What's the difference? Biosimilar and generic drugs

A variety of generic pills displayed on a table
Biosimilar drugs are often confused with generic drugs. Both are marketed as cheaper versions of costly name-brand drugs and are designed to have the same clinical effect as their pricier counterparts. But biosimilar drugs and generic drugs are very different.

Biosimilar drugs are often confused with generic drugs. Both are marketed as cheaper versions of costly name-brand drugs. Both are available when drug companies’ exclusive patents on expensive new drugs expire. And both are designed to have the same clinical effect as their pricier counterparts. But biosimilar drugs and generic drugs are very different, mainly because while generic drugs are identical to the original in chemical composition, biosimilar drugs are “highly similar,” but close enough in duplication to accomplish the same therapeutic and clinical result. Another key difference is that generics are copies of synthetic drugs, while biosimilars are modeled after drugs that use living organisms as important ingredients. But many experts hope the two will share a critical commonality and that, like generics, biosimilars will dramatically lower the cost of biologic drugs.

“ Branded drugs are either synthetic, meaning they're made from a chemical process, or biological, meaning they're made from living sources. Synthetic branded drugs can be exactly replicated into more affordable generic versions, but because biologics involve large, complex molecules, they cannot. That's where biosimilars come into play,” says Jamie Joy, PharmD, Director of Clinical Pharmacy Programs for Cancer Treatment Centers of America. When drug manufacturers receive U.S. Food and Drug Administration (FDA) approval on a new drug, they obtain a patent ensuring that no other company can create or sell the drug for as long as the patent is in effect, generally 20 years. These exclusive patents allow for a monopoly on the drug, and, generally, an expensive price tag.

The Hatch-Waxman Act, passed in 1984, reduced the cost of synthetic branded drugs by allowing other companies to create generics, or identical but less expensive versions of the original, branded drug, once the patent expires. In 1984, generic drugs accounted for 19 percent of retail prescriptions. In 2016, they accounted for 89 percent, and a March report from the President’s Cancer Panel found that the U.S. generic drug market saved the U.S. health care system an estimated $253 billion overall in 2016, including $10 billion in savings for cancer drugs.

But at the same time as generic drugs have helped offset the high cost of name-brand medications, some newer drugs, such as the immunotherapy and targeted therapy drugs now commonly used to treat cancer, have driven up prescription prices even more. A May report from the IQVIA™ Institute from Human Data Science found that spending on cancer medications in the United States doubled from 2012 to 2017. Many of these newer-to-market drugs are biological drugs, or biologics, which are branded drugs made from living organisms like yeast, bacteria, or animal or plant cells. In 2005, biologics made up 39.1 percent of the $9.5 billion in Medicare drug spending. By 2014, they accounted for 62 percent of the $18.5 billion spent by Medicare on prescription drugs.

Now that the patents on high-priced biologics are beginning to expire, many experts hope that biosimilars, which are comparable but not chemically identical to their name-brand counterparts, may work the same way generics did to help offset drug prices. In 2010, Congress passed the Biologics Price Competition and Innovation Act, which established an abbreviated regulatory process for biosimilars and paved the way for their approval.

For a biosimilar drug to receive FDA approval, it must be highly similar to the original biological drug and contain no clinically meaningful differences, although there may be minor differences in clinically inactive ingredients. According to the National Cancer Institute, the biosimilar also must prove to be “as safe as, work as well as, and work in the same way as” the original drug, and “be used in the same way, at the same dose, and for the same condition.”

Generic drugs are chemically identical to the original branded drug and, as such, cost significantly less because they don’t require much testing. Because biosimilars are made from living organisms, though, and don’t contain identical ingredients to their name-brand counterparts, they still require some testing. So, they cost more than generics, but less than the branded biologic.

In general, generic drugs cost 40 percent to 50 percent less than the brand product, Joy says. Biosimilars, in contrast, are closer to 15 percent to 20 percent cheaper because of the amount the drug manufacturer has to spend on testing. “But because there are potential cost savings to the drug industry as a whole, I think we’ll see a slow-moving shift toward using biosimilars more and more in the future,” she says.

So far, the FDA has approved 12 biosimilars. The first was filgrastim-sndz (Zarxio™), approved in 2015 as a derivative of the branded drug filgrastim (Neupogen®), which is used to prevent infection during chemotherapy. The drug bevacizumab-awwb (Mvasi™), modeled after bevacizumab (Avastin®), was the first biosimilar approved for cancer treatment, in 2017. The next biosimilar coming down the pike, which will be on the market in 2019, is trastuzumab-dkst (Ogivri™), a biosimilar developed from trastuzumab (Herceptin®). Like trastuzumab, the biosimilar will treat certain people with breast or metastatic stomach cancers that contain an excess amount of the HER2 protein.