Home » Articles » Volume 14 / Year 2025 / Issue 1 » Original Research » An analysis of policy impacts on the price developments of biological medicines after patent expiration

Published on 08 April 2025

Generics and Biosimilars Initiative Journal (GaBI Journal). 2025;14(1).9-23.

DOI: 10.5639/gabij.2025.1401.004

Author(s): Peter Schneider, MA, Alexander Guggenberger, BSc, MSc, Siegfried Eisenberg, BSc, MSc, PhD, Lukas Rainer, BSc, MSc

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Introduction/Study objectives: A biosimilar is a biological medicine that is developed to be similar to an existing biological medicine (the ‘reference medicine’) for which marketing exclusivity rights have expired. The prices of such medicines are shaped by regulations onpharmaceutical pricing, or the policy of setting the price of a medicine at certain points in the pharmaceutical distribution chain
as well as wholesalers’ and pharmacists’ remuneration margins and product taxation. The aim of this study is to assess how different national policies concerning pharmaceutical pricing and the reimbursement of medicines in European countries impact the pricing of – and, consequently, also access to – biosimilars.
Methods: A difference-in-differences (DID) approach was developed in which relative prices were modelled as a function of selected pharmaceutical policies (price link, prescribing by international non-proprietary name, substitution at pharmacies and inclusion into reference pricing system), while accounting for effects related to characteristics of the product and country characteristics, as well as the number of available biosimilars as an approximation of competition. Data on monthly prices of nine biological active ingredients (adalimumab, enoxaparin, etanercept, infliximab, insulin glargine, insulin lispro, pegfilgrastim, rituximab, trastuzumab) were collected. In addition to price information, data on: (a) medicines; (b) policy measures; and (c) other characteristics of examined countries was gathered.
Results: The model reveals decreasing average prices of biological medicines after the entry of biosimilars on the market. Different
alterations of the model show that the most significant driving factors of price developments are supply-side measures, mainly regulating maximum prices through price links, as well as the entrance of more biosimilars of a pharmaceutical presentation on the respective market and the number of periods at which a biosimilar is available. For the demand-side policies International Nonproprietary Name (INN) prescribing, biosimilar substitution, and reference price system) neither consistent nor significant effects on prices were identified.
Conclusion: The results highlighted the significant impact of supply-side pricing policies, whereas demand-side measures did not foster a more competitive environment for biological medicines and have yet not lead to substantial price reductions.

Key points for decision makers

Biosimilars contribute to improving access to medicines, either through broadening the eligibility criteria of patients or enabling therapy options in the first place, all the while ensuring sustainable health budgets. Policymakers have not been able to realize the full potential of biosimilars, but there will be no ‘magic bullet’ to encourage the uptake of biosimilars. Incentives must be set at both price and volume level. 

At the current stage of public discussion on biosimilars, demand-side policies must lay a focus on health professionals. Only if there is sufficient awareness of interchangeability and comparable efficacy will policies aimed 

Introduction/Study objectives

A medicine passes through different ‘product lifecycle’ stages, which may bring about changes in the regulatory and policy environment of pharmaceuticals. Two key stages are the period under patent exclusivity, when the pharmaceutical product is on patent, and the period when patents on the medicines have expired and competitors enter the market. These competitors are called generics for chemical entities and biosimilars for biological medicines. While there is abundant literature on the prices and price developments of generic medicines [1-7], price studies on biosimilars are scarce. 

Biosimilars have been in use since 2006; the hormones somatropin, erythropoietin, and filgrastim were the first active ingredients for which biosimilars received marketing authorization. However, expenditure on those products did not have a huge impact on pharmaceutical budgets and attention was not paid to potential savings until the launch of an infliximab biosimilar in 2013, the first biosimilar of a complex biological medicine [8]. Since then, this field has developed very dynamically, and in 2020, Troein P, Newton M, Scott K and Mulligan C [9] published a comprehensive description on the impact of biosimilar competition in Europe. The authors focus on the effects on price, volume, and market share after the launch of biosimilars on different European markets. They also suggest a set of key performance indicators to monitor the impact, namely yearly savings, access in terms of increased utilization, and competition within a therapy class. 

