Payers have been concerned with discussions on high-priced medicines for years, regardless of their countries’ ability to pay; these discussions have been fueled by the perception that the expenditures on a number of very expensive medicines threaten the financial sustainability of publicly funded health systems. In some countries, new high-priced, on-patent medicines have contributed to increasing pharmaceutical expenditures in recent years (de Bruijn et al., 2016; Pauwels et al., 2017; Godman et al., 2018; Babar et al., 2019).

Biologicals (i.e. biological medicines) are widely used in the treatment of chronic conditions, such as diabetes and autoimmune disorders, as well as cancers, and they often carry high price tags. By offering more affordable alternatives, biosimilar medicines are considered a promising solution to very high-priced biologicals (Kawalec et al., 2017; Abbott et al., 2019). A biosimilar is a “biological medicine highly similar to another biological medicine already approved (…), called 'reference medicine', in terms of structure, biological activity and efficacy, safety and immunogenicity profile (…)” (European Medicines Agency, 2020a). In the European regulatory framework, most biologicals must be approved centrally for market entry in the European Union (EU). As of August 2020, the European Medicines Agency, which evaluates biosimilars, has approved a total of 72 entities since 2006 (European Medicines Agency, 2020b) compared to 28 biosimilars approved by the US Food and Drug Administration (FDA) (U.S. Food and Drug Administration, 2020).

However, in contrast to marketing authorization, pricing and reimbursement as well as any measures to steer the use of medicines (including enhancing the uptake of generics and biosimilars) are national competences of the EU Member States. The respective policies lead to differences both in the prices and the extent of use of biosimilars across countries (Kanters et al., 2017; Kawalec et al., 2017; Moorkens et al., 2017; Manova et al., 2018; Ferrario et al., 2020; Kim et al., 2020), both of which are important contributing factors to the size of achievable savings from biosimilars (Farfan-Portet et al., 2014; Mestre-Ferrandiz et al., 2016). For Europe, such savings were estimated to range between €11.8 and 33.4 billion for the period 2007–2020, resulting in particular from monoclonal antibodies (Haustein et al., 2012). The market share of biosimilars varies across countries; it remains low, at least for certain substances in some systems (Troein et al., 2019).

In recent years, the savings potential for public budget resulting from biosimilar use has been shown: Tendering for infliximab in Norway in 2015 led to the procurement of biosimilar remsima at a price 72% below the official list price of the reference medicine (GABi Online, 2015); biosimilar infliximab also achieved faster market penetration compared to other biosimilars in Norway (Mack, 2015). Tendering for biologics in Italy also led to lower prices and therefore savings for payers due to competition (Curto et al., 2014). In addition, considerable reductions were observed in the prices of reference medicines (biologicals) upon biosimilar market entry in some countries, as marketing authorization holders of reference medicines have increasingly been applying a price-competition strategy, lowering their prices to make biosimilar substitution unattractive, and thus winning tenders (Troein et al., 2019).

In addition to the effect of pricing and procurement, demand-side measures also play a significant role, inter alia by increasing knowledge about biosimilar medicines, fostering trust and therefore the tendency to use them among patients, prescribers, and dispensers (Mestre-Ferrandiz et al., 2016). One such demand-side measure is substitution at the pharmacy, either of the reference medicine by a biosimilar medicine, or of a biosimilar medicine by a different biosimilar medicine. Another is switching by the doctor, whereby a patient previously treated by one biologic medicine is prescribed a different one, ideally following shared decision-making (Kay et al., 2018).

While the saving potentials of biosimilar use have been established by a number of example cases, an analysis of achievable savings from biosimilar use as a result of specific policy options is lacking.

This article has two aims: on the one hand, to provide an updated overview of the different policy measures employed by governments in European countries to shape the biologicals market; and on the other hand, to explore the potential savings resulting from the use of biosimilar medicines under different scenarios of such measures, taking the German pharmaceutical market as an example.

The aim of this contribution has been to contextualize different mechanisms for pricing and encouraging the use of biosimilars in European countries, and explore their implications for pharmaceutical expenditure. Previous studies have highlighted the dormant potential for savings from the use of biosimilars (Haustein et al., 2012; Farfan-Portet et al., 2014; Mestre-Ferrandiz et al., 2016; Troein et al., 2019; Kim et al., 2020) and have attributed it to limited competition, small price differences between reference medicines and biosimilars, and a slow market penetration due to uncertainties about safety and effectiveness among physicians and patients alike.

