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Avalere Health Analyzes Factors Influencing Federal Budget Impact of Follow-on Biologics
Contact: Lindsey Spindle, 202.207.1337,
lspindle@avalerehealth.net
03.14.07
Washington, DC – There are legislative, regulatory, commercial, and clinical factors that will influence how quickly follow-on biologics (FOBs) can make an impact on the marketplace, says a new Avalere Health analysis. Avalere experts stressed the following issues for consideration when evaluating the potential influence of FOBs on federal healthcare spending estimates:
- Enactment of legislation. If legislation is passed, federal agencies will need time to draft and finalize the implementing regulations. Regulations implementing the previously-enacted Hatch-Waxman Act, which dealt with non-biologic generics, took four years between time of passage and finalization. Avalere’s analysis assumes that promulgation of any post-FOB regulations will move more quickly than Hatch-Waxman (three years), given efficiencies gained from having passed generic legislation before. This timeframe could be shortened if mandated in the legislation.
- Application review and regulatory approval. Avalere assumes that it will take the Food and Drug Administration (FDA) two years to review the first batch of FOB applications. This timeframe is longer than current average FDA review time, but is informed by European experience of reviewing comparable “biosimilars.” This application review timeframe may be lengthened if the FDA requires additional testing.
- Biologics market dynamics. Issues of patent life, market size, market share, and pricing will have a critical impact on how quickly, and to what extent, FOBs make an impact on the marketplace. Avalere’s analysis assumes there will be both marketplace supply and demand for FOB products, and that FOB market penetration will reach 60% over a three- year period against the off-patent reference product. Avalere’s analysis also assumes that FOB pricing will be heavily influenced by production and testing costs, the level of competition, and heightened distribution and marketing costs. Expected patent expirations for large revenue biologics influence when savings from FOBs occur.
- Clinical interchangeability and physician prescribing practice. Ultimately, physicians will define the degree to which FOBs will be prescribed for their patients. Avalere’s analysis takes into consideration historical experience of physician acceptance of new medical technology, and assumes that not all FOBs will be viewed as completely interchangeable with branded biologics. More rapid physician and patient acceptance would accelerate the diffusion of FOBs as would changes to health insurance benefits structures and state interchange laws.
Based on these and other factors, a team of Avalere analysts developed a federal savings estimate of $3.6 billion over the next ten years (2008-2017), if a legislative pathway for FOBs opened in 2007. Avalere’s full analysis is available here. A white paper explaining this analysis is available here. This analysis does not factor in savings that would accrue in the post-2017 era, nor does it attempt to estimate savings to private sector payers.
Avalere will host an educational audio conference on this topic in April; visit www.avalerehealth.net for updates on the date, agenda, and list of speakers.
Avalere Health is an advisory services company whose core purpose is to create innovative solutions to complex healthcare problems. Based in Washington DC, the firm delivers research, analysis, insight, and strategy for leaders in healthcare business and policy. Avalere's experts span 125 staff drawn from the federal government (e.g., CMS, OMB, CBO, and the Congress), Fortune 500 healthcare companies, top consultancies, and nonprofits. The firm offers deep substance in areas ranging from healthcare coverage and financing to the changing role of evidence in healthcare decision-making. Its focus on strategy is supported by a rigorous, in-house analytic research group that uses public and private data to generate quantitative insight. Through events, publications, and interactive programs, Avalere also translates real-time healthcare developments into actionable information.
Learn more at www.avalerehealth.net.
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