The United States is the world’s largest pharmaceutical market and Americans pay higher prices for prescription drugs than any other nation. While federal law in the US does not permit payers to consider drug cost as part of decision-making, the mounting expense of cancer drugs and other innovative biologics is taking its toll on insurers (including the government-funded programs Medicare and Medicaid), and above all on patients who typically share in the cost of medications. Those diagnosed with life-threatening or serious chronic diseases often face significant financial hardships in order to afford modern biologics or may be forced to forego optimal treatment. In 2010, the 351(k) regulatory pathway was established for approval of biosimilars and on 6 March 2015, a biosimilar of filgrastim became the first product to be approved by the FDA via this route, a pivotal event expected to spur future biosimilar development. 

Current access to originator biologics in the United States   +

On its own, the United States (USA) accounts for one-third of the global spend on drugs per year.1 Pharmaceutical prices are higher in the USA than elsewhere in the world2,3 and, in contrast to many other developed countries, cost-effectiveness has so far not been accepted as a legitimate consideration in choice of treatment. Although the Affordable Care Act created a body to compare the effectiveness of treatments, Congress barred it from considering cost. However:

  • In 2013 it was reported that cancer drug prices in the USA had doubled in the past decade, from an average of USD $5,000 per month to more than $10,000.2
  • Eleven of the 12 cancer drugs the FDA approved in 2012 were priced at more than $100,000 per year, double the average annual household income.4
  • The top-tier cancer drugs cost twice as much in the USA as they do in Canada and in many EU countries.5
"Thousands of US cancer patients, even many with insurance, face the same dire decision: Go bankrupt or die." 7

The most expensive treatments in cancer, as in many other fields, are biologics. US spending on biologics has been increasing by as much as 15–20% each year.5 The price of biologic disease-modifying anti-rheumatic drugs (DMARDs) used in rheumatoid arthritis and other chronic autoimmune conditions rose by more than 45% in 5 years (2008–2012).6

Some US clinicians are very concerned about the cost of biologics and have publicly (and sometimes collectively) confirmed that this influences their prescribing decisions.3 US insurers increasingly consider cost-effectiveness when deciding whether to cover a drug and how much of its cost patients themselves should fund (‘co-pays’). A 2014 survey of more than 100 American rheumatologists found that 80% encounter moderate-to-strong control by payers when prescribing biologics for rheumatoid arthritis.7 There are also state-by-state variations in these policies, which has created regional inconsistencies.

The impact of rising drug costs is notable:

  • Medical insurance premiums have more than doubled since 1999.8
  • One in five families affected by cancer use up their personal savings paying for treatment.8
  • Applications by patients for charitable aid to fund their treatments are increasingly common.9
  • One in six of all US bankruptcies is due to medical expenses.8
  • Up to 10% of patients with chronic myeloid leukemia discontinue a biologic treatment – which is widely recognized to be life-saving – because of its cost.3,10 
"It's not until you see the list of the 20 most expensive drugs in the US that the reason why Medicare will become insolvent by 2024 hits home." 12

For a patient with a terminal illness, assessment of drug cost-effectiveness is a very personal matter. For some, living to see a child’s graduation or a spouse’s landmark birthday may be worth every penny. However, some patients may be choosing financial ruin on the basis of a misunderstanding of likely treatment benefit. A study published in the New England Journal of Medicine in 201211 reported that 81% of patients with advanced colon cancer and 69% of patients with advanced lung cancer did not understand that their drug treatment was unlikely to cure them.

The US government-funded insurance programs Medicare and Medicaid are legally obliged to pay for FDA-approved treatments. But – as with private insurers – expensive new drugs have unsurprisingly taken their toll on these cash-strapped programs.

Regulatory guidelines in the United States   +

  • Perhaps nowhere are the challenges and uncertainties of the new biosimilar era more evident than in the USA, which is ultimately expected to be the largest market for these products. The Biologics Price Competition and Innovation Act, which created an abbreviated approval pathway for biosimilars – known as 351(k) – became law in March 2010, and the FDA released a set of much-anticipated draft guidance documents on biosimilar development in February 2012. 
  • However, the first biosimilar application in the USA was not accepted for review by the FDA until 2014. It was for a biosimilar of filgrastim, intended to treat neutropenia.
  • On 7 January 2015, the FDA’s Oncologic Drugs Advisory Committee (ODAC) concluded that the candidate biosimilar was highly similar to the originator product and unanimously recommended its approval. On 6 March 2015, this product was approved by the FDA – the first US biosimilar licensed via the 351(k) pathway. 