Although competition is generally associated with downward pressure on prices in the off-patent market for pharmaceuticals [10-12], few studies have focussed on the prices of biosimilars. One of the first was conducted by Rovira J, Lindner L, Gimenez E, et al. [13], which looked into price variation ratios between the highest and the lowest country price. In this study – and subsequent studies on the impact of biosimilar competition – the analysis of prices was one dimension among others [14] or the focus was on composite measures like (public) pharmaceutical expenditures [15]. Since these studies examined the impact of the market entry of biosimilars, they did not investigate the regulatory environment as a driving factor for the outcomes. 

When it comes to regulatory aspects of health systems the European Observatory on Health Systems and Policies offers – a very comprehensive description of the functioning of national health systems [16]. In the last 20 years, several projects in the area of pharmaceutical policies have been conducted or are still ongoing with the aim of developing a common taxonomy for terms as well as establishing a framework for international comparisons of policies [17, 18]. 

The rationale of these measures is to facilitate and promote a cross-country analysis of the impacts and implications of pharmaceutical policies. Vogler S, Schneider P, Zuba M, Busse R and Panteli D [19] build up on this taxonomy and survey which policies European countries have implemented in relation to biosimilar medicines and explored whether policies for biosimilar medicines differ from generic drug policies or not. The analysis revealed on the one hand differences in design of policies, for instance, the price difference between the originator medicine and the biosimilar was lower than the one between originator and generic drug. On the other hand, there exist also differences in the consistent application of supply-side policies to generics and biosimilars. In most of the countries with statutory International Nonproprietary Name (INN) prescribing, biosimilars are exempt from respective provisions. All those measures, and their application, impact competition and development of prices. 

Several studies have looked into the impacts of pharmaceutical regulation on prices. Brekke KR, Holmas TH and Straume OR [20] examine the impact of changes in the regulatory environment on competition between originator and generic medicines and how this affected pharmaceutical expenditures in Norway. The authors developed a vertical differentiation model in which two different policies were considered in the formula of the theoretical model while the time when the policy was implemented served as a ‘structural break’. Kanavos PG and Vandoros S [21] investigated the determinants of originator branded prescription medicine prices and used different regulatory aspects as variables in their regression. The empirical model included the existence of: (1) a Health Technology Assessment (HTA) procedure; (2) External Price Referencing (EPR); (3) Internal Price Referencing (EPR); and (4) the free pricing of medicines. A follow-up study focussed on the effects of regulatory provisions on prices for the sub-group of pharmaceuticals [22]. Stargardt T [23] assessed the effects of competition, the effects of regulation, and their combined effects on the prices of medicines. The authors developed a hierarchical model in which quarterly changes in prices were modelled as a function of competition and regulation that consisted of three policy measures: (1) price freezes; (2) reference pricing, which was further differentiated into three subtypes; and (3) the design of co-payment regimes. 

The last few years have witnessed a growing interest in and relevance of biosimilars that is reflected in the increasing number of publications. While most of the studies focus on questions regarding the interchangeability and substitutability of biosimilars with their reference medicines, fewer studies investigate health economic aspects. Among the existing investigations, the research questions are related to savings potentials and total public healthcare budgets, either on an aggregated level [15, 24] or in a national context [25]. Existing research centres around outcomes, or the impact of biosimilar competition on defined indicators, rather than determinants and driving factors of price developments. 

This study contributes to the literature by assessing the health economic effects of the market entry of biosimilars, analysing the effect of the regulatory environment on the price development of biological medicines. It draws on the recent patent expiration of so-called blockbuster biological medicines in terms of global sales, which provides an ideal opportunity to assess the price developments of biological medicines and identify possible driving factors. This study builds on literature exploring the importance and significance of regulatory aspects but aims to flesh out those approaches that either focus on one national market [20, 23] or consider only a few policy measures for pharmaceutical pricing in the off-patent market [21, 23]. This study surveys the list prices of biological medicines before and after the entry of the first biosimilar and examines how different policy measures or competition impact on the development of list prices while also considering other factors like the characteristics of the included medicines or the countries surveyed. 

