Blockbuster Arthritis Drug Humira Loses U.S. Monopoly With First Lower-Price Copycat

AbbVie Inc. (ABBV) is a pharmaceutical company that develops and markets drugs and treatments for various medical conditions. The company's stock price has been declining recently, down 0.43% as of this writing.

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The arthritis therapy Humira is set to face its first competition in the U.S. from a near-identical copycat. This will bring an end to the exclusive run of what was for years the country’s biggest-selling drug. After twenty years of patent protection and over $135 billion in sales in the United States, Humira will soon be facing competition from a nearly identical product from Amgen Inc.

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Starting Tuesday, Amgen will begin selling its biosimilar version of Humira. Other biosimilars are expected to become available later this year.
AbbVie has been fighting for years to protect Humira and its sales from copycats. However, under settlements with the various competitors, AbbVie can no longer hold off near-identical rivals. Although its aggressive defense should help it hold on to most sales for several months, Humira's dominance is expected to start cracking by later this year when other copycats go on sale.

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Analysts say that the competition should eventually drive down prices and save health insurers billions of dollars a year, while sending AbbVie searching for new sources of sales.

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Employers and health plans have been looking forward to the arrival of Humira copycats, known as biosimilars. AbbVie’s drug usually is among their top three drug costs, according to analysts and consultants. A year’s supply now lists for about $90,000. According to Katie Asch, U.S. pharmacy leader at Willis Towers Watson PLC, older biosimilars have reduced drug costs for health plans by 20% to 30% per prescription. This has been a great help to employers who are trying to keep their pharmacy benefits affordable. Amgen is offering its new biosimilar, Amjevita, at two prices: $40,500 for a year’s supply, and $85,494 for a version that would list for 5% less. The prices are before insurance and other discounts.

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Although Amjevita may eventually lead to a decline in Humira sales, it is not likely to have a major impact immediately. This is because AbbVie has said that it has reduced the price of Humira in contracts in order to maintain volume. Analysts say that another factor helping AbbVie hold on to sales in the near term is that pharmacists won't be able to dispense the new therapy without seeking a doctor's permission first.

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"There is definitely a growing trend of biosimilar adoption, but it hasn't increased significantly in the U.S. yet," said Carter Gould, an analyst at Barclays PLC. For Humira copycats, "we're expecting a more gradual uptake." AbbVie has projected that Humira U.S. sales may drop by roughly 45% during the course of the year. However, SVB Securities analysts have raised their forecast for the amount of sales AbbVie could retain, due in part to the fact that health plans will continue to cover the drug.
Humira was first approved by the U.S. Food and Drug Administration in 2002 to treat rheumatoid arthritis, psoriasis and other autoimmune diseases. It is now cleared to treat these conditions.

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The drug helped patients overcome a painful, debilitating arthritis, while becoming a sales juggernaut. The drug was a huge success, helping patients and becoming a top seller.

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Humira was the top-selling pharmaceutical for years until Covid-19 vaccines took the mantle. In 2021, Humira generated roughly $21 billion in sales worldwide, including $17 billion in the U.S. On Feb. 9, AbbVie is scheduled to report full-year sales for 2022. AbbVie's top-selling drug accounts for around one-third of the company's total sales.

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Humira is a biotech drug that is made from living cells in a process that resembles brewing. Biotech drugs are injected or infused and don't face competition from generic drugs. Companies that want to introduce a rival product have to test it and get it approved as if it were a new drug. The Affordable Care Act of 2010 established a process for the sale of biosimilars, which are copycat versions of existing drugs. This process is based largely on existing knowledge about the safety and effectiveness of the original drugs. In exchange for this protection from competition, the original drugs are given a 12-year period of protection.

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The FDA has approved 40 biosimilars, but their use has been less than expected because drugmakers like AbbVie have taken out additional patents and kept contracts with drug-benefit managers by offering volume-based discounts. The main U.S. patent related to Humira expired in 2016, but AbbVie obtained more than 100 additional U.S. patents. AbbVie cited those patents, which the company said extended into the 2020s and 2030s, in litigation seeking to protect Humira from biosimilar competition. Critics say AbbVie may have abused the U.S. patent system to preserve sales.

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The legal strategy employed by the developers of the biosimilar versions prevented them from launching their products in the U.S., even after the FDA had approved them. Meanwhile, some copycats began selling in Europe in 2018. In the meantime, AbbVie kept raising the price of Humira. A year's supply of the drug was originally priced at around $13,600. The FDA approved Amjevita in 2016, but its launch was held up as Amgen and AbbVie were tied up in litigation. The companies resolved their legal dispute in an agreement that paved the way for Amjevita's launch on Tuesday.

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Amgen has set two prices for Amjevita in order to take advantage of the complex U.S. drug payment system. By having a higher list price, Amgen is able to negotiate larger discounts and rebates with drug-benefit managers and pharmacies. This arrangement is preferable to a lower list price for these entities. Murdo Gordon, Amgen’s head of global commercial operations, explained this decision.

Analysts predict that Humira's dominance will begin to erode later this year and into 2024, as more biosimilars become available and help drive down prices. Humira sales are forecast to drop to about $8.2 billion in 2024, according to analysts surveyed by FactSet. Amjevita could generate around $1 billion in sales this year, thanks to its advantage as the first Humira biosimilar, according to Cowen & Co. OptumRx, CVS Caremark, and Express Scripts, all owned by major healthcare corporations, have announced that they will be adding biosimilar versions of Humira to their formularies. Amgen's biosimilar will be added on February 1st. This move will allow patients to have more choices when it comes to their medication, and potentially save money on their treatments.

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Optum Rx and Express Scripts have both stated that they have no plans to give biosimilars priority over Humira. CVS Caremark has said that it would give preference to Humira instead. AbbVie has announced that the vast majority of patients with insurance coverage will have access to Humira, thanks to the company's negotiations with drug-benefit managers.

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The company has two multibillion-dollar products, immune drugs Rinvoq and Skyrizi, that together in 2027 are expected to surpass Humira's peak sales, Chief Executive Rick Gonzalez said at a recent healthcare conference. The company declined to comment further. Unlike most biosimilars, which are administered by hospitals and doctors, Humira biosimilars will be dispensed at pharmacies and taken at home by patients. Biosimilars are set to roll out beginning in July, with therapies from Boehringer Ingelheim, Organon & Co., Samsung Bioepis Co., Teva Pharmaceutical Industries Ltd., and Alvotech Holdings SA all vying for market share.

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The FDA has granted Boehringer's biosimilar interchangeable status, meaning pharmacists can substitute it for Humira without getting permission from a physician. Teva and Alvotech have said they expect the FDA to grant their biosimilars interchangeable status as well. The interchangeable designation for biosimilars could prove to be significant because some doctors are hesitant to switch their patients to a biosimilar product and reluctant to give a pharmacist permission to substitute a biosimilar.

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According to Terrence Flynn, an analyst at Morgan Stanley, transitioning to telemedicine can be easier because you don't need a physician's intervention. The FDA has not yet designated Amjevita as interchangeable with other biologic drugs. However, Mr. Gordon said that Amgen has built the necessary capabilities to help patients switch to Amjevita if they are interested. The company expects that Amjevita will initially attract more new patients than existing biologic drugs. Amgen also plans to pursue an interchangeability designation, a company spokeswoman said. This would allow patients to switch between Amgen's biosimilar and the reference product without the involvement of a healthcare professional.