Uptake of biosimilars in the US has the potential to lead to Medicare savings of $4 billion over ten years. However, these drugs are struggling to gain a foot hold in the US healthcare market. The lack of a biosimilar market in the US is largely due to the substantial patent litigations (often referred to as the “patent dance”), which can restrict biosimilars from launching. However, as this year has shown, even when a launch is achieved, biosimilar market penetration in the US can be significantly limited.
Inflectra (Pfizer; biosimilar of J&J’s Remicade (infliximab)) is one of the few drugs to successfully navigate its “patent dance” (which began in 2014). In November 2016, Inflectra became the second biosimilar (after Sandoz’s Zarxio (filgrastim-sndz)) to launch in the US. However, despite this win, Inflectra has struggled to gain market share and achieved US sales of only $40 million (less than 2% of Remicade’s total US sales of $2.24 billion) in the first half of this year. This is in stark contrast to the success gained by Inflectra in Europe, where it has achieved 46% of the infliximab market share. In fact, in some European markets, such as Norway and Denmark, Inflectra occupies more than 90% of the infliximab market.
Inflectra launch strategy
Pfizer were aware that introducing a biosimilar into the US market would be associated with significant challenges, including overcoming the lack of interchangeability and gaining physician buy-in. As such, Inflectra was launched with a unique multi-channel market access strategy, described by Pfizer as a “hybrid model”. This approach targeted healthcare providers rather than consumers and involved hospitals being provided with educational literature and digital assets covering the use of biosimilars. Furthermore, a team of field-reps, account managers and medical advisory board facilitators were also sent to hospitals with the aim of significantly improving physician understanding of biosimilars, and hence Inflectra’s place in therapy. The strategy also incorporated enCompass: a patient assistance programme that provides copays, reimbursement support and financial assistance to patients. Given this multi-channel approach, along with a 15% price discount vs. Remicade, Pfizer could anticipate capturing significant market share with Inflectra.
Remicade defence strategy
However, Inflectra has struggled to make a dent in Remicade sales. The reason is due to J&J implementing a strong, three-channeled defense strategy as part of their “Biosimilar Readiness Plan”. Firstly, exclusive and volume-dependent contracts were negotiated with payers to secure Remicade’s position on the formulary. Secondly, bundling deals (incorporating several drugs and medical devices) were signed with larger hospitals to make Inflectra less economical, despite its price discount. And finally, for independent infusion centers (with smaller budgets) competitive pricing in the form of greater discounts were implemented. Overall, the comprehensive nature of J&Js defense has successfully staved off Inflectra, with Remicade sales decreasing by a mere 5% in the second quarter of 2017. This is despite further discounting of Inflectra from 15% to 35% vs. Remicade and the launch of a second Remicade biosimilar (Renflexis; Merck; launched July 2017 at 35% discount vs. Remicade). This is a tremendous win for J&J who themselves had predicted their “Biosimilar Readiness Plan” could only limit Remicade sales erosion to 10 to 15%.
Pfizer are, perhaps understandably, not impressed by the aggressive defense strategy implemented and in September 2017 filed a suit alleging J&J sought to preserve its monopoly by ensuring biosimilars could “never become viable competitors”. The company asserts that use of Inflectra has been prevented by “exclusionary contracts”, which have triggered wasteful healthcare spending and undermine the intent of federal biosimilar laws. Pfizer are seeking monetary damages and a court order both ruling J&Js actions as unlawful and barring its use of exclusionary contracts. J&J have responded to patients and the public directly in an online statement which states they are “effectively competing on value and price” and that Inflectra’s lack of success has been due to Pfizer failing “to demonstrate sufficient value to patients, providers, payers and employers”. However, J&J does not only have Pfizer’s accusations to contend with. The United Food and Commercial Workers Local 1500 Welfare Fund (UFCW; the largest grocery worker union in New York) filed a separate antitrust suit against J&J in October 2017, accusing the company of “abusing its monopoly power to exclude competition for Remicade and resulting in higher treatment price for its union members”.
These lawsuits are the first of their kind and could have a significant impact on pharmaceutical contracting in the US. Biosimilar manufacturers will be watching the outcomes of these suits closely. Whilst there are currently only three biosimilars available in the US, there are a number of FDA cleared biosimilars awaiting launch in the coming years. A win for Pfizer and the UFCW here could immensely benefit the market access of these products.
We have recently presented on pricing and reimbursement considerations for biosimilars at the Global Pharmaceutical Regulatory Affairs Summit held in Prague in October of this year. If you have any questions regarding the biosimilar market, please do not hesitate to contact the Remap Consulting team.