Methods

Data collection 

Data on the monthly list prices of nine biological active ingredients (adalimumab, enoxaparin, etanercept, infliximab, insulin glargine, insulin lispro, pegfilgrastim, rituximab, and trastuzumab) were collected from the Pharma Price Information (PPI) Service at the Austrian National Public Health Institute, which provides reliable and independent information on pharmaceutical prices in almost all EU Member States1plus Norway, Switzerland, and the UK. Sales of the selected active ingredient constitute more than 90% in value of the biosimilar market [9]. The study period for each active ingredient started six months before the first biosimilar for the defined presentation (cf. Table 4 in the appendix) of an active ingredient entered the market in any European country and ended for all active ingredients in December 2019. As a result, the length of the study period was different for each active ingredient: while for infliximab2 the study period was longest, lasting from May 2013 to December 2019 (80 months), it was shortest for adalimumab and pegfilgrastim (24 months). 

When conducting medicine price comparisons, a wide range of methods can be used and major dimensions to consider need to be defined [26]. To ensure the comparability of prices/price developments across countries, the same pharmaceutical specialities – as given in Table 4 in the appendix – were identified and compared. In this analysis, a pharmaceutical speciality is defined as a product with the same active ingredient in the same strength3, same pharmaceutical form, and same primary packaging (container)4. Differences regarding the content, e.g. some solutions for injections have either 0.4 mL or 0.8 mL while the strength was the same, will not be considered. Regarding package size, or the number of units per authorized presentation, the presentation with the highest data availability among the countries surveyed was considered, and only if this package size was not available everywhere did we select the closest one. The selected sample of nine active ingredients consists of 19 pharmaceutical presentations for which a biosimilar product was launched on at least one market in the countries surveyed. Table 5 in the appendix provides an overview of the availability of identified pharmaceutical specialities in the countries surveyed. If more price data were available, for example, if two different pack sizes are available in one national market, the average unit price was calculated. 

We chose to use ex-factory prices in each country although in some countries this price type is not regulated and/or cannot be calculated from statutory wholesale remuneration. In such cases ex-factory prices were approximated through average wholesale margins, which is a common procedure among competent authorities for pricing and reimbursement [27, 28]. As the unit of analysis, we selected per unit prices for the common unit of administration but also ex-factory prices per different common denominators, per mg or per defined daily dose (DDD), were computed and analysed. 

In addition to list price information, the following information was collected: 

Information on medicines was obtained from the European Medicines Agency’s (EMA) webpage  Information on different regulatory aspects was extracted from the literature review, particularly the Pharmaceutical Pricing and Reimbursement Network (PPRI) report published in 2019 included comprehensive information about pharmaceutical systems in different European countries [18]  Information on other characteristics of the examined countries were obtained from EUROSTAT. 

All information thus obtained was included in country-specific datasets that were sent for validation to representatives of the National Competent Authorities on Pricing and Reimbursement (NCAPR) and health experts at public health institutions, HTA bodies, or universities (cf. Table 6 in the appendix). Open points were clarified in written form by email or in brief structured interviews. 

Theoretical model 

Relative prices are modelled as a function of selected pharmaceutical policies while accounting for effects related to characteristics of the product and country characteristics as well as the number of biosimilars available as an approximation of competition. Pharmaceutical product-specific factors include their active ingredient, strength, pharmaceutical presentation, and point of administration. Regulatory factors include information on selected policies that aim to encourage the uptake of biosimilars, namely biosimilar price links, the prescribing of biosimilars by INN, biosimilar substitution, and a reference price system (RPS). These policy factors are incorporated in the model as time- and country-specific dummy variables, indicating whether a policy is in place in a given country during each month. Country characteristics are captured through country fixed effects but were also considered as control variables when checking for the robustness of the results. Those variables include population, i.e. logarithm of population size, or health expenditures like total health expenditures (THE) – either per capita or as a share of gross domestic product (GDP) – and total pharmaceutical expenditures (TPE) – either per capita (adjusted by purchasing power parity (PPP)) or as a share of THE or GDP – according to the system of health accounts. 

