The case for health economic studies on biopharmaceuticals

Biosimilars/Research | Posted 26/11/2010 post-comment0 Post your comment

In the not too distant future, patents will expire on some major biopharmaceuticals, such as interferons, insulins and granulocyte-colony stimulating factors [1]. This is likely to lead to the market entry of a number of biosimilars. A health economic approach to market access for biopharmaceuticals and biosimilars serves to aid researchers and decision makers in pharmaceutical companies and government to identify those products in the development process that are likely to be safe, effective and cost-effective. This approach should also guide the rationale for registration, pricing and reimbursement decisions.


To do this, financial analyses are needed of R & D, registration, and pricing and reimbursement of biopharmaceuticals and biosimilars.

Research and development

Biopharmaceuticals incur higher costs for their manufacturing processes, have a lower success rate in the more expensive phase III trials, and experience a longer development time. A recent US study showed that, in order to break even on R & D costs, a data exclusivity period of between 12.9 years and 16.2 years should be granted to innovator companies of biopharmaceuticals before a competitor can submit an application for the marketing authorisation of a biosimilar [2].


To claim biosimilarity in Europe, the manufacturer must conduct a direct and extensive comparability exercise between the biosimilar and the reference biopharmaceutical, with a view to demonstrating that the two products have similar quality, safety and efficacy. Although there is no need to repeat all trials of the reference biopharmaceutical, the need to conduct some biosimilar trials enrolling several hundreds of patients involves considerable expense and time.

A defined regulatory pathway for the FDA to review or approve biosimilars in the US has only recently been put in place (March 2010). However, no consensus has been reached on a number of registration issues, for instance length of patent protection, due to the possibility of patent litigation. This issue also applies to biosimilars: will patents on biopharmaceuticals be enforceable? Another major issue is the length of the data exclusivity period, the period of time during which the application for a biosimilar cannot refer to the documentation of the reference biopharmaceutical. Progress is slow and registration is expensive.

Pricing and reimbursement

In order to inform pricing and/or reimbursement decisions, an increasing number of countries require pharmaceutical companies to carry out an economic evaluation, with a view to demonstrating the value of a new biopharmaceutical. In addition a budget impact analysis is required, with a view to exploring the affordability of a biopharmaceutical [3].

Reimbursement may not only depend on the value-for-money of the biopharmaceutical at the time of the reimbursement application, but also on its value after a number of years, following admission to the reimbursement system. Pharmaceutical companies may need to demonstrate the post-launch cost-effectiveness of a biopharmaceutical, based on phase IV trials.

Regulatory authorities tend to demand data on the effectiveness of biopharmaceuticals in a real-world setting, rather than on their efficacy in a structured setting [4]. For the most expensive drugs risk-sharing schemes make assessing the cost more complicated.

Biopharmaceuticals are expensive. The selection of a specific target population improves their cost-effectiveness and reduces the budget impact. For instance, despite the high price of trastuzumab of around Euros 15,000 per year, the UK National Institute for Health and Clinical Excellence found trastuzumab to be cost-effective in the subgroup of patients with metastatic breast cancer whose tumours over-express the human epidermal growth factor receptor 2 as indicated by a diagnostic test [5].

Biopharmaceutical prices may be less regulated than those of chemically-derived medicines given that: (a) some countries exclude biopharmaceuticals used in hospitals from price regulation, (b) price comparisons with other products in a therapeutic class are less likely for biopharmaceuticals with a novel mechanism of action or indication, (c) informal cost-effectiveness thresholds may be higher for biopharmaceuticals that address unmet clinical needs or that treat orphan diseases, and (d) some countries have in place industrial policies to support the development of biopharmaceuticals [6].


It is difficult to recommend realistic prices for new biopharmaceuticals or biosimilars and quantify the benefits to be gained from them. Nevertheless the early inclusion of health economics in the process of developing biopharmaceuticals and biosimilars can support the implementation of safe and (cost)-effective health technologies leading to further health improvements, while containing health expenditure [1].

Related articles

US healthcare reform

Market access for biopharmaceuticals and biosimilars: a case study

Biopharmaceuticals: the start of personalised medicine

Health economic challenges for biosimilars


1. Simoens S. Health economics of market access for biopharmaceuticals and biosimilars. J Med Econ. 2009;12(3):211–8.

2. Grabowski H. Follow-on biologics: data exclusivity and the balance between innovation and competition. Nat Rev Drug Discov. 2008;7(6):479–88.

3. Cohen J, Stolk E,Niezen M. The increasingly complex fourth hurdle for pharmaceuticals. Pharmacoeconomics. 2007;25(9):727–34.

4. Hjelmgren J, Berggren F, Andersson F. Health economic guidelines – similarities, differences and some implications. Value Health. 2001;4(3):225–50.

5. Vernon JA, Johnson SJ, Hughen WK, Trujillo A. Economic and developmental considerations for pharmacogenomic technology. Pharmacoeconomics. 2006;24(4):335–43.

6. Danzon PM, Furukawa MF. Prices and availability of biopharmaceuticals: an international comparison. Health Aff. (Millwood) 2006;25(5):1353–62.

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