title: Regulatory and cost barriers are likely to limit biosimilar development and expected savings in the near future.
abstract: In March 2010 Congress established an abbreviated Food and Drug Administration approval pathway for biosimilars-drugs that are very similar but not identical to a reference biological product and cost less. Because bringing biosimilars to the market currently requires large investments of money, fewer biosimilars are expected to enter the biologics market than has been the case with generic drugs entering the small-molecule drug market. Additionally, given the high regulatory hurdles to obtaining interchangeability-which would allow pharmacists to substitute a biosimilar for its reference product, subject to evolving state substitution laws-most biosimilars will likely compete as therapeutic alternatives instead of as therapeutic equivalents. In other words, biosimilars will need to compete with their reference product on the basis of quality; price; and manufacturer's reputation with physicians, insurers, and patient groups. Biosimilars also will face dynamic competition from new biologics in the same therapeutic class-including "biobetters," which offer incremental improvements on reference products, such as extended duration of action. The prospects for significant cost savings from the use of biosimilars appear to be limited for the next several years, but their use should increase over time because of both demand- and supply-side factors.
authors.affiliation: Henry G. Grabowski (grabow@econ.duke.edu) is a professor emeritus and director of the Program in Pharmaceutical Health Economics at Duke University, in Durham, North Carolina.
authors.forename: Henry G
authors.initials: HG
authors.lastname: Grabowski
authors.affiliation: Rahul Guha is a vice president at Cornerstone Research in New York City.
authors.forename: Rahul
authors.initials: R
authors.lastname: Guha
authors.affiliation: Maria Salgado is a principal at Cornerstone Research in San Francisco, California.
authors.forename: Maria
authors.initials: M
authors.lastname: Salgado
mesh_terms: D059451:Biosimilar Pharmaceuticals / Q000138:chemical synthesis* / Q000191:economics* / Q000600:supply & distribution; D017046:Cost Savings / Q000191:economics* / Q000331:legislation & jurisprudence* / Q000639:trends; D003362:Cost-Benefit Analysis / Q000191:economics / Q000331:legislation & jurisprudence; D017277:Drug Approval / Q000191:economics / Q000331:legislation & jurisprudence; D016527:Drug Costs / Q000331:legislation & jurisprudence* / Q000639:trends*; D004465:Economic Competition / Q000191:economics / Q000331:legislation & jurisprudence / Q000639:trends; D005544:Forecasting; D006801:Humans; D013810:Therapeutic Equivalency; D014481:United States; D014486:United States Food and Drug Administration / Q000191:economics / Q000331:legislation & jurisprudence
chemical_list: D059451:Biosimilar Pharmaceuticals
keywords: Biotechnology; Health Spending; Pharmaceuticals