AbbVie Defends Humira With Aggressive Discount In First EU Tender
Executive Summary
AbbVie has reportedly slashed the price of its TNF inhibitor Humira by 80% in the first European tender for biosimilar adalimumab, far beyond the 50% discount previously thought.
AbbVie Inc. is ready for a fight to keep rivals away from having their piece of the biosimilar adalimumab market if reports of a price cut of 80% are anything to go by.
The discount in an, as yet, unknown market, is not expected to hurt AbbVie much financially. Even with the 80% discount, the gross margin on manufacturing Humira would be above 75%.
The news was broken in an analyst note by Bernstein’s Ronny Gal. He said: “We expect the biosimilar players who are not up to scale yet and need to recoup their initial investment would not bid that low.”
At the time of writing, details of the tender process are scarce. When approached for comment, AbbVie has declined to confirm or discuss the matter.
But this is the first solid indication of how AbbVie may defend its share of the Humira market in Europe, worth $4.4bn per year. Rivals bidding on the European adalimumab market are Sandoz International GMBH (Hyrimoz), Samsung Bioepis Co. Ltd. and its European partner Biogen Inc. (Imraldi), Amgen Inc. (Amgevita), Mylan NV and Fujifilm Kyowa Kirin Biologics Co. Ltd. (Hulio) and Boehringer Ingelheim GMBH, which has told Scrip it will not be launching Cyltezo in Europe to enable it to concentrate on the US market.
Pricing information, from the association of statutory health insurance doctors for the North Rhine region in Germany, the KVNO, shows six syringes of Humira at a list price cost €5,300. Amgen’s Amgevita is listed at €4,533, while Hyrimoz and Imraldi are priced at €4,206 and €3,354 respectively, offering a discount of 15%, 21% and 37% on Humira.
“Not all buyers will achieve the kind of discount achievable by a national tender. However, the band of pricing will move lower. We would expect average discount would have to be above 50%,” elaborated Gal.
“The adalimumab situation is a reflection of the challenge posed by biological medicines, and how patent expiration does not automatically translate in the marketing of cheaper biosimilars,” commented Jaume Vidal, European policy advisor to the NGO Health Action International. “What we have here is a pharmaceutical company protecting an already blockbuster product by gaming the IP protection system.”
HAI’s Vidal told Scrip: “AbbVie is taking advantage of a regulatory framework that makes it very difficult for other pharmaceutical companies to develop and market their biosimilar products. At the core of it is an all-too-familiar problem: the abuse of the IP protection system and lack of transparency on the purported development costs that are used to justify exorbitant prices.”
US Implications
Gal says he suspects that the AbbVie strategy is “in-effect targeting the US market.”
AbbVie “will hold the EU volume despite very large discounts. The objective is to defend the US market by denying the biosimilars in-market experience and then arguing the European ‘chose’ Humira over the biosimilars for quality reasons beyond price,” he said.
In the US, Humira made $12.4bn in sales in 2017, making it Humira’s biggest market by far. AbbVie has recently settled legislation with Sandoz over the timing of the latter’s Hyrimoz launch in the US, with the Novartis company agreeing to delay launch until September 2023, as well as paying royalties to AbbVie of any Hyrimoz sales in Europe. Three other companies have already signed similar agreements with AbbVie. (Also see "Sandoz And AbbVie Biosimilar Humira Settlement: What Does It Mean?" - Scrip, 12 Oct, 2018.)
In a previous analyst note on the subject of the European defense of Humira, Gal had noted that “AbbVie appears much more prepared than prior defenders and their key objective is to prevent the creation of large patient databases ahead of US biosimilar introduction. AbbVie is much more likely to give up price than volume.” (Also see "Biosimilar Infliximab Success Paves The Way For Adalimumab In Europe" - Scrip, 16 Aug, 2018.)
Tendering Strategy
One market where AbbVie may find it difficult to cut out its biosimilar competitors is the UK. NHS England has changed its procurement mechanism for biosimilar adalimumab to encourage competition and sustainability. The tender process will award contracts in lots; this is based on the assumption that there will be four biosimilar products and four bids by Dec. 1. If only three offers are received, then three lots will be awarded as three distinct lots, and so on. The size and shape of each lot will depend on the offers received and the relative prices, the NHS England Specialist Pharmacy Service (SPS) said in a strategy document.
“The strategy means that no supplier of adalimumab will be awarded the whole market but will have a strong incentive to offer their best price at the point of tender. If all tendered prices are similar, the shares awarded will on an equitable basis. If there are price differentials, awarded shares will be higher for the most competitively priced suppliers, but all suppliers will get access to at least some of the market upon receipt of a compliant bid to avoid dominance.”
Humira will be a separate line in the tender. Humira is approved for use in Crohn’s disease, ulcerative colitis, psoriasis, psoriatic arthritis, and ankylosing spondylitis.
AbbVie announces its Q3 results on Nov. 2.
Additional reporting by Ian Schofield.