By Peyton HowellThe pharma industry has begun a new chapter of the biosimilars story. We now have much-anticipated guidance from the FDA on what the approval pathway will look like, what evidence can be used from a branded innovator, and a sense of how cumbersome the approval process might be for manufacturers of biosimilars. Based on the guidance, the process of bringing a biosimilar to market will likely require many of the strategies used to bring a branded product to market, which will impact the commercialization of the products and likely reduce potential cost savings. The explosive growth in the costs associated with pharmaceuticals, particularly highly complex specialty products, continues to be a significant barrier to curbing overall healthcare spending in the United States. As such, biosimilars are expected to decrease or at least control rising pharmaceutical expenditures by offering considerable savings for high-cost biologic products. According to the Congressional Budget Office, biosimilars are expected to save $13 billion over the next 10 years. Initially, from the payer perspective, biosimilars were expected to generate 30% to 40% savings; however, as the complexity of bringing biosimilars to market continues to be discussed, more recent data suggest that most payers anticipate a biosimilar will come in between 10% to 20% less than the cost of the branded manufacturer. In Europe, we know that biosimilars have often been just a 10% discount from the brand. Figure 1 illustrates trending payer opinions based on Xcenda's proprietary research with advisers who participate in a managed care network. There has been a significant shift from payer perception on savings between 2010 and 2011.The premise of biosimilar cost savings is that the FDA approval pathway is significantly less arduous than that of a branded biologic. In November 2010, the FDA held a public meeting on biosimilars, which included representatives from both branded and generic manufacturers. Not surprisingly, branded manufacturers cited the need for independent evidence and strong data to support approval by the FDA. On the contrary, generic and potential biosimilar manufacturers identified that the purpose of such a pathway is to ensure products can be approved based on innovator data and in a reduced time frame to improve access to lower-cost products.On Feb. 9, the FDA released the first substantive information since the passage of the ACA in the form of three guidance documents that provide some insight into the approval pathway for biosimilars. These regulatory guidances suggested some wins for biosimilar manufacturers, as the FDA clarified that some ex-U.S. and branded innovator data can be used to support a biosimilar application for approval. Additionally, the FDA suggested that biosimilar manufacturers will be allowed to extrapolate innovator data to support the approval of all indications the branded product is approved for. While these may reduce the overall resources required to bring a biosimilar to market, there were other aspects of the guidance that were not as favorable to these stakeholders. For example, the FDA discussed some methodological approaches to examine interchangeability; however, the guidance suggests that the FDA does not believe the current technology is evolved enough to truly establish interchangeability. While these documents provide some clarity from the FDA regarding evidence aspects of the approval pathway, the lingering issue with interchangeability may prove to be a barrier for biosimilar manufacturers from the utilization and payer management perspectives. Based on Xcenda research, in order to require an existing patient to switch to a biosimilar:-- Payers will want to see greater than a 40% cost savings (see Figure 2) for an existing patient to require a switch-- Interchangeability will be a key factor in requiring a switch-- The savings is lower for a new start patient (21% to 30%), indicating that read more..