Why The U.S. Continues to be World’s Priciest Marketplace for 'Biologic' Drugs

Europeans have found the secret to creating some of the world's costliest medicines a lot more affordable, as much as 80 % cheaper than within the U.S.

Governments in Europe have compelled drugmakers to bend on prices and also have thrown open the marketplace for so-called biosimilars, which are cheaper copies of biologic drugs produced from living organisms. The brand-name products – which range from Humira for rheumatoid arthritis symptoms to Avastin for cancer – are high-priced drugs that take into account 40 percent of U.S. pharmaceutical sales.

European patients can decide on dozens of biosimilars, 50 in all, that have stoked competition and driven prices lower. Europe approved the development hormone Omnitrope since it's first biosimilar in 2006, however the U.S. didn't follow until 2021 with cancer-treatment drug Zarxio.

Now, the U.S. government stops lacking negotiating and drugmakers with brand-name biologics used a variety of strategies – from special contracting deals to overlapping patents referred to as “patent thickets”- to bar copycat versions of the drugs from entering the U.S. or gaining share of the market.

As an effect, only six biosimilars are available for U.S. consumers.

European countries don't generally allow price increases after a drug launches and, in some cases, the nation's health authority requires patients to switch to less expensive biosimilars once the copycat product is proven safe and effective, said Michael Kleinrock, research director for IQVIA Institute for Human Data Science.

If Susie Christoff, a 59-year-old who is affected with debilitating psoriatic arthritis, lived in Italy, the price of her preferred medicine would be just one quarter of the items it is within the U.S., based on data gathered by GlobalData, a research firm.

Christoff tried a series of expensive biologics before finding that a once-a-month injection of Cosentyx, manufactured by Swiss drugmaker Novartis, worked the very best.

Susie Christoff enrolled in Medicare after going on disability because of crippling arthritis. Her out-of-pocket price of nearly $1,300 a month for Cosentyx, which provides relief, is unaffordable, she says. “I am at a desperation level,” Christoff says. (Chris Bartlett/for Kaiser Health News)

Without the medicine, Christoff said, her fingers can swell to the size of sausages.

“It's 24/7 constant pain in, like, the ankles and feet,” said Christoff, who lives in Fairfax, Va. “I can't sleep, [and] I can not sit still. I cry. I throw pillows. It is simply – awful.”

At first, Christoff’s copay for Cosentyx only agreed to be $50 per month. However when a disability led her to switch to a Medicare Advantage plan, her out-of-pocket costs ballooned to almost $1,300 per month – more than 3 times her monthly auto loan.

Christoff, with the help of her rheumatologist, Dr. Angus Worthing, tried Enbrel, Humira along with other drugs before finding Cosentyx, the only real drug that gives relief.

Christoff's case is “heartbreaking,” Worthing said.

Novartis declined to respond to questions about Cosentyx's price. Instead, like other pharmaceutical companies, Novartis says it offers patient assistance programs for those who can not afford the drug. Christoff said she doesn’t be eligible for a financial assistance.

Like other biologics, Cosentyx costs 1000s of dollars monthly. The annual price of Christoff's treatment runs about $65,000 in the U.S. In Italy, where competition and price negotiations play a bigger role, it might run about $15,000, according to GlobalData.

In England, Dr. Christopher Griffiths, a lead researcher in the National Institute for Health Research who treats patients with Cosentyx, said the nation's Health Service would pay about 10,000 pounds, or less than $13,000.

And those drastic price differences are true even though there is no biosimilar version of Cosentyx yet obtainable in Europe, and might not be for years.

The cost of the drug is going for a toll on Christoff. Earlier this summer, her progressive disease made it hard to enjoy the annual family vacation together with her three grown children as well as their kids in Virginia Beach, Va.

“I can't get down on the sand to experience with my children without help. I can not get up without help,” Christoff recalled. “I'm not prepared to stop trying. But I'm also not all set to go through my entire retirement fund just to walk.”

Unlike Cosentyx, rival drugs – Humira, Enbrel and Remicade – all face biosimilar competition in Europe. Only Remicade has competition from the lower-cost biosimilar in the U.S., and Humira isn't envisioned having a copycat competitor within the U.S. market until 2023. Humira, made by AbbVie, may be the world's top-selling drug.

In late October, Wall Street analyst Ronny Gal at Sanford C. Bernstein & Co. noted that AbbVie agreed to drop Humira's price by 80 percent in one Nordic country to combat biosimilar competition. Throughout the company's quarterly conference call, AbbVie leader Richard Gonzalez said the drug's discount was as low as 10 percent and as high as 80 percent across the continent, with the highest discounts in Nordic countries.

