'The End of Humira’s $200 Billion Drug Monopoly ' Transcript
January 26, 2023
Note: This transcript has been created with a combination of machine ears and human eyes. There may be small differences between this document and the audio version, which is one of many reasons we encourage you to listen to the episode!
Dan Gorenstein: For years, Humira — a drug that treats conditions like rheumatoid arthritis — has been the best selling drug on the planet. It made $200 billion over the last two decades. And Humira has done so well, for so long for one big reason: It’s had the market nearly all to itself.
But now, that’s coming to an end. Not one, not two, but at least eight generic versions of the drug arrive this year. Patients, insurers, employers are giddy with excitement, ready for the savings to pile up.
Montage: Sameer Awsare: I think it’s about time for Humira // Eileen Pincay: This is such a big deal for many of our clients // David Chen: This will be probably one of the biggest projects ever.
DG: So then why is one of the country’s leading drug economists feeling…like this?
Marta Wosińska: My first reaction was…huh.
DG: Today, the end of Humira’s epic reign and what it means for the future of generic drugs in America. From the studio at the Leonard Davis Institute at the University of Pennsylvania, I’m Dan Gorenstein. This is Tradeoffs.
For a long time, generic drugs have been like this light at the end of a tunnel. Every time a brand new drug hits the market, its first several years are free from competition — time to rake in profits, reap the rewards of being first. But no matter how high prices go — how much pain patients and employers face — eventually, the generic cavalry arrives.
News Montage: The best selling drug in the country, Lipitor, is now available in generic form. // Wednesday, Pfizer’s patent runs out. // And Plavix is gonna go generic next May.
DG: Sure, this market has plenty of flaws. But overall, it’s worked pretty damn well. Generic drugs save patients, insurers and the government more than $300 billion a year. Nine out of every 10 prescriptions filled in the US are generic, and we pay less for these drugs than people in most other countries.
But industry insiders and economists like Marta Wosińska, a fellow at the Brookings Institution, worry that this generic light at the end of the tunnel…it’s starting to dim.
Marta began her academic career in 2002, right around when Humira first launched.
MW: I started as an assistant professor at Harvard Business School.
DG: She was studying what, at the time, was the hottest drug on the market, a pill for people with high cholesterol.
MW: Until Humira came about, Lipitor was the largest selling drug ever.
There is one difference, though. It can sound minor and technical, but Marta says it’s major.
MW: There are really two drug categories: small molecule and large molecule drugs.
DG: Lipitor is a small molecule drug — the kind that generic companies have been successfully copying and selling on the cheap for decades. Within a year of Lipitor losing its U.S. monopoly, sure enough: Generics had cut the blockbuster’s revenue by 80%.
But Humira is a large molecule drug, also known as a biologic. Biologics are harder and more expensive for generic drugmakers to copy. So in 2010, Congress gave this type of generic its own rules…even its own name: biosimilars.
MW: They have done really well in Europe. In the United States, biosimilars have struggled.
DG: Nothing like the market devouring, price plummeting impact that generics usually have. And that’s a problem because biologics are stopping tumors, controlling diabetes, changing lives. But they’re also eating up more and more of the country’s health care dollars.
MW: Biologics make up close to half of U.S. drug spending, even though they only represent about two or three percent of prescriptions.
DG: That’s why people like Marta are watching this Humira test so closely. Because on paper, it’s a golden opportunity for biosimilars.
MW: All of the pieces seem to be there. Tons of money on the table. Eight companies ready to jump in. But I still worry about their ability to break out.
DG: If the U.S. biosimilar market fails this test, then it’s a clear signal something’s fundamentally broken. And that would mean a future with less meaningful generic biosimilar competition, where patients pay more, insurers raise premiums, taxpayers foot bigger bills for programs like Medicare.
So, that’s what’s on the line — and why insiders are holding their breath — as eight companies line up to take on Humira. The first biosimilar is coming to market any day now. At least seven others later this year.
