U.S. Biosimilars: Greater Access and New Commercial Models

As the dynamics of the U.S. biosimilar landscape quickens in pace, this paper explores primary considerations that manufacturers – of both biosimilars and originator products – must factor into strategic plans going forward. While no means exhaustive, three key takeaways include:

• Interchangeability is no longer a point of differentiation

The U.S. Food and Drug Administration (FDA) has relaxed the clinical switching study requirement for biosimilar interchangeability and supports a legislation proposal to consider all biosimilars as interchangeable. Smarter differentiation angles for brands are imperative.

• New avenues of commercial access must be explored

Pharmacy Benefit Managers (PBMs) exert formidable control over biosimilar access, and they have even produced their own private-labeled biosimilars, drawing government scrutiny. New business models such as payer/PBM-manufacturer alliance and direct selling to payers have emerged, presenting new commercial options for biosimilar manufacturers to consider.

• Strategic agility is crucial

In an increasingly competitive environment, with evolving regulatory and access dynamics, biosimilar and originator manufacturers need to be flexible and adaptable to pivot their market strategy and tactics in this new era.

Introduction

The U.S. biosimilar market is undergoing a significant transformation. An influx of newly launched biosimilars, coupled with evolving regulatory policies and innovative commercial models, is reshaping the landscape. As of October 2024, a total of 61 biosimilars had been approved by the FDA across 17 reference molecules, and 41 have launched so far.¹ While biosimilars have successfully lowered drug prices, their adoption rates vary by molecule and therapy area. Oncology, ophthalmology, and pegfilgrastim biosimilars have seen rapid uptake, while immunology, filgrastim, epoetin alfa, and insulin glargine biosimilars have lagged.²

As the U.S. market becomes more experienced with biosimilars, several factors are driving the anticipated rise in biosimilar adoption. In this paper, we will discuss these market changes, especially in the immunology space, and outline some strategic considerations for biosimilar manufacturers and originator manufacturers.

Relaxing of Interchangeability Guidance

To breakthrough in a crowded marketplace, biosimilar manufacturers recognized that they needed to create ways to differentiate their product. One strategy undertaken by some was to pursue a label of interchangeability (IC) – this status allows pharmacist to substitute an originator biologic for a biosimilar without approval from the prescriber. Biosimilar manufacturers conducted additional clinical switching studies to achieve the IC designation. However, this designation only applies to products dispensed in retail pharmacies and is subject to additional state-level regulation.³ The existence of both the interchangeable and biosimilar designations has created confusion in the marketplace and concerns about the true equivalence of biosimilars to their reference products.

Given the growing evidence of safety and efficacy in switching between biosimilars and originators, the additional clinical study requirement may become obsolete.² Furthermore, the FDA has supported a fiscal year 2025 legislative proposal to eliminate the statutory distinction between biosimilars and interchangeable biosimilars and deem that all approved biosimilars are interchangeable (see the quote below).⁴ This shift could level the playing field for biosimilar manufacturers.

As evident in the adalimumab biosimilars, the IC designation has not provided a discernible commercial advantage. While six of the ten adalimumab biosimilars on the market have achieved IC status, this designation has not translated into increased market share. Instead, these products differentiate through a variety of pricing and market access strategies. These include offering single low-priced options (e.g., Hadlima and Yusimry) or more complex dual/multiple pricing options (e.g., Cyltezo, Amjevita, Hyrimoz, Idacio, Yuflyma, Abrilada, and Simlandi).² Strategic co-branding and distribution agreements with major payers and PBMs are also playing a key role in market access and uptake for biosimilars such as Hyrimoz and Cyltezo.

Biosimilar Private-Labeling Trend

PBMs play a pivotal role in the biosimilar market, managing prescription drug benefits for health plans, negotiating drug pricing and rebates with manufacturers, and returning certain rebate dollars to their group customers. While, historically, they tend to delay the shift to biosimilars due to higher rebates from the originator products, they are increasingly incorporating biosimilars in their preferred formularies. Furthermore, major PBMs are adopting new commercial models, including co-producing and distributing biosimilars through subsidiaries.

