First Humira Biosimilar Price Highlights Cost-Saving Challenges

While drugmakers have made cheap generic versions of off-patent prescription pills since at least the 1960s, the newer class of drugs known as biologics can’t be copied in the same way. Instead, the Food and Drug Administration approves so-called biosimilars, which can launch once their patent protections end.

So far, biosimilars have struggled to demonstrate their ability to substantially lower spending on high-price drugs. This year will be an important test:
AbbVie
‘s (ABBV) Humira is by far the highest-selling drug to ever face biosimilar competition. Analysts expect AbbVie to have sold $21.2 billion worth of Humira in 2022.

Humira will also be the first drug to face off against multiple biosimilar launches in a single year: As many as eight Humira biosimilars are expected to launch by the end of 2023.

The first,
Amgen
‘s Amjevita, launches Tuesday. The company said early Tuesday it will sell Amjevita at two different list prices: One at 55% below Humira’s list price, and one at 5% below Humira’s list price. Humira’s list price is $6,922.62 for a four-week supply.

Both prices buy the same product. It’s up to the middlemen known as pharmacy-benefit managers, or PBMs, which are generally owned by big insurance companies, to decide whether to pay the higher or lower price. The high-price version appears to be intended to allow Amgen to pay higher rebates to the PBMs.

“This pricing strategy is likely designed to give PBMs and plans the flexibility to choose the version that suits their needs, either a low price/low rebate or high price/high rebate version depending on the plan’s individual strategy,” Cowen analyst Yaron Werber wrote in a note early Tuesday.

The mind-bending pricing plan reflects the extraordinary complexity of the U.S. pharmaceutical supply, made more complicated by the role of PBMs, which don’t exist in other countries. They highlight the likelihood that the Humira biosimilars may not immediately bring down spending on the high-price drug.

Amgen’s strategy echoes the pricing of Semglee, an insulin biosimilar manufactured by
Viatris
(VTRS). Like Amgen’s Amjevita,
Viatris
sells a high-price and low-price version of Semglee.

“There’s a perverse incentive for PBMs to favor the high list price/high rebate branded drug over the unbranded version,” Cowen analysts wrote in a report out in mid-January. “PBMs typically pocket a large portion of rebates, hence steeper rebates mean greater profits for PBMs.”

In an explanatory statement linked from its announcement on Tuesday, Amgen said that it uses “flexible pricing approaches to ensure patient access.”

Access to Humira biosimilars, and patient adoption of those biosimilars, is likely to be contested. AbbVie CEO Richard Gonzalez said at an investor event in January that Humira will be on the formularies for 90% of insured people in the U.S. this year. What’s more,
Cigna
(CI) and
UnitedHealth Group
(UNH), which own two of the three major PBMs in the U.S., have both said that Humira and the Humira biosimilars will be on the same tier in their formularies. That means that patients won’t have a lower copay if they choose the biosimilar.

More details on the outcome of the behind-the-scenes negotiations among AbbVie, the biosimilar manufacturers, and the PBMs could come next week, when AbbVie reports earnings. On Tuesday, AbbVie stock is up 0.1%, while Amgen stock is down 0.3%.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com