Europe’s evolving landscape for biosimilar medicines

Co-authored by Todor Finkov, Manager, Pricing, Tenders & Contracts

In the EU healthcare landscape, three major influences have advanced the current position of biosimilar medicines:

  1. Advances in the biologics manufacturing process
  2. Solidifying approval framework for biosimilar medicines
  3. Advances in procurement approach for all healthcare spending

On top of these influences, an overarching increase in healthcare spending has shifted the focus onto drug procurement practices in general. Within this context, the attention on biosimilars derives from perceived savings in therapeutic areas where originator biological medicines engage considerable amounts of healthcare budgets.

Sound familiar? There’s an unmistakeable echo from a previous era when generics were first establishing presence in the European markets. But despite a faint “Deja-vu” feeling, I don’t believe we’re currently facing the same situation. In this blog, I’ll detail some key differences between the rise of generics and the current advancement of biosimilars in Europe.

In particular, three elements – 1) Physician detailing efforts; 2) procurement practices; and 3) effectiveness of contracting procedures – each play a role in this differentiation. (For a U.S. perspective on the biosimilar uptick, please view a previous HighPoint blog.)

Key contrasts in the advancement of biosimilars vs. generics in the EU

  1. Physician detailing efforts

What were companies focused on when the first biosimilars, etanercept and infliximab, were launched? At that time, major efforts were dedicated to the development of marketing strategies, value propositions, and detailing to the prescribing physicians. One of the goals of the marketing strategy and value proposition was to develop and execute strategies and tools to support the detailing to the physicians and key opinion leaders (KOLs). As physicians will always play a central role in therapy delivery, they will always need to receive some form of detailing.

Generics helped to establish an assumption for the prescribing physicians, that when approved by EMA (and/or the member states’ national drug agencies), a drug fulfils all required standards and qualities. Within this context, a physician can more readily understand the parallel role of biosimilars, and their acceptance is much higher, out of the gate.

However, from this same vantage point, some may draw a rough conclusion that the biosimilars market should behave the same as the generics market did. This conclusion would be wrong for many reasons. First, biosimilars are more expensive to manufacture and more demanding in terms of supply and delivery. Second, currently within the EU, the procurement of biosimilars is much more centralised, and national authorities play a key role. So, while in some EU countries, generics could have benefited from a brilliantly mastered and executed marketing effort, this is not enough for a biosimilar product to sell.

National authorities are now responsible to manage larger healthcare budgets and also to ensure the sustainable procurement of medicines. The authorities’ centralized procurement of biosimilars leaves prescribers with less decision-making power and limited ability to deviate from the directive to prescribe the most economical treatment available. The majority of EU countries have enacted medical practice guidelines that outline negative incentives for physicians prescribing more expensive alternatives for any non-medical reasons.

2. Procurement practices

The biosimilars market is transitioning to a state that demands greater operational efficiency from both the companies offering the medicines and national authorities. Within the EU, prescription medicine products almost always involve the spending of public funds, and if such products have alternatives (for instance, same-molecule/biosimilar products) they come into the focus of procurement authorities.

Authorities are developing mechanisms to stimulate competition via public offerings, and the tendering procurement format is designed for products where competition exists. Despite having a common European Public Procurement Directive (EU PPD 2014/24), tendering practices across EU member states may still vary tremendously.

Based on experience and knowledge of authorities’ contractual preferences, industry can respond by developing an approach to meet authorities’ expectations. For instance, buying groups and hospitals in The Netherlands would rarely tender for a biosimilar product and would instead choose to negotiate discount schemas via non-exclusive, time-limited contracts with manufacturers. On the other hand, the Danish procurement agency, Amgros, has developed and implemented price-only tender and framework agreement approaches to procure biosimilar products at the national level. These different types of procedures can be more effective (or less effective) to achieve authorities’ goals, depending on the environment executed in.

3. Effectiveness of contracting procedures / impact on price

Another topic that attracts attention from those marketing biosimilar products is whether the type of contracting procedure can have an impact on price discounts. This attracts the attention of authorities as well, as procuring biosimilar products at the lowest possible price, together with ensuring continuous and timely drug supply, are their top priorities.

In a recent study, we analyzed tendering data for procurement of biosimilars by leveraging HighPoint’s Tender History and Opportunity Repository (THOR). Our goal was to examine the impact of various contracting procedures’ parameters on bidding discounts. We reviewed public offerings procedures across key markets that procure biosimilars with public funds and were curious to find particular patterns and relationships.

It is a common assumption that open procedures would be the most competitive approach to procure biosimilars. However, the findings suggest that in certain conditions, framework agreements can also provide authorities with significant savings potential. In addition, the number of participants in a framework agreement itself can impact the discount offered compared to a single-winner tender.

Maturing biosimilars market

As the biosimilars market continues to evolve to a more mature state, we can expect the role of national authorities to increase. Soon, we may see centralized procurement efforts in countries where tendering and contracting is currently decentralized. As most of the efforts of authorities are directed where savings potentials exist, we can expect this trend to continue into the future. With biologics losing patent within the next five years in Europe, biosimilar competition will emerge in the therapeutic segments of oncology, inflammatory disease, osteoporosis, and others.

Further increasing the concentration of players where biosimilar alternatives already exist (for example, etanercept and infliximab) will additionally harden existing competitive pressure. For both types of new biosimilars launches, it means that it will not only be critical to understand the environment, but also to analyze all the details and their interconnections, to be prepared for a successful and sustainable tendering and contracting business strategy.

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