What Are Biosimilars, and What Do They Mean for US Big Pharma?

What Are Biosimilars, and What Do They Mean for US Big Pharma?

Thanks to a recent approval from the US Food and Drug Administration (FDA), a revolutionary new type of drug will soon be making its way to the United States.

The particular approved drug in question is Zarxio, manufactured by Sandoz and used to reduce infections resulting from chemotherapy. What is unique about Zarxio is that it belongs to a new and innovative category of drug known as “biosimilars.”

Many of the drugs that treat chronic or life-threatening diseases fall into the category of biologics or biological medicines: disease-treating drugs that are synthesized from living cells. Approved by the FDA under a process distinct from small-molecule drugs like aspirin, these large, complex drugs are manufactured under highly specialized conditions. They also assist in a wide range of therapeutic areas, such as oncology, diabetes, rheumatology, and inherited conditions.

Biosimilars, as the name implies, are highly similar versions of biologics; essentially, they are less costly imitations of existing approved and authorized drugs. They are similar to generic drugs (which are mainly small-molecule drugs) except for one detail: while generic drugs have an identical chemical structure to their non-generic counterparts, biosimilars are structurally different to biologics, though they achieve the same outcomes. In other words, biosimilars are not exact copies of the biologics they replicate.

It is for this reason that, although they could account this year for $4.8 billion in European sales, biosimilars have been slow to gain a foothold in the US. Drug approvals for biosimilars cannot be easily granted based on matching chemical structure as they are for generics; rather, each new biosimilar must run clinical trials to prove that it achieves the same results as the biologic it is imitating. This has made the process of bringing biosimilars to market in the US both costly and time consuming.

However, the approval of Zarxio may now pave the way for a flood of biosimilars to enter the US market, an outcome that could have an enormous impact on both manufacturers and consumers. In addition to improving access to and cost for these drugs for individual patients, more available biosimilars also means more savings for the US government. A 2014 Rand analysis estimates that biosimilars could make it possible for the US to reduce its spending on biologics by roughly $44 billion over the next decade.