What is harder than making biotech copycats? Selling them
New York: Big-name drugmakers want to profit from selling lower-priced copies of rivals’ expensive biotechnology drugs. Patients and doctors want to pay less for medicine.
Getting those two sides together is harder than it looks. Part of the problem: a web of relationships between drug companies and insurers that shields incumbent drugs and often sidelines upstarts until the market becomes crowded.
Pfizer Inc. said this month that Inflectra, its version of the blockbuster Johnson and Johnson rheumatoid arthritis drug Remicade, brought in $94 million in the second quarter. Remicade, a biologic medicine made from living cells, booked $1.53 billion in sales in the period and had 2016 sales of $7 billion.
Ascension Health, a nearly 23,000-bed nonprofit hospital system based in St. Louis, spends $55 million a year on Remicade, more than any other drug. Using Inflectra, part of a new class of medicines called biosimilars, would save it at least $10 million annually, according to Ascension’s chief pharmacist, Roy Guharoy. He met with Pfizer and planned to integrate Inflectra into care more often until learning that insurers preferred to stay with Remicade. “This we did not expect,” Guharoy said. “If the insurance companies force us to use the branded product, of course our hands are tied.”
Pfizer says that the playing field is tilted against its drug.
“Access for Inflectra has been substantially limited due to J&J’s pursuit of exclusionary contracting with insurers and providers. Our lower-priced product has not received access at parity to Remicade and remains in a disadvantaged position despite recent price increases of Remicade,” the company said in a statement.
J&J spokeswoman Caroline Pavis said in a statement that Remicade is sold in a highly competitive market and that health plans decide on coverage.
Biosimilars have faced a difficult path to market. Doctors and patients tend to be loyal to innovative drugs that have worked well; payers are cautious in adopting new alternatives; and biosimilars can’t be swapped at the pharmacy because they aren’t identical to the drugs they aim to replace.
Remicade, known as infliximab and first approved in the US in 1998 for treating the digestive disorder Crohn’s disease, was cleared for rheumatoid arthritis a year later. It marked a seismic shift for the 1.3 million patients who today suffer from swelling and pain in the joints. By 2008, it was the top-selling drug in J&J’s pharmaceutical division.
“Most rheumatologists are happy with the drugs we have. I wouldn’t switch a patient if they are doing well on infliximab simply for the economics of it,” said Susan Goodman, rheumatologist at Weill Cornell Medicine and New York-Presbyterian. “However, if a patient could only be given Inflectra, that would be a different argument.”
J&J told analysts on a recent conference call that it has protected Remicade’s turf by setting up its contracts with payers for the year. J&J has exclusive contracts in nearly half its market, according to analyst Ronny Gal of Sanford Bernstein and Co., meaning payers agree to cover only Remicade for rheumatoid arthritis. J&J also bundled drugs and devices with hospitals and gave discounts to infusion centers, Gal wrote.
“We view biosimilars as competitive entrants and we compete for continued access to Remicade for patients,” said Pavis, the J&J spokeswoman. “Patients should have affordable access to medicines their healthcare providers determine are best for them.”
UnitedHeath Group Inc., the largest US insurer, recently told providers that Remicade remains its preferred drug for coverage. Remicade is still on next year’s list of preferred medicines at pharmacy-benefit managers Express Scripts Holding Co. and CVS Caremark, run by CVS Health Corp.
A Cigna Corp. spokeswoman declined to comment. Representatives for Anthem Inc., Aetna Inc., and UnitedHealth Group didn’t respond to requests for comment.
Pfizer began selling Inflectra in November at $946 a vial, a 15% discount to Remicade’s then-price of $1,113. But J&J has retained its pricing power, boosting Remicade’s price to $1,168, a 64% increase since 2011. J&J says discounts and rebates, among others, can lower the drug’s actual price.
Other biosimilars have taken time to get traction. When Novartis AG unit Sandoz launched white-blood-cell booster Zarxio, the first biosimilar approved in the US, two years ago, it cost 15% less than Amgen Inc.’s Neupogen. Since then, Neupogen has lost its dominance, with sales sliding from $1.4 billion in 2013 to $765 million last year. But another drug, Granix by Teva Pharmaceutical Industries Ltd, has been cleared, and Express Scripts last week became the second pharmacy-benefit manager to exclude Neupogen from its list of covered medicines.