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Price controls, competition and tendering for biosimilars Posted 26/02/2021

What lessons the US can learn from price controls, competition and tendering for biosimilars in Europe was a topic discussed in a report produced for the Biosimilars Council [1].

The advent of biosimilars has opened the door to biological competition and potential cost savings for healthcare providers and patients. Although savings are expected to be much lower than those gained for small molecule generics it has been estimated that even a 20% price reduction of five off-patent biologicals would save the European Union over Euros 1.6 billion per year [2].

The best way to achieve savings is to have multiple products on the market rather than a single biological, which then has a monopoly on the market. Competition between manufacturers drives prices down, making the drugs more affordable. However, in Europe many countries also use pricing and demand-side measures to control the prices of biosimilars. In many countries this includes setting biosimilar prices at a defined percentage below the price of the originator biological [3]. For example, in Poland, the first biosimilar must be 25% cheaper than its reference biological and the second biosimilar must be further discounted. While in Czechia, Finland, Latvia and Serbia, the first biosimilar must be priced 30% lower than the reference biological [4].

The authors of the report believe that strategies such as mandatory discounts while bringing short-term savings are short-sighted, as they may drive prices too low and discourage further biosimilars from entering the market or even mean that established biosimilars leave the market. They advocate facilitating approvals and encouraging competition in order to maximize the potential savings from biosimilars.

Tendering is also a procedure used in Europe for purchasing biologicals. To date, 12 European countries have single-winner tenders awarded to the manufacturer with the lowest bid and proven capacity to supply. The authors, however, caution that this can lead to a ‘race to the bottom’ on prices and instability in production. While the tender might result in a very low price for the duration of the contract, in the long term, the price may deter new entrants.

The authors conclude that there are some cautionary lessons to be learnt from Europe. These relate to:

  1. the importance of competition in the biosimilars market
  2. reasonable expectations for the market, including prices.

They add that ‘biosimilars involve substantial risk, time and expense to develop. Some practices in Europe, if adopted in the US, would prove detrimental to the long-term sustainability of the US biosimilars market.’

Related articles
How do the biosimilar markets in the US and Europe compare?

What can the US learn from the European biosimilars market?

LATIN AMERICAN FORUM – Coming soon!

To further enhance the objectives of GaBI in sharing information and knowledge that ensure policies supportive of safe biosimilars use, we are pleased to announce that we will be launching a new section on GaBI Online and GaBI Journal, the ‘Latin American Forum’ (in Spanish) featuring the latest news and updates on research and developments in generic and biosimilar medicines in Latin America.

Register to receive the GaBI Latin American Forum newsletter. Inform colleagues and friends of this new initiative.

 

LATIN AMERICAN FORUM – Próximamente!

Para fomentar los objetivos de GaBI sobre la difusión de información y conocimiento sobre las políticas de apoyo que garantizan el uso seguro de medicamentos biosimilares, nos complace anunciar el lanzamiento de una nueva sección en GaBI Online y GaBI Journal, el ‘Latin American Forum’ (en español), que presentará las últimas noticias y actualizaciones en investigación y desarrollo sobre medicamentos genéricos y biosimilares en Latinoamérica.

Regístrese para recibir el boletín informativo GaBI Latin American Forum. Informe a colegas y amigos sobre esta nueva iniciativa. 

References
1. Biosimilars Council. Brill A, Robinson C. Lessons for the United States from Europe’s biosimilar experience. June 2020 [homepage on the Internet]. [cited 2021 Feb 5]. Available from: https://biosimilarscouncil.org/resource/europes-biosimilar-experience 
2. GaBI Online - Generics and Biosimilars Initiative. Pricing of biosimilars [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2021 Feb 26]. Available from: www.gabionline.net/Biosimilars/Research/Pricing-of-biosimilars 
3. GaBI Online - Generics and Biosimilars Initiative. Generics versus biosimilars: pricing and usage-enhancing policies [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2021 Feb 26]. Available from: www.gabionline.net/Biosimilars/Research/Generics-versus-biosimilars-pricing-and-usage-enhancing-policies 
4. GaBI Online - Generics and Biosimilars Initiative. Biosimilar policies in Europe [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2021 Feb 26]. Available from: www.gabionline.net/Biosimilars/Research/Biosimilar-policies-in-Europe

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Source: Biosimilars Council

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