Could Biosimilars Reduce Cost of Treating NCDs? - Dinar Kale

17 February 2017

The rising number of cases of Non-Communicable Diseases (NCDs) has focused interest on strategies for dealing with the cost of their treatment. High on the list are biosimilars – imitative versions of biologicals, a therapeutic drug comprising large complex molecules – as, in theory, generic versions of innovator drugs should deliver the same therapeutic benefits but at significantly lower cost. Frustratingly, however, numerous manufacturing and regulatory challenges continue to create serious doubts about their ability to do so. Now, a special issue of Technology Analysis and Strategic Management, co-edited by myself and Professor Jorge Niosi (Université du Québec), looks at the issue of affordable healthcare in both advanced and developing countries through a focus on these challenges.

Traditionally, biologicals were developed to address the most challenging NCDs such as cancer, autoimmune diseases and diabetes. Over the last decade, a number used in the treatment of cancer and diabetes have gone off-patent, creating a significant opportunity – both for the pharma-biotech industry and government policymakers – to provide affordable treatments. However, the complexity of the manufacture of biosimilars has emerged as an entry barrier, leading to the need for new regulatory frameworks, improved firm-level technological capabilities and increased financial resources.

Biosimilars raise questions not only on the plasticity of regulatory systems to create safe and effective pathways for product approval, but also on the ability of health systems to facilitate their use. In so doing, they offer an appropriate lens through which to view the challenges associated with regulatory and health system transformations. Although the European pharmaceutical industry has been at the forefront of all stages of biosimilar development – including production, regulation and patient care – critical issues regarding their acceptance into clinical practice remain unresolved. As Virginia Acha, Executive Director Research, Medical and Innovation at the Association of the British Pharmaceutical Industry highlights, affordable healthcare will not be achieved until these issues are dealt with. Analysis in the special issue, On Biosimilar: Capabilities, Regulations and Affordable Healthcare, makes clear that even after adoption of appropriate regulatory frameworks, the uptake of biosimilars by clinicians and health systems remains a challenge. The current failures in interaction between regulation and healthcare systems therefore have huge implications for the delivery of affordable healthcare.

The research presented shows that the new market segment biosimilars represent has the potential to alter leadership of the pharmaceuticals industry and create pathways to affordable treatments. The industry is already undergoing significant changes and, with the emergence of these new market segments and the entry of new players, there are grounds for believing that we are seeing the beginning of a long game, where changes in market, regulation, science and production technology will impact on future patterns of partnership and production capabilities.

The focus on biosimilars helps to capture an industry in transition, one in which the stakeholders associated with innovation and health systems in both advanced and developing countries are likely to evolve, particularly with regards to their partnerships and relationships. These interactions between firms, social organisations and institutions may have critical repercussions in the transformation of the industry and the future of healthcare.

The burden of NCDs is felt heavily in low-income countries where most patients pay out-of- pocket for treatment and the cost of medicines is a severe challenge. In the past, emerging-country firms provided drugs at affordable prices but the rapid rise of emerging-country generic suppliers seen in the small-molecule pharmaceutical market is unlikely to be replicated – in the short term at least – in the biosimilar market. The special issue engages with issues around emerging-country firms’ strategies for development of biosimilars, including resource constraints, lack of biological manufacturing capabilities and weak innovation systems. It explores not simply how firms might develop new capabilities, but how they might do so with limited resources and under challenging policy regimes and very different market conditions. The significance of accumulated capacity and business models employed by firms to learn, build competence and absorb new knowledge is highlighted, as is the need for countries to improve institutional frameworks and look at ways to bridge resource constraints and knowledge gaps.  

Although the potential for biosimilars to reduce the treatment cost of NCDs is undoubted, in advanced countries a significant gap remains between regulatory approval and incorporation within healthcare systems. Developing countries, meanwhile, face an additional challenge: the gap between availability and affordability for low-income populations. Currently, industrial systems are locked in the practices of advanced-country markets that ignore the healthcare requirements of low-income populations in developing countries. The challenge, now, is to overcome that mismatch.

Dinar Kale is a Senior Lecturer in International Development and Innovation within DPP. The blog is based on the editorial for Biosimilar: Capabilities, Regulations and Affordable Healthcare, a special issue of the journal Technology Analysis & Strategic Management (Vol. 29, Iss. 3, 2017). Read the full editorial.