1 Introduction
Global pharmaceutical costs continue to rise, and spending on medicines is expected to increase at an annual rate of 3–6% [
1]. A significant part of pharmaceutical costs is caused by the sale of biological medicinal products (biologics): for example, over 30% of drug spending is driven by biologics in Europe [
2]. Biologics are essential in treating many chronic diseases such as diabetes mellitus, autoimmune diseases, and cancers [
3].
A biosimilar is a biological medicinal product highly similar to another biological medicinal product (‘reference medicine’) already having a market approval in the European Union [
3]. Biosimilars are expected to lead to significant cost savings in the biologics market [
1]. Because of more affordable development costs, a biosimilar may enter the market at a lower price than its reference product once the patent and marketing protection of the reference product has expired [
3]. The introduction of biosimilars may also lower the prices of reference products [
4].
In Finland, biologics are dispensed by two routes with separate funding mechanisms. In hospitals, most administered biologics are intravenous and/or monoclonal antibodies for anti-cancer treatments [
5]. The majority of the self-injectable biologics are reimbursable and dispensed from the community pharmacies for outpatient care. The prices of reimbursable biologics are highly regulated. Under the Ministry of Social Affairs and Health, the Pharmaceuticals Pricing Board sets the maximum wholesale prices for reimbursable medicinal products in outpatient care [
6]. The retail prices of the reimbursable prescription medicines are based on maximum wholesale prices, whereas pharmaceutical companies can freely set the price of non-reimbursable medicines. The prices of prescription medicines are the same in all Finnish community pharmacies. Two supply-side changes in pharmaceutical legislation in 2013 and 2017 have had a significant impact on the maximum wholesale prices of biologics in Finland. First, in 2013, the wholesale prices of all medicines outside the reference price system were reduced by 5% [
7]. Second, in 2017, two amendments regarding biosimilars were added to the Health Insurance Act (2004/1224) [
6]. According to the amendments, the first biosimilar entering the market must be priced at least 30% lower than the reference product to gain reimbursable status. Further, when a biosimilar product containing the same active substance enters the reimbursement system, the Pharmaceuticals Pricing Board is required to re-evaluate the reasonable wholesale price for the reference product [
6]. In the only demand-side regulation, which came into force in 2017, the prescriber must choose the most affordable comparable product if a biosimilar is available for biological medicine [
8]. To date, biologics are not substituted in community pharmacies in Finland [
9].
Despite policy and legislative changes, the increase in costs has continued in the Finnish prescription pharmaceutical market in outpatient care [
10]. In 2020, sales of outpatient prescription drugs, measured at retail prices including value-added tax, increased 2.1% compared with the previous year, EUR 2.33 billion of the total drug sales of EUR 3.52 billion. A significant part of the growth is caused by the sale of biologics [
11]. The objective of this study was to find out what impact the market entry of biosimilars has on the prices of the reference products in outpatient care in Finland and to investigate whether biosimilars trigger price competition for biologics. In addition, the study examined how the prices and market shares of outpatient biosimilars have developed in Finland from 2009 to 2020.
4 Discussion
In light of the global need to increase price competition among interchangeable biologics, our study provides several findings on the price and market share evolution of the original biologics and their biosimilars on a national level. Our study shows that the biosimilar market entry reduces the prices of reference products in outpatient care in Finland. However, the price reduction of the reference products can be seen as a consequence of the pricing policy and public reimbursement scheme concerning the market entry of the first biosimilars. Biosimilar prices usually remained stable or decreased during the observation period depending on the number of competing biosimilars. The market shares of biosimilars were relatively minor compared with the market shares of the reference products, with significant variations between different active substances.
The changes in pharmaceutical pricing and reimbursement legislation in 2013 [
7] and 2017 [
6] impacted the prices of the included products in this study. These two changes seem to explain almost all reference product price changes being more than the annual variation in the price indexes. For all products (reference products and biosimilars) whose observation periods were started before 2013, a single decrease in prices was observed in 2013. Otherwise, the reference product prices mainly stayed stable before the biosimilar introduction to the market. Price trends were generally marginal and comparable to the annual variation in the price index. Before 2017, the market entries of biosimilars were not found to cause immediate price reductions for the reference products. Following the mandatory price regulation in 2017, the decline in the prices of reference products occurred relatively soon after the first biosimilar entered the market, and the price generally decreased only once. After that, the changes in the price trends of the reference products were mainly minor. Similar results from the price decrease of the reference product after the biosimilar market entry have also been reported previously in Finland and other European countries [
30,
31]. However, this study did not observe permanent price decreases for insulin lispro, filgrastim, epoetin, and enoxaparin reference products. As a result, the first three of these reference products were no longer covered by the public reimbursement scheme at the end of the observation period [
23]. Subsequently, the latter reference product was re-evaluated and not reimbursed after the end of November 2020 [
22].
