

Additionally, the Centers for Medicare & Medicaid Services (CMS) has proposed a payment policy to place each biosimilar to the same reference product under the same Healthcare Common Procedure Coding System (HCPCS) code, treating them as multiple source drugs for payment purposes. For reimbursement, CMS intends to blend the Average Sales Price (ASP) for each biosimilar and 6 percent of its reference product’s ASP into a single payment rate. The Affordable Care Act is structured to neutralize any incentives to use higher-priced products, but does not create incentives to use cheaper ones. Some of the patient out-of-pocket disincentives to use of biosimilars may be inadvertent.1

The biopharma industry has worried publicly that CMS’ policy may impact the viability of biosimilars in the U.S. and adversely affect the originator reference products. This concern is compounded as biosimilars, unlike generics, do not need to be approved for all of the same indications as the reference product, although they cannot have additional indications. Furthermore, only some sponsors of biosimilars to a given reference product may choose to pursue an interchangeability designation from the FDA. Competing products distinguished by different brand names and different nonproprietary names, but with largely the same labels, will thus have the same HCPCS code and a blended single-payment rate. To address pharmacovigilance concerns, the CMS plans to create manufacturer-specific modifiers for use with the single HCPCS code per product reference.

As biosimilars are still new in the U.S. and many prescribers do not understand the same safety and effectiveness standard being applied by the FDA as necessary for the approval of these products, concerns remain as to how biosimilars will be viewed and utilized by physicians and patients, especially if sponsors cannot offer greater value through price reduction compared to other biosimilars. Two differentiators built into the regulatory and reimbursement processes—the FDA’s non-proprietary name suffix and the CMS’ manufacturer-specific modifier—create the potential for further confusion among prescribers.

In Europe, where the biosimilar market is more established and each product stands alone, pricing patterns have not mirrored the steep discounts of generics but have created downward pressure on price overall. For example, the infliximab biosimilar Remsima® (the same product approved as Inflectra® in the U.S.) was originally offered at a 39% discount compared to the reference product in Norway. After a year, the manufacturer increased its discount to 69% and grew its market share in Norway to over 50%.2 Yet this example is more of an outlier than the rule, as overall biosimilars continue to be offered at approximately 20–30% less than their reference products. These pricing profiles are all within the European system in which different countries create different incentives for the use of biosimilars. It is also important to note that overall, generics are underutilized in the EU compared to the U.S.

The FDA and CMS continue to shape their policies regarding biosimilars as Congress and other stakeholders assert a multiplicity of viewpoints in the young market. We expect to see further submissions and approvals of both new biologics and biosimilars by the FDA this year as well as issuance of draft guidance for interchangeable biologics and finalization of the Agency’s new nonproprietary naming formats for all biologics.

1. Avalere Report, “Patient Out-of-Pocket Costs for Biosimilars in Medicare Part D.”

2. Yu, Benjamin. “Great Potential Cost Savings with Biosimilar Use.” Am J Manag Care 2016.22(5):378. Accessed June 3, 2016. Available at

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