The U.S. Food and Drug Administration approved the first biosimilar for U.S. markets Friday, a decision that has big implications for drug spending.
The drug Zarxio was created by Sandoz, a unit of Novartis. It is formulated to mimic the outcomes of Amgen’s Neupogen, a drug that boosts the white blood-cell count of patients going through chemotherapy. Zarxio has been approved for the same five conditions for which Neupogen is used.
Biosimilars are very close copies of expensive biologic drugs, which are made or extracted from living cells. Biosimilars are like generics but not exact duplicates the way ibuprofen is a stand-in for brand name Advil. That’s because the complexity of biologic drugs means that it isn’t possible to directly recreate the same molecules, although a “highly similar” medicine can be created with equally effective clinical results.
Biosimilars have been available in Europe since 2006, but the FDA only received the ability to approve the biologic copies in 2010, following passage of the Affordable Care Act.
Biologics are among the most expensive medicines on the market, and they account for about 30% of the total $375 billion in yearly U.S. drug spending. By 2016, biologics are expected to bring in as much as $200 billion in sales, according to IMS Health.
The first two biosimilars expected to hit the market — copies of Neupogen and Janssen Biotech’s Remicade — could save $22.7 billion in drug spending over their first 10 years, according to prescription-benefit manager Express Scripts.
Sandoz has not said explicitly what it will charge for the newly-approved Zarxio. “The only thing we can say is it will be competitively priced,” Carol Lynch, global head of biopharmaceuticals and oncology injectables at Sandoz, told Reuters.
Despite being approved, Zarxio won’t hit the market immediately. Sandoz is still facing legal action by Amgen to block the biosimilar, and the biotech company agreed to delay the launch until there’s a court decision, or April 10 — whichever comes first.
-Additional report contributed by Reuters.