Although the reference product price reduction is mainly because of price regulation, the biosimilar market entry enables the treatment of patients with more affordable biologics. However, the savings may not be gained if the patient’s medication is switched to another competitor, such as an improved version or a follow-on drug (a compound with a very similar mechanism of action, which usually does not add therapeutic value to medicines already on the market [
32]). We observed that the improved competitor of the insulin glargine gained a significant market share after entering the market. A recent study on the Finnish pharmaceutical market showed that some patients treated earlier with a reference product were switched to improved versions after the biosimilar market entry [
11].
In this study, the biosimilar prices mainly remained steady or decreased over a long observation period, starting from the market entry of the first biosimilar for each active substance until 31 August, 2020. The price regulation of reimbursable biologics was seen from 2017. After that, the first biosimilar to be reimbursed must be at least 30% lower priced than the reference product [
6]. In addition, the prices of subsequent biosimilars entering the market must be at least as low as the price of the first biosimilar. We found that if there were more than two biosimilars on the market, introducing new biosimilars triggered a slight price reduction among the previous biosimilars. This finding may indicate that one or two biosimilars on the market do not yet lead to price competition between interchangeable products. However, further research is needed to confirm this finding.
The mandatory price reduction of the reference product may curb incentives to switch to biosimilars and lead to meager use of biosimilars in the future. This situation may not be a problem, but mandatory price reductions for reference products may hinder long-term competition by limiting price differences between products and affecting incentives to enter the market for biosimilar products [
30,
33]. Incentives for pharmaceutical companies to bring biosimilars to the market may weaken if biosimilars do not achieve reasonable market shares. The most significant market shares were for epoetin, filgrastim, and insulin lispro biosimilars at the end of the observation period in 2020, considering the overall market for the reference product and its biosimilars. However, the utilization of biosimilars varies greatly between different biological agents, and the uptake is still scarce among some active substances. The lowest biosimilar market shares were for enoxaparin and teriparatide with the shortest observation periods and insulin glargine. Similar variation in biosimilar use has been observed between active substances elsewhere in Europe [
2]. Several studies have explored initiatives and policies that may influence biosimilar uptake [
34‐
37]. In Finland, the biosimilar uptake has been promoted by legislative changes in public reimbursement schemes and prescribing rules and information guidance targeted mainly at physicians [
38]. However, our study confirms that although Finnish prescribers have positive views on biosimilars [
39], these initiatives have not been effective enough in promoting biosimilar uptake as the reference product had the highest market share at the end of the observation period in several active substances. Therefore, Finland should consider new, more effective methods to incite biosimilar uptake and trigger price competition [
39,
40].
The strengths of this study were the use of comprehensive nationwide data and the application of a robust scientific method suitable to analyze the impact of the interventions on the biologics market in outpatient care. In addition, we had a long observation period that covered almost the entire time biosimilars have been on the Finnish market. To the best of our knowledge, no previous comprehensive nationwide analysis on this topic has been published from the Western markets. However, our study has some limitations. First, we excluded the competitors of biosimilars, such as improved versions and follow-on products from the study, except for two insulin products. Competitors with the same or a similar mechanism of action may impact the biosimilar market development. This perspective should be considered in pharmacoeconomic studies focusing on one or a few indications treated by a biological medicine or its competitors. For the complete nationwide data used in the present study, extended inclusion criteria were not applicable. Further, the effect of competitors should be noted as a potential bias in the statistical analysis. A reference product’s price change could have been due to the market entry of any competitor and not specifically due to a biosimilar, as assumed in our approach. However, the graphs of the market shares and price evolutions in the ESM support our assumptions. Second, we made some extrapolations using wholesale data and wholesale weighted average prices instead of retail sales in community pharmacies. However, as the prices of biologics are relatively high, it can be assumed that community pharmacies are hesitant to store many expensive medicines and the use of wholesale data is representative. In addition, the sales prices of prescription medicines are the same in all Finnish community pharmacies based on wholesale prices. The use of the wholesale weighted average price may skew the prices if the monthly wholesale is minor and targeted to small package sizes. We also used DDDs in the study, which describe the presumed average adult maintenance dose per day when a drug is used for its primary indication [
18]. These are not necessarily equal to the prescribed doses of the drug for patients. However, DDDs can be used to compare drug utilization regardless of different strengths or package sizes between products and active ingredients. Additionally, the use of DDDs and Anatomical Therapeutic Chemical codes enables the international comparison of the results [
41] increasing the generalizability of our findings. However, the national context should be noted as the policies for biosimilar uptake vary across Europe [
35].