For the past several weeks, our senior producer Leslie Walker has been talking to experts, economists like Marta, insurers, employers, drug industry insiders, asking what’s the chance these biosimilar companies will succeed.
Leslie, thanks for coming on.
Leslie Walker: Thanks for having me.
DG: So we’ve just told our listeners that Humira represents by far the biggest test our country’s pretty small biosimilar market has ever faced. The big question, Leslie, for me: What counts as a passing grade?
LW: There are basically two signals people are looking for to know whether this biosimilar market is healthy or if it’s headed for life support. The first is savings.
DG: Like how much are we talking here?
LW: There’s no magic number but experts told me they’re looking for insurers to save 30 to 50% out of the gate.
DG: So that’s a lot less than the 90% savings we’ve seen with traditional generics.
LW: Yes but still a lotta cash when you consider that Humira costs $70,000 a year.
And then you’ve got the second sign and that one, Dan, I’m calling…pie. An economist might call it market share. And the question is this: Can these biosimilar companies steal a big enough slice from Humira?
DG: You say pie, I think cheesecake. Does cheesecake count, Leslie, as pie?
LW: I’m gonna go no.
DG: Okay setting that aside for the time being. Why should anyone outside of Wall Street care about how this pie or cheesecake gets cut up?
LW: It’s a reasonable question. So the amount of sales these biosimilars can snatch from Humira is critical for a couple reasons. Most obvious: more pie means more profits, and it takes a lot more money and time to bring a biosimilar to market compared to a small molecule generics. So all that trouble needs to be worth it to drugmakers.
DG: Otherwise these companies might not bother making more biosimilars to compete against the next Humira.
LW: That’s right. The other thing about the size of the pie slice, Dan, it reflects whether doctors are prescribing these biosimilars, insurers covering them, patients trusting them? And that’s been a big struggle for biosimilars so far.
DG: That’s for sure. So let me just recap for a minute, Leslie. On the eve of the biggest test biosimilars have ever faced, experts and industry people are looking for them to: 1) deliver deep discounts and 2) grab a hefty slice of pie. How confident are people you talked to that Humira’s competitors are actually be gonna be able to get this done?
LW: Well, most people I spoke to were hesitant to make a prediction, even off the record. They told me there are so many unprecedented variables, it’s tough to put odds on.
But that’s okay. Because on this podcast, as you know Dan, we like to go off more than crystal balls and vibes. We like a little thing called evidence.
DG: Oh yes we do.
LW: And I’ve got some but I feel like we should get into it…can I do this part?
DG: Knock yourself out.
LW: …after the break.
DG: Welcome back. We’re days away from the debut of the first generic version of Humira, the best selling drug of all time. Some folks are watching closely because the $20 billion a year drug impacts a lot of people, patients, insurers, investors.
And others are watching because this could answer a much bigger question: Can the U.S. ever develop a robust biosimilar market, where prices drop and drugmakers jump in? That’s the focus of our story today, and senior producer Leslie Walker is helping us tell it.
Hey again, Leslie.
LW: Hey Dan.
DG: So before the break, you mentioned there’s some evidence that can give us a sense of how biosimilars will do against the goliath Humira. Can they deliver those deep dish discounts and hefty pie slices?
LW: Wait, did you just say deep dish discounts, Dan? Your Chicago is showing.
DG: I love deep dish pizza.
LW: I mean it’s pretty good. Don’t blame you. So this evidence, though, it comes from this other biologic called Lantus. It’s a kind of long-acting insulin for diabetics. And it’s got a couple close copycat competitors.
DG: So first question, Leslie: Did those Lantus competitors deliver those ‘deep dish discounts’?
LW: Depends on who you’re talking about, Dan. Patients haven’t seen a lot of savings.
But a 2021 study in JAMA Internal Medicine shows insurers were paying about 60% less for insulin three years after that first competitor arrived.
