In the current global economic crisis, significant savings on healthcare spending should be made as a result of increased competition between manufacturers of off-patent biologicals or biosimilars. If only that were so, writes Professor Livio Garattini at the Centre for Health Economics, Ranica, Italy [1], who has analysed the pricing of off-patent biologicals in Italy, a country particularly hard hit by the economic downturn.
In Italy, these products are more and more bought through the country’s publicly funded National Health Service (NHS) via a tendering process, which is rather like an auction. Price quotations are invited from drug manufacturers before a decision is made on the preferred manufacturer. The aim is to provide quality drugs at the lowest possible cost when needed.
Itay’s NHS is split into 20 Regional Health Authorities (RHAs), and each RHA runs its own tenders. Price quotations are invited from companies, and then the RHA can decide which drug to buy. In Italy, there are currently three off-patent biologicals (epoetin, filgrastim, somatropin) for which biosimilars are available.
Because off-patent biologicals are as safe and effective as their originators but cost less, they should perform well in these auction-like tenders, and one might expect some fierce competition among their manufacturers. However, Garattini reports that biosimilar manufacturers are failing to compete in the Italian market. This is worrying now, since RHAs are tasked with making the healthcare savings offered by off-patent biologicals, and it does not bode well for the future with the upcoming patent expiry of some very expensive biologicals including bevacizumab, cetuximab and trastuzumab [2].
Garattini’s team analysed 24 tenders, which included nearly 200 lots including an off-patent biological. The lowest price/best offer was always the criterion for awarding the tender. The study found that those tenders, which included off-patent biologicals, did not encourage competition between manufacturers.
The level of competition will depend on how the bidders (manufacturers) and buyers (RHAs) behave. Manufacturers in Italy have been allowed to launch their off-patent biologicals in different dosages and forms, ruling out competition with manufacturers who produce the same off-patent biological but in a different dosage or form. On the buyer’s side, RHAs have not fully exploited their purchasing power, and tendered many piecemeal lots restricted to only one product (thereby ruling out competition). This pattern may have arisen following fears of litigation from companies who have lost tenders, Garattini suggests, which is not uncommon in Italy.
As a result, the whole process favours drug manufacturers rather than the cash-strapped NHS. The lack of competition seems to be extensive and hard to justify in Italian regional tenders, concludes Garattini.
Professor Livio Garattini is a member of International Editorial Advisory Board of GaBI Journal.
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References
1. Curto A, Van de Vooren K, Muto R, Duranti S, Garattini L. Regional tenders on biosimilars in Italy: potentially competitive? Generics and Biosimilars Initiative Journal (GaBI Journal). 2013;2(3):123-9. doi:10.5639/gabij.2013.0203.036
2. Aapro M. Biosimilars in oncology: current and future perspectives. Generics and Biosimilars Initiative Journal (GaBI Journal). 2013;2(2):39-42. doi:10.5639/gabij.2013.0202.023
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