For example, CVS Health, through its subsidiary Cordavis, has partnered with Sandoz to co-produce and distribute Hyrimoz, a biosimilar of Humira. CVS Caremark, the pharmacy benefit management arm of CVS Health, has given Hyrimoz preferred formulary placement, effectively boosting its market share.⁵ Cigna's Evernorth, through its subsidiary Quallent Pharmaceuticals, is distributing its own private-label adalimumab biosimilar, manufactured through agreements with multiple companies including Alvotech, Teva Pharmaceuticals, and Boehringer Ingelheim ⁶. UnitedHealth Group's Optum Rx is launching Nuvaila, which will distribute Amgen's adalimumab biosimilar, Amjevita, and ustekinumab biosimilar, Wezlana. ⁷

These developments highlight the increasing importance of PBMs in the biosimilar market. Their influence over formularies and pricing strategies significantly impacts which biosimilars gain market traction. This has led some payers, like Blue Shield of California, to explore direct purchasing agreements with manufacturers, bypassing PBMs altogether for the first time in an attempt to avoid markups tied to the traditional PBM model.⁸

These new commercial models offer advantages in cost control and supply chain management for the PBMs.⁹ They also benefit the biosimilar manufacturers by guaranteeing volume sales and excluding competitors. A large PBM binding to one or two biosimilar manufacturers to produce two or three biosimilars may become the main business model, which will have a significant impact on other biosimilars entering the market later. With the three major PBM companies controlling 80% of the prescription volume¹⁰, it will be difficult for other biosimilars to reap sufficient market returns if they do not join partnership with the big payer/PBMs.

Government Scrutiny on PBMs

Vertical integration between payers, PBMs, pharmacies, and now manufacturers has raised concerns about potential anti-competitive practices. In March 2023, the House Committee on Oversight and Accountability began investigating PBMs and held a public hearing with leaders from the three PBM companies in July 2024. The House Committee also published a report criticizing PBM’s role in “inflat[ing] prescription drug costs and interfer[ing] with patient care for their own financial benefit.”¹¹

They have criticized PMBs for creating access barriers for biosimilars (see the quote below)¹⁰ and called to investigate the practice of PBMs favoring their own private-labeled biosimilars.⁸ Bipartisan legislative effort is underway at both the federal and state levels to reform PBMs, focusing on increased price transparency and accountability.¹⁰ While the consequences of these legislative and legal actions and new business models have yet to fall out, they could have profound ramifications on the biosimilar market. As the biopharma industry braces for a second term under President-elect Donald Trump, there is even greater uncertainty regarding the regulation of biosimilars and PBMs.

Strategic Considerations for Stakeholders

In summary, the reduction in regulatory barriers, new biosimilar production/distribution models, and efforts to increase price transparency create both opportunities and challenges for biosimilar manufacturers and originator manufacturers.

Biosimilar manufacturers will also need to prioritize early market access planning to ensure utilization. That includes setting the appropriate prices, building the value story for payers, and negotiating with key accounts. Becoming the first biosimilar to market also brings an advantage: the first entrant’s share can be 27% higher than the second entrant.¹² Forming alliances with payers and PBMs or exploring direct-to-payer sales may be necessary to secure market share. They will need to be strategic about which areas to pursue depending on the viability of a partnership.⁹

On the other hand, originator manufacturers can leverage product innovation, line extensions, and strategic contracting to maintain market position. For example, AbbVie has worked to move patients to next-generation therapies, Skyrizi and Rinvoq, rather than risk loss to biosimilars.¹³ AbbVie was also able to match competitor pricing through contracting and achieve parity access with biosimilars more than a year after the first adalimumab biosimilar entry.² Optimal contracting (incl. portfolio contracting) and payer relationships can delay initial biosimilar additions to formulary and extend the period of parity access. 

Commercial Strategic Considerations for Biosimilar and Originator Manufacturers

Conclusion

The U.S. biosimilar market is poised for continued growth and competition. Both biosimilar and originator manufacturers must adapt to these evolving market forces and adopt proactive strategies to thrive in this increasingly competitive environment. Keeping abreast of regulatory changes, market trends, and emerging commercial models will be essential for success.

References

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