IQVIA’s Michael Kleinrock Shares Why Smaller Manufacturers Are Investing in Biosimilar Development

Michael Kleinrock, lead research director for the IQVIA Institute for Human Data Science, explained some of the biosimilar manufacturing and business trends found in IQVIA’s Biosimilars in the United States 2023-2027 report and his thoughts on legislative acts and their impact on biosimilar trends at Access!, the annual meeting of the Association for Accessible Medicines in Orlando, Florida.

IQVIA reported that more small drug companies are breaking out into the biosimilars space, with 79% of the biosimilar molecules under development being created by smaller manufacturers. Why are we seeing this trend growing and why are smaller companies more willing than before to invest in biosimilars?

Kleinrock: We can only guess as to the motivations of the companies, but there are a number of signals here. One is certainly that the revenue available is attractive and the clarity in regulatory requirements and the ability to generate the biosimilar is something that more and more companies are able to do. It’s also clear that there are some companies that may be perceived to be smaller, but they have specific expertise. There are a number of Korean companies that we might call essentially a service provider or they’re developing biosimilars and then licensing them to larger companies at a later date.

So, certainly one of our observations is that our percentage is maybe an artifact of they haven’t been sold yet. But there’s definitely an attractiveness to the large market potential and even a small share. If you’re one of many competitors in a molecule with $20 billion of sales, even a small share of that at discounted rates would be a significant windfall for a smaller company and worth chasing.

The report noted that biosimilars tend to be more successful in plans with buy-and-build policies rather than white bagging policies. Why is this and what are the pros and cons of each framework?

Kleinrock: The context here is important because, essentially, buy and build drugs are those which are administered by a doctor and they’re reimbursed for them, whereas white bagging can often be the same drugs—So, it’s not necessarily a different type of drug—but it may be that the reimbursement is less certain.

In some cases, the provider is encouraging the patient to acquire the drug through their pharmacy benefit and will administer it, but they don’t want the risk. In other cases, the plan may prefer that way of distribution to ensure the control of the appropriate formulary position and prior authorizations and so on. The degree to which your patients are exposed to cost, maybe in a high-deductible plan or maybe because of tighter control, is a limiting factor, which is limiting the white bagging.

And essentially, it’s if [the patient] has to pay for it. If I were a patient and if I have to pay for it or if I had to jump through some hoops in order to have that reimbursed, that’s different in many cases than a medical benefit drug where the provider is very likely to get reimbursed. And I think that’s really the issue. It acts as a proxy for the degree of control that’s exerted by different stakeholders on the decision.

In addition to the Inflation Reduction Act (IRA), what other pieces of legislation should biosimilar companies be keeping an eye on when evaluating which biosimilars to invest in and develop next?

Kleinrock: The pipeline for biosimilars is really informed by some medicines that are already available and certainly the next 10 or 15 years of biosimilars are really filled with some quite exciting medicines.

The interesting challenges you mentioned in the IRA are whether that compound or whether that medicine will have had its price negotiated under the price negotiation provisions before the biosimilars arrive. That would change the available market size. It would change some go-or-no-go decisions, and that’s still significantly uncertain. But beyond that, regulatory oversight of the requirements to develop and get a biosimilar approved and particularly interchangeability aren’t really part of any of that legislation. They’re part of what I would call a natural evolution of regulatory governance.

Over time, our comfort societally and regulatory wise with biosimilars is growing. And so, at some point, the costs to be a developer and to achieve interchangeability may evolve. They may be lower. That would change the threshold, essentially, the commercial floor for whether a biosimilar is viable, and those are complex decisions.

Essentially, you’re talking about how much does it cost to run the trials? How much share are you likely to get? So, if some controls and a study could be done with real-world evidence, that [might be a better] pathway to lower cost than essentially running a randomized controlled trial. For indication extrapolation or switching studies—which are complicated, hard to enroll, and take a long time—those drive cost.

If they were not part of it or were a lesser part of it, it would change the calculus of what makes a viable commercial opportunity. And I think those are things which, I don’t have a crystal ball about when and how these things change, but it’s definitely appeared to be an evolving landscape. And there are signals from Europe that there’s willingness to explore moving those thresholds. The US has typically been following Europe on that regulatory science approach. And so, it’s possible we can see that here. It could be interesting.