It is important to note that there are currently two distinct FDA approval pathways in use for biologics. Some have been approved under the Federal Food Drug and Cosmetic Act as ‘drugs’, while others have been approved as ‘biologics’ under the Public Health Service Act. By March 2020, all biologics will be reviewed under the Public Health Service Act.

For now, if the originator biologic product was originally approved as a ‘drug’, then a new version of that product (i.e. a product which depends at least in part on the data of the originator) is known as a ‘follow-on biologic’ or ‘follow-on protein’ as opposed to a biosimilar. The diagram below shows the different FDA drug approval pathways.

‘Follow-on biologics’ approved via the 505(b)(2) pathway between 1998 and 2006 comprise versions of recombinant glucagon, hyaluronidase, calcitonin salmon and somatropin. The newest product to be approved via the 505(b)(2) pathway (in January 2016) is a follow-on version of insulin glargine.

FDA guidelines on the data required to satisfy regulatory requirements for biosimilarity via 351(k) remain a work in progress. In May 2014, it was established that the degree of similarity between a biosimilar candidate and its originator – as shown by the analytical data – should determine a sponsor’s next steps.

Outcome of analytical data

Next steps

‘Not similar’

Further development through the 351(k) regulatory pathway is not recommended.


Further analytical information is needed to determine if the product is sufficiently similar to the originator.

‘Highly similar’

The biosimilar candidate meets the statutory standard for analytical similarity, meaning pre-clinical and clinical studies are warranted to resolve residual uncertainty and support a demonstration of biosimilarity.

‘Highly similar with fingerprint-like similarity’

The biosimilar candidate meets the statutory standard for analytical similarity based on extremely sensitive methods and the sponsor can consider using a more targeted and selective approach to conducting pre-clinical and clinical studies.

Some experts regarded filgrastim as a relatively ‘low-risk’ product and warned that monoclonal antibody biosimilars, for example, may face tougher regulatory hurdles in the USA than they have in Europe.13 However, the first biosimilar monoclonal antibody (a biosimilar of infliximab) was approved by the FDA in April 2016.

Other regulatory questions still to be finalized include:

  • Requirements for extrapolation: The filgrastim and infliximab biosimilars approved by the FDA had their licenses ‘extrapolated’ to include all the licensed indications of the originators. However, extrapolation is by no means inevitable for all biosimilar candidates and is expected to be evaluated on a case-by-case basis.
  • Requirements for interchangeability: The FDA will approve biosimilars as ‘non-interchangeable’ or ‘interchangeable,’ meaning that the biosimilar may or may not be substituted for the originator at the pharmacy level without approval of the prescribing physician. An ‘interchangeable’ license requires higher standards of evidence for biosimilarity, including proof that there is no greater risk in switching to the biosimilar compared with maintaining therapy with the originator. The details of these requirements are still not clear – but even if a product is deemed interchangeable by the FDA, individual state laws will govern the ability of a pharmacist to make substitutions for a prescribed branded product. As of March 2016, 20 states had enacted legislation or set out administrative rules governing biosimilar substitution by pharmacists. Of these, most require the pharmacist to notify the prescriber of the substitution and some states require the pharmacist to notify the patient.14 An up-to-date record of state legislation on pharmacist substitution of biosimilars is available here.  
  • Product namingIn September 2015, the FDA issued provisional naming guidance for biosimilars, which proposes that originator biologics and biosimilars are given the same non-proprietary name, but with a unique four-letter suffix for all biologics, including originators. The proposed naming convention seeks to prevent inadvertent substitution of biologic products that are not deemed interchangeable by the FDA, as well as to support safety monitoring by making it easier to accurately track product usage.15,16
  • Product labelling: As of April 2016, the FDA requires biosimilars to be identified as such on product labels. However the clinical data cited on the label should be that of the originator.

