Friday, April 19, 2019

Why Biosimilars do not create Effective Competition

“Biologics Are Natural Monopolies (Part 1): Why Biosimilars Do Not Create Effective Competition, " Health Affairs Blog, April 15, 2019.
DOI: 10.1377/hblog20190405.396631

Part 1 :
Part 2 :

This article presents a fascinating look at biosimilars and proposes a different way to decrease drug prices in the case of biosimilars.  The argument goes like this:
- The small molecule market price of generics is driven by the ability of generic manufacturers to develop generic versions of proprietary drugs cost effectively creating an efficient market and driving costs down 85-95%
- Biosimilars on the other hand, are significantly more difficult to develop.  The approval path is more difficult.  And when actually available, the approved biosimilar only lowers the price of drugs by 20-30%.
- If instead of encouraging biosimilars, we instituted a regulated price control system for the innovator, that would allow a lower price, while maintaining complete market share (and therefore profitability) for the innovator.

The question is... Is this really a viable path forward?  And if not, is the current plan of expecting biosimilars to follow an identical path to that of small molecule generics really a viable path in it's own right?

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