DG: That sounds pretty good.
LW: It is and experts like Marta Wosińska at Brookings are even more bullish about Humira’s competition.
MW: We are going to see tremendous savings. I have no doubt about it.
LW: That’s because there are eight biosimilars in the mix here, Dan. Lots of research shows more players means more savings.
DG: Okay, seems like we can move on to dessert. Start slicing up that pie of yours, Leslie.
LW: Well, you know, Dan I was actually thinking a burger might be a better metaphor here.
DG: Hold up, Walker. First with the pie? Now burgers?
LW: I guess we’re both hungry? I’m not sure what happened. But seriously, Dan, I have to share this crazy stat with you that I found as I reported this story.
DG: Wait what?
LW: You heard me. The Golden Arches, the master of the McNugget, the baron of the Big Mac barely brought in more dough than this one prescription drug.
DG: You can almost hear AbbVie executives humming that old McDonald’s commercial, right?
Sfx: McDonald’s I’m Lovin it
DG: So, Leslie, what’s the Lantus data say? Were drug companies able to take a big enough bite outta that burger? Because of course the bigger the bite, the more likely they are to bring more biosimilars to market in the future.
LW: Well, neither of Lantus’s two closest competitors cracked even 20% of their markets in their first year. For comparison, in just one year, traditional generics — the small molecule ones — gobble up 90% of their burgers, on average.
MW: And that’s the piece that I worry about.
LW: Experts like Marta say how much market share biosimilars get here is the toughest part of this test.
MW: Because I very much expect that spending will go down but what I worry about is Humira will still hang on to the market.
DG: Leslie, can you explain that? What’s so hard about this?
LW: So for starters, Dan, the companies that make these biologic drugs — in the case of Lantus, that’s Sanofi — they spend years and tons of money preparing for this…burger fight. They’re wooing patients with coupons…developing new, slightly different versions of their original drug to make these biosimilar competitors seem less similar.
DG: Hang on to market share, by any means. Got it. Is that what Sanofi did?
LW: Yep, and it’s exactly what Humira’s manufacturer, AbbVie, is doing too. They’ve tweaked Humira and launched, not one, but two similar new drugs. AbbVie’s already predicting that pair will top $20 billion by 2027.
DG: So AbbVie’s doing its best to block competitors from taking too big a bite. But I know drugmakers fending off traditional generics use these tactics all the time. What else makes it hard for biosimilars to ‘get theirs?’
LW: I call it the menu problem.
DG: Again with the food, Walker! We really need to get you a snack, girl!
LW: I know! So insurers, they have a list of drugs they cover, right? It’s called a formulary.
Some biosimilars have struggled to get on that menu usually because they can’t come to terms with insurers. Others get on the menu, but find very few docs and patients order their drug. One big reason: The insurer basically slaps the same co-pay on both the biosimilar and the branded drug.
DG: So what you’re saying is there’s no incentive to switch. Like, if you have a complex chronic condition, or treat people who do, why stop using the brand you already know and like when it doesn’t cost any less?
DG: I’m wondering here, Leslie, you would think insurers would push patients to biosimilars like they do with traditional generics?
LW: Remember Dan these biologics are much more expensive. All that money can distort incentives, right? Lead insurers and their middlemen to cut deals with drugmakers that help their own bottom lines but squeeze biosimilars’ market share. It’s become a big enough problem the federal government and some states are calling out these deals, saying they undermine competition and hurt patients.
DG: So is this happening with Humira?
LW: Well, these contracts are confidential so no one knows for sure. But we do know this: Two of the three biggest insurance middlemen plan to charge patients about the same for Humira and its competitors.
A crumb of good news here, Dan: The national insurer Kaiser Permanente told me they’re taking Humira off the menu this year, which should give their biosimilar of choice a big leg up.
There’s one other reason some experts think at least one of the eight biosimilar companies may still get a pretty big bite, here. And I’d tell you who that is except I have no idea how to pronounce it.