Approved biosimilars in the United States   +

  • Sandoz’ Zarxio®, the first biosimilar approved by the FDA, was launched in the US on September 3, 2015, approximately 6 months after it received approval. The delay was caused by a patent infringement lawsuit initiated by Amgen, manufacturer of the originator filgrastim – Neupogen®.
  • The dispute focused on whether Sandoz had violated the law by not informing Amgen about its application to the FDA for approval of Zarxio® or revealing its plans to manufacture a biosimilar of filgrastim in the first place (this communication of information between biosimilar and originator companies is informally known as the “patent dance”). The outcome of the lawsuit was that biosimilar manufacturers do not have to share their plans with originators, but they do have to give them 180 days’ notice of their intention to bring their product to market, which can only be done once they have secured FDA approval.17,18 Sandoz has appealed the 180-day notice ruling and, as at July 2016, this issue has been escalated to the US Supreme Court, who in turn is seeking the opinion of the Federal Government.
  • Zarxio (which has the non-proprietary name filgrastim-sndz) is being marketed at a wholesale price 15% lower than that of Neupogen. For Medicare, this amounts to a relatively small saving but biosimilar discounts typically evolve over time and the price of Zarxio may decrease later, as seen in the EU, where it is currently 20–30% cheaper than Neupogen.19,20

  • In 2015, the American Society for Oncology (ASCO) announced in its new guidelines that substitution of biosimilar filgrastim for the originator in clinical practice is appropriate.21
  • In April 2016, InflectraTM, a biosimilar of infliximab, became the second US biosimilar (and the first biosimilar monoclonal antibody) approved by the FDA via the 351(k) pathway.
  • In July 2016, candidate biosimilars of adalimumab (from Amgen) and etanercept (from Sandoz) both received unanimous recommendations for approval from FDA advisory panels. However, in the case of adalimumab, AbbVie – the manufacturer of the originator biologic, Humira® – may succeed in preventing the launch of the biosimilar competitor for several years due to Humira’s complex, multi-layered patent protection.
  • In August 2016, CVS Heath Corp., which administers drug-benefit plans for employers and insurers, announced that – from January 1, 2017 – it will drop coverage of branded filgrastim (Neupogen) and instead cover only the biosimilar version, Zarxio, for which it has negotiated an additional discount. CVS has made the same decision for insulin glargine* and will no longer cover the originator, Lantus®.22   
*The biosimilar of insulin glargine was not approved via the FDA’s 351(k) pathway but instead via 505(b)(2) as a ‘follow-on biologic’. See Regulatory guidelines in the United States.
The future of biosimilars in the United States   +

  • Because of the need for comparative clinical trials, savings from biosimilars cannot match those achievable with small-molecule generics, which are estimated to have saved US consumers approximately $1 trillion in the decade 2002–2012.23
  • Nonetheless, because of the high unit cost of biologics, and the growing need for them in clinical practice, biosimilars are still expected to achieve substantial savings. There is no consensus on the scale of the savings and they may be influenced by numerous factors, including the timing of FDA approvals, whether indication extrapolation is approved, the granting of interchangeability licenses, prescriber attitudes, competition between biosimilar versions of the same originator, and many other variables. However, a number of authoritative stakeholders have made predictions regarding potential savings in the US.
  • The Rand Corporation estimates that the introduction of biosimilars may reduce direct spending on biologics in the USA by $44.2 billion from 2014–2024.24
  • Express Scripts, the nation’s largest manager of pharmacy benefits, has gone so far as to suggest that biosimilar competition for the top 11 biologics could save as much as $250 billion over the same decade.25
  • In March 2015, the Centers for Medicare and Medicaid Services (CMS) removed an incentive for physicians to prescribe more expensive Medicare Part B originator drugs in a move to encourage preferential biosimilar prescribing. They also opened the door to formulary exclusions of originator drugs under Medicare Part D, which is required to offer at least two distinct drugs in each class.26

Despite the long wait for the 351(k) pathway to be successfully put into practise, the US biotechnology industry has been highly active in this field for many years and brand-name biologic manufacturers themselves are pursuing biosimilars. Now that the first biosimilar has received FDA approval and has reached the market, biosimilar development programs in the USA are expected to gain new momentum and many opportunities for clinical investigators are anticipated.