Price change was subsequently defined as the price ratio Pt/P0*100, where Pt is the average of price ratios for all defined pharmaceutical presentations of an active ingredient in a given country in period t, and P0 is the average of price ratios for all defined pharmaceutical presentations of an active ingredient in the month when the first biosimilar was launched in the country in question5; by definition this results in a price ratio of 100 for the originator product in period 0. The price is expressed in per cent, which facilities cross-country comparability, as relative changes in price ratios for one unit of the pharmaceutical presentation (cf. Table 4 in the appendix) are attributed to the regulatory environment. This approach simultaneously addresses issues related to the conversion of different national currencies and differences in purchasing power parities (PPPs). Price changes for any given pharmaceutical product were estimated as difference-in-differences (DID) in which the launch of the first biosimilar within each country for each defined pharmaceutical product constitutes the intervention. The estimated model is 

where i indicates the pharmaceutical speciality, j indicates a specific country, and t indicates time. Pratioi,j,t is the price ratio for a pharmaceutical product i in country j at time t, BSi,j,t denotes the intervention, i.e. the launch and availability of a biosimilar for a pharmaceutical product i in country j at time t6. Ri,j,tis the matrix of regulatory variables defining whether selected pharmaceutical policies (price links, prescribing by INN, substitution, or an RPS) were in place for pharmaceutical product i in country j at time t7. FEi,j,t is the matrix of fixed effects related to countries and pharmaceutical product (strength, pack size, pharmaceutical form, route of administration, primary packaging, point of administration) that are included8 to account for potential differences in prices with regard to country differences (market size, health or pharmaceutical expenditures). ε denotes the error term that captures differences between the fitted value of the model and the actual observed results. To model the effect of regulation, estimator β3 is of particular interest for answering the research question as it aims to provide a measure on the effectiveness and significance of the four pharmaceutical policies that are commonly applied to generic medicines and associated with an impact on price developments for those medicines [29]. The model captures the one-time effect of a biosimilar launch, but also gradual price developments in the post-launch period related to the suggested policies. To account for the impact of several biosimilars being available in national markets a continuous DID was conducted. The model measures the effect of the policies on the difference between monopoly prices and prices with biosimilar competition. In other words, for each market, the model compares the average price levels before and after the introduction of the first biosimilar and then calculates whether this difference in average price levels is on average higher if a certain policy is in place, in addition to the baseline effect of biosimilar competition measured by the term biosim_period_country. Another version of the model does not only compare the average prices before and after the first biosimilar but allows for a gradual effect depending on the number of biosimilars (cf. Table 3). Including the variable, rel_period_country, controls for common time trends of prices, independently of any of the other variables. 

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Funding sources

The authors and their contributors listed in the Acknowledgement section, had free access to the national price databases accessible through the Pharma Price Information (PPI) service of the Austrian Public Health Institute. The support of the Austrian Federal Ministry of Health to maintain the PPI service is gratefully acknowledged. 

No specific funding was received for writing this article. 

Competing interests: The authors declare that they have no conflicts of interest. 

Provenance and peer review: Not commissioned; externally peer reviewed. 

Authors

Peter Schneider1, MA 
Alexander Guggenberger2, BSc, MSc 
Siegfried Eisenberg3, BSc, MSc, PhD 
Lukas Rainer4, BSc, MSc 

1WHO Collaborating Centre for Pharmaceutical Pricing and Reimbursement Policies, Pharmacoeconomics Department, Gesundheit Österreich GmbH (GÖG/Austrian Public Health Institute), Vienna, Austria 
2Department of Economics, Paris Lodron University, Salzburg, Austria 
3Health Economics and Health Policy, Institute for Advanced Studies, Vienna, Austria 
4Department of Health Law and Hospitals, Province of Tyrol, Innsbruck, Austria 

Author for correspondence: Dr Peter Schneider, MA, WHO Collaborating Centre for Pharmaceutical Pricing and Reimbursement Policies, Pharmacoeconomics Department, Gesundheit Österreich GmbH (GÖG / Austrian National Public Health Institute), Vienna, Austria 

Disclosure of Conflict of Interest Statement is available upon request.

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