A Quantitative Exploration of Challenges to the Sustainability of the United States Biosimilar Market
Author(s)
Victoria Dayer, BA, BS, PharmD1, Joshua A. Roth, MHA, PhD2, Mireia Jofre-Bonet, PhD3, alistair mcguire, BA, MPhil, PhD4, Sean D. Sullivan, PhD1;
1University of Washington, Seattle, WA, USA, 2Pfizer, New York, NY, USA, 3Office of Health Economics, London, United Kingdom, 4London School of Economics and Political Science, London, United Kingdom
1University of Washington, Seattle, WA, USA, 2Pfizer, New York, NY, USA, 3Office of Health Economics, London, United Kingdom, 4London School of Economics and Political Science, London, United Kingdom
Presentation Documents
OBJECTIVES: Biosimilars have generated significant savings by increasing competition in biologic product markets and driving down prices. These dynamics increase cost-savings in the short-term, but may result in diminished incentives for manufacturers to enter and/or remain in the market. We sought to explore the relationship between market concentration in the U.S. on the price of reference products and biosimilars.
METHODS: We used Centers for Medicare and Medicaid Services data over 34 quarters from 2015 to July, 2023 to assess the relationship between market concentration and price in eight biologic markets (including 21 biosimilars). Market concentration was defined using the Herfindahl-Hirshman Index (HHI, range: 1-10,000 with higher scores demonstrating more concentration). Price was defined as the ratio of the volume-weighted product market Average Sales Price (ASP) to the ASP of the originator in the quarter prior to biosimilar competition. Using an instrumental variables approach, we evaluated the relationship between market concentration (HHI) and price (ASP ratio) using reference product fixed effects.
RESULTS: The number of competitors in each market varied (range: 2-7) and the pricing dynamics were unique. The mean HHI was 6,957, 5,178, and 4,440 at 4-, 8-, and 12-quarters after biosimilar entry across product markets, suggesting highly concentrated markets at early time points. In aggregate, we found that a 30% higher market concentration (HHI) was associated with a 13-15% higher ASP price ratio at these three time points.
CONCLUSIONS: Market concentration is a measure of competition and is related to price in the originator and biosimilars markets. Our findings suggest that higher market concentration (less competition) is associated with higher prices. Although no biosimilar manufacturers have exited the US market, an exit would increase market concentration and may lead to potential price increases. If current downward price trends continue, the cost-saving potential of biosimilars could be altered.
METHODS: We used Centers for Medicare and Medicaid Services data over 34 quarters from 2015 to July, 2023 to assess the relationship between market concentration and price in eight biologic markets (including 21 biosimilars). Market concentration was defined using the Herfindahl-Hirshman Index (HHI, range: 1-10,000 with higher scores demonstrating more concentration). Price was defined as the ratio of the volume-weighted product market Average Sales Price (ASP) to the ASP of the originator in the quarter prior to biosimilar competition. Using an instrumental variables approach, we evaluated the relationship between market concentration (HHI) and price (ASP ratio) using reference product fixed effects.
RESULTS: The number of competitors in each market varied (range: 2-7) and the pricing dynamics were unique. The mean HHI was 6,957, 5,178, and 4,440 at 4-, 8-, and 12-quarters after biosimilar entry across product markets, suggesting highly concentrated markets at early time points. In aggregate, we found that a 30% higher market concentration (HHI) was associated with a 13-15% higher ASP price ratio at these three time points.
CONCLUSIONS: Market concentration is a measure of competition and is related to price in the originator and biosimilars markets. Our findings suggest that higher market concentration (less competition) is associated with higher prices. Although no biosimilar manufacturers have exited the US market, an exit would increase market concentration and may lead to potential price increases. If current downward price trends continue, the cost-saving potential of biosimilars could be altered.
Conference/Value in Health Info
2025-05, ISPOR 2025, Montréal, Quebec, CA
Value in Health, Volume 28, Issue S1
Code
PT24
Topic
Economic Evaluation
Topic Subcategory
Cost/Cost of Illness/Resource Use Studies
Disease
SDC: Oncology, STA: Biologics & Biosimilars