AbbVie's blockbuster drug Humira finally loses its 20-year, $200 billion monopoly

After 20 years and $200 billion in revenue, Humira — an injectable treatment for rheumatoid arthritis and several other autoimmune conditions — has lost its monopoly. Early Tuesday morning, California-based biotech firm Amgen released Amjevita, the first close copy of the best selling drug of all time. At least seven more Humira copycats, known as biosimilars, are expected to debut later this year.

"It's about time!" said Sameer Awsare with a laugh and a smile. Awsare, associate executive director for the Permanente Medical Group, advises national insurer Kaiser Permanente on its prescription drug policies. Other groups representing insurers, patients or employers are also eager for these biosimilars to usher in more competition — in hopes that will enable them to slash their spending on the popular treatment.

But among industry watchers, the prevailing sentiment is uncertainty over whether competition alone will bring the price down.

"I am pretty anxious," said Marta Wosińska, an economist and fellow at the Brookings Institution.

Humira losing its monopoly creates the biggest test the fledgling U.S. biosimilars market has ever faced. It's a market critical to containing drug costs in the U.S., which relies primarily on competition rather than regulation to rein in spending.

If these challengers to Humira fail to pass this test, some will see it as a sign something about this market is fundamentally broken.

A golden opportunity for a beleaguered biosimilars market

Biosimilars are highly similar versions of a rapidly growing class of drugs called biologics, a broad range of treatments or preventatives that include immunotherapies, insulins and certain vaccines made from living cells.

While biologics are driving many of medicine's most exciting new advances — shrinking tumors, controlling diabetes, even delaying dementia — they are also consuming more of our money. Biologics account for nearly half of U.S. drug spending despite comprising less than 3% of prescriptions.

Since debuting in the U.S. in 2015, biosimilars have struggled to match the market-devouring, price-plummeting impact of generic drugs, which save U.S. patients and insurers $300 billion a year.

How biosimilars are different from generics

Unlike generics, biosimilars face a unique set of regulatory, manufacturing and business challenges. Conventional drugs can be replicated like a recipe in a cookbook using chemical processes. In contrast, because biologic drugs are grown in living cells, they are harder to mimic, making biosimilars more difficult and expensive to manufacture. Experts debate whether those unique challenges have doomed this market or if biosimilars simply need more time to establish themselves.

Humira offers by far the best opportunity this beleaguered market has had to succeed.

"All of the pieces seem to be there," Wosińska said. "Tons of money on the table [and] eight companies ready to jump in."

If biosimilars come up short again, Wosińska and others worry about the chilling effect that could have on future biosimilar investments, leading to less competition and a future where people pay higher drug prices, steeper insurance premiums and bigger tax bills for programs like Medicare.

A fierce fight for market share

In order to pass this test — and demonstrate biosimilars can have a strong, healthy future in the U.S. — Humira's challengers need to deliver big savings and devour market share.

Experts — and even Humira's own manufacturer, AbbVie — are confident this new competition will soon cut spending on the drug nearly in half. Those savings would mostly benefit insurers and their middlemen as well as employers, who pick up the bulk of drug costs for many Americans. According to original calculations done for Tradeoffs by the Health Care Cost Institute, employers spent more than $15 billion in 2020 on Humira. How much of the cost-savings will trickle down to patients, who can spend more than $70,000 a year on this drug, is less clear.

The much harder part of this test to pass will be snatching significant market share away from Humira manufacturer AbbVie. With its 20-year head start, the drugmaker has spent billions of dollars erecting barriers to "slow competitors down and protect as much of the market as possible," according to Robin Feldman, professor at University of California Law, San Francisco.

Company tactics have included tweaking Humira's formula to give the appearance that biosimilar competitors are less similar; AbbVie has also added two new drugs of its own that target similar patient populations and add to the company's market share. AbbVie recently projected the pair of drugs —– Rinvoq and Skyrizi —– will exceed Humira's record $20 billion in annual sales by 2027.

AbbVie declined multiple requests for comment but in addressing the forthcoming biosimilar competition on a February 2020 earnings call, chief executive Richard Gonzalez said, "Our goal is to maintain as much share as we can in as profitable of a way as we can."

AbbVie's actions are just one hurdle biosimilars face.

"Everybody is feeding at the trough," Feldman said.

The complex drug purchasing system in the U.S. — rife with confidential rebates and convoluted fees — creates perverse financial incentives.

For example, most insurers rely on middlemen to negotiate deals with drugmakers that in turn dictate which drugs get covered and what patients pay at the pharmacy counter. But those middlemen have their own profit motives and have been known to give favorable coverage to a more expensive drug if its manufacturer offers them a lucrative deal.

These contracts are confidential, but so far, in the case of Humira, two of the country's three largest insurance middlemen have said they plan to charge patients the same out of pocket costs for Humira as biosimilar alternatives.

"The patient won't pay any less if they switch to the biosimilar," Feldman said. "Why would you switch from [a brand] you already know to [one] that you don't know" if you are paying the same?

Patients lacking any financial incentive to switch makes competing that much harder for biosimilars, which are vying in many cases for patients who have relied on Humira for years — and their doctors. In a survey of physicians conducted by the research group NORC at the University of Chicago, only 31% said they were very likely to switch a patient doing well on any biologic over to a biosimilar version.

Additionally, pharmacists must get a whole new prescription for a biosimilar before swapping it in for a brand-name competitor. With traditional generics, that swap for the pharmacist is essentially automatic and requires no new prescription. While one of Humira's biosimilar competitors — Cyltezo, which will come to the U.S. market in July — has gotten a special Food and Drug Administration approval that allows for automatic swapping, most others have not.

Only one large insurer has said it will bring down the kind of financial hammer required to help biosimilars grab meaningful market share. David Chen, who directs specialty drug use for Kaiser Permanente, said the insurer plans to stop covering Humira by the end of 2023. He expects at least 90% of patients to switch to the biosimilar alternative, and said Kaiser should save hundreds of millions of dollars a year.

A reckoning on the horizon

If the biosimilar market once again falls short of its promise, economist Wosińska said she foresees a larger reckoning. She expects some drugmakers would deem the market fatally flawed and exit altogether, leaving fewer competitors to drive down the price of the next big biologic blockbuster.

Congress also could act to fix certain flaws, other experts said. They could change regulations, and try to make the market a cheaper, easier place for companies to thrive. Or, they could go in the opposite direction: embrace price regulation.

It's an option that was considered untouchable for many decades. But the passage of the Inflation Reduction Act of 2022, which gave the federal government new power to lower drug prices, has put that path squarely on the map.

This story comes from the health policy podcast Tradeoffs, a partner of Side Effects Public Media. Dan Gorenstein is Tradeoffs' executive editor, and Leslie Walker is a senior producer for the show, which ran a version of this story on January 26. Tradeoffs' coverage of health care costs is supported, in part, by Arnold Ventures and West Health.