Biosimilars: the next big savings opportunity

Article source – PharmConsult Website

Why do biologics and biosimilars need to be considered differently to generic medicines?

A biological medicine (also called a biologic) is a medicine that contains one or more active substances made by, or derived from a biological source (such as a bacterium or yeast) and produced by biotechnology processes.  Biologics can consist of relatively small molecules such as human insulin or erythropoietin, or large and complex molecules such as monoclonal antibodies.  Their complexity, as well as the way they are produced, may result in a degree of variability, particularly between batches of the medicine.1

A biosimilar medicine is a version of an already registered biologic (the reference medicine) that has demonstrable similarity in physiochemical, biological and immunological characteristics, efficacy and safety. The active substances of a biosimilar and its reference medicine are essentially the same with natural variability.  Not only are there minor differences between reference medicines and their biosimilars, there are minor differences between batches of the same medicines. This is because of the complex, biologically-based methods of producing the medicines.2

How do biosimilars and generic medicines differ?

Both biosimilars and generics are versions of original (reference) medicines, but are different. Generic medicines have simpler chemical structures and can therefore be developed to be the same as the reference medicine.  However, the degree of natural variability that occurs in the development and production of biological medicines means that biosimilars are similar, but not identical versions of a biological medicine.

Registration of a biosimilar medicine

As with all PBS drugs, biosimilars are subject to rigorous evaluation in Australia by both the Therapeutic Goods Administration (TGA) and the PBAC. The TGA must first register a biosimilar medicine using quality, safety and efficacy data to determine whether the biosimilar is an equally safe and effective treatment as the reference medicine which must already be registered in Australia.  This comparison must show that there are no significant differences in the benefits and risks of using the biosimilar.  The PBAC can then assess a submission from the drug sponsor to have the biosimilar listed on the PBS.

What is meant by the terms ‘substitutable’ and ‘a-flagged’?

Brands of medicine that can be substituted by the pharmacist when dispensed are indicated in the PBS Schedule by an ‘a-flag’. Where the PBAC recommends a biosimilar for listing on the PBS, it will also consider whether the biosimilar and its reference medicine should be substitutable where the clinical evidence supports this.

A prescriber may tick the ‘brand substitution not permitted’ box on a PBS prescription form when writing a prescription, if they think it is not appropriate for brand substitution to be offered to the patient.  When this happens, under the National Health Act 1953, a pharmacist cannot dispense a brand other than that prescribed. If this box is not ticked by the prescriber, good pharmacy practice requires that the pharmacist consult with the patient before substituting a brand.  In hospitals it is also recommended that prescribers be consulted about the proposed change.

Opportunities for savings using biosimilars

In the time between the introduction of a bisimilar to the Australian market and the reduction in the PBS price due to impact of PBS Price Disclosure (i.e. the Commonwealth Government program which progressively reduces the price of PBS medicines, which are subject to competition, to actual market prices), there is an opportunity for hospitals to purchase biosimilars at a price significantly less than the PBS reimbursed price. Depending on the quantity of the biosimilar which is dispensed, this provides a short tem but sizable opportunity for savings.

The most common and effective approach to achieving the potential savings is to conduct a tender for the supply of the biosimilar / reference medicine, as soon as the biosimilar is available. A critical success factor for these tenders is the involvement of key prescribers in the decision-making process.

But prior to running a tender it is important that hospitals develop guidelines for the use of biosimilars. To this end it is worth noting the guidelines from The Council of Australian Therapeutic Advisory Groups, which provide useful advice regarding the governance of biological and biosimilar medicines in Australian hospitals.3

The tender processes usually results in manufacturers seeing the commercial opportunity from achieving the majority share of a hospital’s use of a biologic.  There is good evidence that this approach is effective in achieving significant savings.

The future

The biologics that are likely to face competition from biosimilars in Australia, or those that are expected to come off patent protection in the next few years, include, epoetin alfa, insulin glargine, pegfilgrastim, rituximab, trastuzumab, bevacizumab, ranibizumab, adalimumab, etanercept, and darbopoetin alfa.

As such, the use of biosimilars in hospitals is likely to increase significantly in coming years. But, this needs to be managed carefully to ensure the desired outcomes are achieved for patients and to maximise the savings opportunities which biosimilars present.


  1. Biosimilar Medicines – Factsheet for Healthcare Professionals. Australian Department of Health. August 2015.
  2. Guiding principles for the governance of biological and biosimilar medicines in Australian hospitals. CATAG. May 2015. Available at:



Michael Ryan

Managing Director

PharmConsult Pty Ltd

January 2016