Additional resources   +

  • Additional educational resources and information on biosimilars for healthcare providers are available at the Academy of Managed Care Pharmacy’s Biosimilars Resource Center website, which can be accessed here:

References   +

  1. Reuters, 20 November 2014. Drug spending tops $1 trillion on hepatitis C, cancer therapies: study. Accessed 27 February 2015.
  2. Medscape, 19 November 2014. Why are drug costs so high in the United States? Accessed 27 February 2015.
  3. Kantarjian HM, Fojo T, Mathisen M & Zwelling LA. Cancer drugs in the United States: Justum pretium – the just price. J Clin Oncol (2013) 31:3600–3604.
  4. Experts in Chronic Myeloid Leukemia. The price of drugs for chronic myeloid leukemia (CML) is a reflection of the unsustainable prices of cancer drugs: from the perspective of a large group of CML experts. Blood (2013) 121:4439–4442.
  5. ABC News, 18 December 2013. Outrage at the increasingly high cost of cancer drugs. Accessed 27 February 2015.
  6. Optum, 14 November 2014. Rheumatoid arthritis cost drivers. Accessed 27 February 2015.
  7. Decision Resources, 20 August 2014. Payers exert cost controls on high-cost biologics to treat autoimmune conditions. Accessed 27 February 2015.
  8. Cornes P. The economic pressures for biosimilar drug use in cancer medicine. Targ Oncol (2012) 7(Suppl 1):S57–S67.
  9. The Economist, 4 January 2014. Hard pills to swallow. Drug firms have new medicines and patients are desperate for them. But the arguments over cost are growing. Accessed 27 February 2015.
  10. The Economist, 26 May 2011. The costly war on cancer. New cancer drugs are technically impressive. But must they cost so much? Accessed 27 February 2015.
  11. Weeks JC, Catalano PJ, Cronin A et al. Patients' expectations about effects of chemotherapy for advanced cancer. N Engl J Med (2012) 367:1616–1625.
  12. CBS News, 29 June 2011. 20 expensive drugs that could bankrupt Medicare. Accessed 27 February 2015.
  13. Wall Street Journal Pharmalot blog, 8 January 2015. What the FDA panel vote on a biosimilar says about approvals. Accessed 27 February 2015.
  14. Health Law and Policy Matters, 28 July 2015. Emerging state biosimilar laws – reference chart and five issues to watch. Accessed 2 November 2015.
  15. US Department of Health and Human Services, Food and Drug Administration (FDA). Nonproprietary naming of biological products. Guidance for industry. August 2015. Accessed 10 December 2015.
  16. Pharmaceutical Manufacturing, 28 August 2015. FDA issues biosimilar naming guidance. Accessed 10 December 2015.
  17. Reuters, 21 July 2015. Drugmaker Novartis blocked from selling Neupogen copycat until Sept 2. Accessed 2 November 2015.
  18. FDA Law Blog, 21 July 2015. BPCIA federal circuit follies, or can we all agree to disagree? A divided federal circuit finds the patent dance voluntary, but rules that notice of commercial marketing can occur only after licensure. Accessed 2 November 2015.
  19. PM Live, 4 September 2015. Novartis launches first biosimilar Zarxio in the US. Accessed 2 November 2015.
  20. Biopharma Reporter, 3 September 2015. Biosimilars land in the US as Sandoz launches Zarxio. Accessed 2 November 2015.
  21. Medscape, 14 July 2015. ASCO updates practice guidelines for CSFs in cancer patients. Accessed 2 November 2015. [Subscribe for free]
  22. The Wall Street Journal, 2 August 2016. The CVS drops coverage of 2 branded biotech drugs in favor of copies. Accessed 12 September 2016. [Subscription required]
  23. Generic Pharmaceutical Association. New study finds generic prescription drugs saved consumers and the U.S. health care system $1 trillion over past decade. Accessed 27 February 2015.
  24. Rand, 3 November 2014. Biosimilar medications could create billions in health care savings. Accessed 27 February 2015.
  25. Express Scripts, 23 April 2013. The $250 billion potential of biosimilars.$250-billion-potential-of-biosimilars. Accessed 27 February 2015.
  26. The National Law Review, 7 April 2015. CMS releases new reimbursement guidance for biosimilars. Accessed 2 November 2015.