The US has experienced a policy debate as to whether competition from biosimilars is the best strategy for achieving price reductions for biologicals or, rather, whether direct price regulation after loss of patent exclusivity would be more effective. In order to investigate this issue, authors from the US and France combined quantitative and case study methods to examine in detail the interaction between market and administrative mechanisms to reduce biologicals’ prices in France. In their article they present comprehensive data on market shares and prices for three major biologicals and their 11 competing biosimilars between 2004 and 2020 [1].
France has a single-payer health insurance system with authority to impose pharmaceutical price reductions but relies on decentralized market negotiations between hospitals and manufacturers to establish prices for injected and infused biologicals. The national health insurance system negotiates a national tariff for each product, but these are the prices paid by the government to hospitals where the drugs are administered, not to the drug manufacturers themselves. Hospitals and hospital purchasing groups negotiate prices with manufacturers who typically offer significant discounts to be included in the hospital’s inventories and formularies. In these negotiations the hospitals rely on biosimilars to stimulate competition. The hospitals have an incentive to negotiate prices as low as possible, since they are allowed to retain half the difference between the national price and the price they negotiate.
The national insurer relies on this decentralized process of negotiations and the ‘shared savings’ incentives for hospitals to obtain discounts from manufacturers, rather than unilaterally imposing reductions on manufacturers. Each year, the price reductions negotiated by hospitals are adopted by the health insurance system for its national tariffs. This eliminates the shared savings potential for hospitals at the prices they had negotiated with manufacturers, driving hospitals to negotiate a new round of discounts. The French system exhibits an iterative process of biosimilar market launch, price reductions, reductions for the reference biologicals, reductions in the national tariffs, then new launches and further share increases for biosimilars and further price reductions.
In their article Robinson and Jarrion measure 2004–2020 trends in prices, price reductions, utilization and market shares for Remicade (infliximab), Enbrel (etanercept), Humira (adalimumab) and their 11 competing biosimilars. Biosimilar launches are associated with a sequence of price reductions for the originator biological, for other biologicals that treat similar conditions and for all related biosimilars.
The authors conclude that the French experience provides lessons for the US and other nations in their efforts to use competition from biosimilars to drive price reductions and savings from biologicals. Reliance on biosimilars can be effective in reducing the prices of biologicals. Most importantly, health programmes can combine centralized administrative and decentralized market mechanisms in the pursuit of social goals.
Conflict of interest
The author of the research paper [1] did not provide any conflict of interest statement.
Abstracted by Professor James C Robinson, PhD, Leonard D Schaeffer Professor of Health Economics, Director of Berkeley Center for Health Technology, Division Head of Health Policy and Management, School of Public Health, University of California Berkeley, California, USA.
Editor’s comment
Readers interested to learn more about biosimilars in Europe are invited to visit www.gabi-journal.net to view the following manuscript published in GaBI Journal:
Use of biosimilars in Europe differs across countries
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Reference
1. Robinson JC, Jarrion Q. Competition from biosimilars drives price reductions for biologics in the French Single-Payer Health System. Health Aff (Millwood). 2021;40(8):1190-7.
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