The conventional view of biosimilar pricing is that a discount of up to 30% is sufficient to secure reimbursement and enable patient access, as recently observed in the UK where Napp launched Remsima, the biosimilar of Remicade (infliximab) at a 30% discount. However, the recent announcement of a 72% price discount for Remsima, in the annual Norwegian tender of anti- tumour necrosis factor (TNF) products has blown this conventional view out of the water.
Every year in Norway there is a national tender for anti-TNF products, where each anti-TNF manufacturer is invited to submit a price for their own product for the following year. 2014 was the first year the tender was awarded to Remsima (from Hospira), a biosimilar of infliximab, who had offered a discount of 39% to win the tender. However in 2015, the tender was won by Orion, another biosimilar company, who offered a huge 72% discount. The high level of discount offered by biosimilars is alternative strategy to gain new patients, which may capture significant value in the long term due to the lack of switching that currently occurs across the anti-TNF products.
It is interesting to note that the 2015 tender price has been made publicly available and that the discounts offered are significantly greater than the ‘official’ prices published by the Norwegian’s medicines agency, where biosimilars are priced at a 10% discount to Remicade’s price. The level of discount offered in the tender far exceeded the expectations of many, as summarised by Dr Steinar Madsen, medical director at the Norwegian Medicines Agency:
“I had hoped to see discounts around 50 percent, but I did not anticipate a 72 percent price reduction… with the prices we have seen today, the biosimilar infliximab will probably be a game changer in Europe… this is a great day for our patients, as we will be able to extend treatment to many more in Europe”.
The level of discount offered is likely to have repercussions for both branded manufactures and biosimilar manufacturers alike. Branded manufacturers are now seeing copies of their drugs priced at generic price points and must now reconsider their marketing strategy for off-patent biologics, if they are to maintain a significant level of market share for their products.
Biosimilar manufacturers should also reassess their strategy, primarily to ensure that they can compete at these generic price points. Pricing at a discount to the original brand was always going to be the main ‘ticket to entry’ for biosimilar manufacturers. However, the higher cost of manufacturing and developing biosimilars (unlike generics, there is a need to conduct phase III bioequivalent studies to secure regulatory approval) means that biosimilar companies have significantly higher investments compared to generic manufacturers.
Furthermore, biosimilar companies still need to invest in their communication strategies to convince both physicians and patients that biosimilars are safe and effective treatments. A 72% price discount over the branded product will put significant pressure on the profit margins of biosimilar products and may make the biosimilar marketplace significantly less attractive for new entrants.