“These are markets where it's ‘winner takes all’ over the entire – category, so includes Remicade and Enbrel too,” Gonzalez said in November, adding that Nordic countries represent about Four to five percent of overall revenue in AbbVie's international business.

Concerned about how much biologics cost the U.S. health system and patients, Fda Commissioner Scott Gottlieb announced an “action plan” come july 1st that included tapping the government Trade Commission for help, saying he was “worried” about the biosimilar market.

“The branded drug industry didn't build its success by being business naive; they're smart competitors,” Gottlieb told a crowd filled with advocates, industry insiders and researchers at the Washington, D.C.-based Brookings Institution in July. “But i am not saying we have to embrace all of these business tactics or agree with them and think they're appropriate.”

Food and Drug Administration Commissioner Scott Gottlieb takes questions on biosimilar development during a September public hearing in the agency's White Oak, Md., campus.(Sarah Jane Tribble/KHN)

One of these business tactics involves so-called rebate traps, by which financial deals are cut to ensure patients could possibly get merely a biologic, not a biosimilar. International drugmaker Pfizer alleged in a September 2021 lawsuit that exclusionary contracts developed by Johnson & Johnson prevented utilization of its biosimilar by health insurers, hospitals and clinics.

Johnson & Johnson's wildly successful biologic Remicade, the brand-name form of infliximab, produced $6.3 billion in worldwide revenue in 2021. Pfizer launched its copycat drug, Inflectra, in the U.S. in October 2021, noting in the announcement that it would price the drug in a 15 percent discount to Remicade's wholesale price.

Still, health systems such as Geisinger Health, located in Pennsylvania, say they have had difficulty switching to the more affordable alternative.

“J&J has been doing a really good job of entrenching themselves on the market,” said Jason Howay, manager of formulary services at Geisinger.

The health system ultimately decided it wanted to switch all adults to Pfizer's biosimilar, saying it provided the same quality of treatment. But Johnson & Johnson had “bundled” the prices of other drugs with Remicade. So if Geisinger stopped using Remicade on adult patients, J&J could stop providing discounts on other drugs, such as those employed for cardiology, Howay explained. “It weaves a very tangled web.”

A spokeswoman for Janssen, Johnson & Johnson's main pharmaceutical subsidiary, says the drugmaker does offer “more attractive contract terms” to clients who use a wider selection of J&J medicines. “Our contracting approach has always prioritized access for patients as well as their providers,” Meredith Sharp says.

Geisinger negotiated with biosimilar maker Pfizer and won still lower prices to make up for lost savings alternatively J&J drugs. It's now transitioning all adult patients towards the less expensive biosimilar.

Another business tactic is creating patent thickets, in which drugmakers win numerous patents to block competitors entirely. Humira, which treats arthritis and Crohn's disease, has a lot more than 100 patents protecting it within the U.S. By contrast, cheaper biosimilar versions of the AbbVie drug rolled out in October in Europe, where patent laws are not as likely to provide such protection.

Such tactics are stifling competitors, based on Bruce Leicher, a former senior vice president and general counsel for Momenta Pharmaceuticals, a Cambridge, Mass., biotechnology company centered on rare-disease drug development. Smaller companies are “struggling now” to organize launches of new drugs. Momenta cut half its staff in October, including Leicher, and announced plans to shift from five biosimilar development programs.

Leicher said the FDA's biosimilar plan of action under Gottlieb is a good initial step but “would have been wonderful to see five years ago.”

Other lingering regulatory burdens have hampered biosimilar adoption as well. Come july 1st, Medicare began reimbursing doctors and hospitals differently for biosimilars. Before that change, patients could pay more out-of-pocket at a lower price expensive rheumatoid arthritis symptoms biosimilars compared to the brand-name biologics.

And, unlike more chemical compound generics, like aspirin, a pharmacist cannot automatically replace a brand-name biologic with the biosimilar. A lot more than 40 states have passed laws around when and how doctors and pharmacists can substitute a biosimilar for a biologic. Federal guidelines continue to be not established.

In addition, the FDA requires each biosimilar name to include a random suffix, ostensibly to differentiate it from the biologic drug. That may be confusing and could cause patients and physicians to believe these products are significantly different in quality, said Christine Simmon, who promotes biosimilars for the trade group Association for Accessible Medicines.

She said the naming convention “fuels the fire” of a broader debate about whether or not to trust biosimilars, adding, “Making sure doctors and people are comfortable with the products is integral to uptake.”