Montage: LW: Why will I never know how to say it. Ingelheim, is that Beringer? MW: I think I’m pronouncing it right. Boehringer Ingelheim. Well it’s a German name, so it’s Boehringer Ingelheim. LW: I know it’s an obstacle course of terrible names to pronounce. Let’s call them BI for now. MW: BI that’s right. Let’s go with BI.
LW: So the thing about BI, Dan, is their biosimilar has this special status from the FDA. It’s something a couple of other competitors have applied for too. And whenever a pharmacist gets an order for Humira, in most cases, they’ll be able to just swap in the BI drug.
In general, pharmacists have to call the doctor’s office and get a new prescription for a biosimilar…a bureaucratic nightmare.
DG: So because BI’s got this special status a lot more patients might start getting BI’s drug instead of Humira?
LW: Yes but only if insurers agree to cover BI’s drug in the first place — put it up on that menu — and that’s a big ‘if.’
DG: Alright Leslie, sounds like some good news for Humira biosimilars…at least a fighting chance. But on the whole, given the evidence, all the business and regulatory hurdles biosimilars are facing, it seems very possible they come up short here and fail to deliver on the savings or grab the market share we see traditional generics get.
And at the top of the show, Leslie, we said that if biosimilars can’t pass this test — a shot at the best selling drug of all time — that’s a sign something’s fundamentally broken about this market. So I’m curious, what then?
LW: So experts like Marta say some drug companies might leave the biosimilar market altogether, meaning fewer competitors around to drive down prices. Other people I talked to in Washington said Congress could respond in two very different ways. They could double down on competition, right? Basically change the rules so it’s easier and cheaper for biosimilars to thrive. Or, they could go in the exact opposite direction — and regulate.
DG: Like what Congress passed last year with the Inflation Reduction Act? Giving Medicare power to negotiate drug prices, ding companies who raise them too fast.
LW: Exactly. And in some ways, that law opened up Pandora’s box, put the kind of price regulation that was once considered unthinkable, squarely on the table.
DG: Important test coming up, Leslie. Thanks so much for your really good work on this.
LW: Thanks, Dan.
DG: I’m Dan Gorenstein and this is Tradeoffs.
Tradeoffs’ coverage of health care costs is supported, in part, by Arnold Ventures and West Health.
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Selected Reporting and Research on Biosimilars:
The Big Three PBMs’ 2023 Formulary Exclusions: Observations on Insulin, Humira, and Biosimilars (Adam Fein, Drug Channels, 1/10/2023)
Lessons from Semglee: Early Perspectives on Pharmacy Biosimilars (Eric Foster, Sayantan Niyogi, Nicholas Adolph and Eric Savage; IQVIA, 2022)
World’s Top-Selling Drug Going Off Patent Means Big Bucks for Middlemen (David Wainer, Wall Street Journal, 11/27/2022)
Changes Associated With the Entry of a Biosimilar in the Insulin Glargine Market (Joseph Levy, Zahra Chowdhury, Mariana Socal, et al; JAMA Internal Medicine; 6/28/2021)
The Growing Power of Biotech Monopolies Threatens Affordable Care (Gregg Girvan and Avik Roy, FREOPP, 9/15/2020)
Guest: Marta Wosińska, PhD, Visiting Fellow, Brookings Institution
The Tradeoffs theme song was composed by Ty Citerman, with additional music this episode by Blue Dot Sessions and Epidemic Sound.
This episode was reported by Leslie Walker and mixed by Andrew Parrella. Editing assistance from Cate Cahan.
Additional thanks to: Robin Feldman, Mariana Socal, Jeremy Sharp, Steve Pearson, Eric Percher, Eileen Pincay, James Gelfand, David Chen, Sameer Awsare, Brian Lehman, Ben Ippolito, Mark Trusheim, the Tradeoffs Advisory Board and our stellar staff!