The End of Humira’s $200 Billion Drug Monopoly
January 26, 2023
After 20 years, Humira – the best selling drug of all time – is finally facing direct competition. What should we expect from its eight new challengers?
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After 20 years and $200 billion in revenue, Humira — an injectable treatment for autoimmune conditions like rheumatoid arthritis — is losing its monopoly. Its new competitors: at least eight drug companies producing close knockoffs of Humira known as biosimilars. The first is expected to debut next week — others later this year.
“It’s about time!” said Dr. Sameer Awsare with a laugh and a smile. Awsare, associate executive director for the Permanente Medical Group, advises national insurer Kaiser Permanente on its prescription drug policies. Other insurer, patient and employer groups are also eager for these biosimilars to usher in more competition and slash their spending on the popular drug.
But among industry watchers, the prevailing sentiment is uncertainty.
“I am pretty anxious,” said Marta Wosińska, an economist and fellow at the Brookings Institution.
Humira losing its monopoly creates the biggest test the fledgling U.S. biosimilars market has ever faced. It’s a market critical to containing drug costs in the U.S., which relies primarily on competition rather than regulation to rein in spending.
If these challengers to Humira fail to pass this test, some will see it as a sign something about this market is fundamentally broken.
A golden opportunity for a beleaguered biosimilars market
Biosimilars are essentially generic versions of a rapidly growing class of drugs called biologics. And while biologics are driving many of medicine’s most exciting new advances — shrinking tumors, controlling diabetes, even delaying dementia — they are also consuming more of our money. Biologics account for nearly half of U.S. drug spending despite comprising less than 3 percent of prescriptions.
Since debuting in the U.S. in 2015, biosimilars have struggled to match the market-devouring, price-plummeting impact of generic drugs, which save U.S. patients and insurers $300 billion a year.
Unlike generics, biosimilars face a unique set of regulatory, manufacturing and business challenges. Experts debate whether those challenges have doomed this market or if biosimilars simply need more time to establish themselves.
Humira offers by far the best opportunity this beleaguered market has had to succeed.
“All of the pieces seem to be there,” Wosińska said. “Tons of money on the table [and] eight companies ready to jump in.”
If biosimilars come up short again, Wosińska and others worry about the chilling effect that could have on future biosimilar investments, leading to less competition and a future where people pay higher drug prices, steeper insurance premiums and bigger tax bills for programs like Medicare.
A fierce fight for market share
In order to pass this test — and demonstrate biosimilars can have a strong, healthy future in the U.S. — Humira’s challengers need to deliver big savings and devour market share.
Experts — and even Humira’s own manufacturer, AbbVie — are confident this new competition will soon cut spending on the drug nearly in half. Those savings would mostly benefit insurers and their middlemen as well as employers, who pick up the bulk of drug costs for many Americans. According to original calculations done for Tradeoffs by the Health Care Cost Institute, employers spent more than $15 billion in 2020 on Humira. How much money will trickle down into the pockets of patients, who can spend more than $70,000 a year on this drug, is less clear.
The much harder part of this test to pass will be snatching significant market share away from Humira manufacturer AbbVie. With its 20-year head start, the drugmaker has spent billions of dollars erecting barriers to “slow competitors down and protect as much of the market as possible,” according to Robin Feldman, professor at University of California Law, San Francisco.
Company tactics have included tweaking Humira’s formula to give the appearance that biosimilar competitors are less similar, and introducing two new drugs similar to Humira that can eat additional market share. AbbVie recently projected the pair, Rinvoq and Skyrizi, will exceed Humira’s record $20 billion in annual sales by 2027.
AbbVie’s actions are just one hurdle biosimilars face.
“Everybody is feeding at the trough,” Feldman said.
The country’s complex drug purchasing system — rife with confidential rebates and convoluted fees — creates perverse financial incentives.
For example, most insurers rely on middlemen to negotiate deals with drugmakers that in turn dictate which drugs get covered and what patients pay at the pharmacy counter. But those middlemen have their own profit motives and have been known to give favorable coverage to a more expensive drug if its manufacturer offers them a lucrative deal.
These contracts are confidential, but so far, in the case of Humira, two of the country’s three largest insurance middlemen have said they plan to charge patients the same out of pocket costs for Humira as biosimilar alternatives.
“The patient won’t pay any less if they switch to the biosimilar,” Feldman said. “Why would you switch from [a brand] you already know to [one] that you don’t know” if you are paying the same?
Patients lacking any financial incentive to switch makes competing that much harder for biosimilars, which are vying in many cases for patients who have relied on Humira for years — and their doctors. In a survey of physicians conducted by the research group NORC at the University of Chicago, only 31 percent said they were very likely to switch a patient doing well on any biologic over to a biosimilar version.
Additionally, pharmacists must get a whole new prescription for a biosimilar before swapping it in for a brand-name competitor. With traditional generics, that swap for the pharmacist is essentially automatic and requires no new prescription. While one of Humira’s biosimilar competitors has gotten a special Food and Drug Administration approval that allows for automatic swapping, most others have not.
Only one large insurer has said it will bring down the kind of financial hammer required to help biosimilars grab meaningful market share. David Chen, who directs specialty drug use for Kaiser Permanente, said the insurer plans to stop covering Humira by the end of 2023. He expects at least 90 percent of patients to switch to the biosimilar alternative, and said Kaiser should save hundreds of millions of dollars a year.
A reckoning on the horizon
If the biosimilar market once again falls short of its promise, economist Wosińska said she foresees a larger reckoning. She expects some drugmakers would deem the market fatally flawed and exit altogether, leaving fewer competitors to drive down the price of the next big biologic blockbuster.
Congress also could act to fix certain flaws, other experts said. They could change regulations, and try to make the market a cheaper, easier place for companies to thrive. Or, they could go in the opposite direction: embrace price regulation.
It’s an option that was considered untouchable for many decades. But the passage of the Inflation Reduction Act, which gave the federal government new power to lower drug prices, has put that path squarely on the map.
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: Mariana Socal, Aditi Sen, Jeremy Sharp, Steve Pearson, Eric Percher, Eileen Pincay, James Gelfand, Brian Lehman, Ben Ippolito, Mark Trusheim, the Tradeoffs Advisory Board and our stellar staff!