Earlier reviews (Kawalec et al., 2017; Moorkens et al., 2017; Vogler et al., 2019) of policies to shape the biologicals market and make use of the efficiency gains of biosimilar medicines usually focused on a smaller group of countries, and describe a situation of a few years ago. Given the emergence of new biosimilar medicines on the market, policies in this area have been changing. This work provides a more comprehensive, updated overview, which can be beneficial as more countries consider introducing policies to increase the uptake of biosimilar medicines.

Despite the fact that price link policies seem to have some potential for savings (as demonstrated by scenario 2), not all the countries studied here apply them. A reduction in the reference medicine price at the market entry of the first biosimilar would have a more substantial effect on the total savings (as shown in scenario 3), but this variant of the price link policy is less frequently used. A design of the price link policy with a price reduction of 30% for the first biosimilar in comparison with the reference medicine price and a 15% reduction in the price of reference medicine itself at the first biosimilar’s market entry seems plausible, as this approach was identified in the legislation of some of the studied countries (Table 2). However, countries that do not apply price link policies at all (such as Germany) are less likely to enforce them for biosimilars than countries where such policies are already in place for generics.

As far as tendering is concerned, the policy is employed rather rarely in the outpatient setting, while it is prevalent in the inpatient setting, documented for every country in the sample. This policy, generally known for its savings potential (Mack, 2015; WHO, 2016), can thus have considerable impact in the area of biologicals, as these are commonly used in hospitals. For instance, in November 2018, the Danish procurement agency AMGROS serving all public hospitals completed its then largest-ever tendering procedure for biologicals, including adalimumab, and expected savings of approximately € 56 million for the year to come (AMGROS, 2018). Similarly, the inclusion of biosimilars in the preference price policy schemes of the Dutch health insurers (i.e. tendering for outpatient medicines) can be assumed to have an effect on their expenditure; the preference price policy itself was deemed so successful before the inclusion of biosimilars in 2016 that other cost-containment measures like price freezes were abandoned (Panteli et al., 2016). It is difficult to anticipate if similar large price reductions as in Denmark, the Netherlands, and Norway could be achieved for tendered biosimilar medicines in Germany. Should it be possible, the savings potential could be substantial, as also scenario 1 (application of prices as in other countries) suggests. However, these instruments also have their limitations, for instance regarding the need to adjust treatment regimens for patients and possibly introducing vulnerabilities to shortages. Conducting tenders thus requires an appropriate strategy, as highlighted under the concept of “strategic procurement” promoted by the World Health Organization (WHO, 2016).

A number of countries have included biosimilars in their reference price system, and the results in scenarios 4 and 5 confirmed the savings potential of this measure. It should be noted that a reference price system requires sound competition among a sufficient number of manufacturers to realize its cost-containment potential. In Germany, in 2018, only three active substances (infliximab, erythropoetin, filgrastim) had been included in the reference price system (baseline scenario). A higher number of biosimilar suppliers on the market for a given biologic was shown to lead to lower prices of all the medicines of a specific substance (reference medicine and biosimilars) (Curto et al., 2014). Consequently, as long as reimbursement amounts for the reference groups are set based on the prices of the medicines in the cluster, lower biosimilar prices would result in lower reimbursement amounts and thus lower public pharmaceutical expenditure. In addition to the number of biological medicines grouped in a cluster, the time after patent expiry also impacts the savings potentials. As shown in scenario 4, possible savings for infliximab, which has had biosimilars on the market for more than five years, would amount to 3% compared to 37% for adalimumab, for which the general price level experienced reductions already three months after market entry of the first biosimilar in September 2018. Furthermore, the larger saving potentials in scenario 5 compared to scenario 4 can be attributed to the lower list prices in other study countries, as is also supported by scenario 1. The cost-containment potential of a reference price system has been recognized even in countries without an established reference price system, as is attested by the introduction of country-wide reimbursement amounts for adalimumab in England in April 2019 (NHS England, 2019).

Demand-side measures mainly aim to increase the market penetration of biosimilars. This can also bolster the attractiveness of the biosimilar market and lead to an increase in the number of suppliers and the effects of competition, thus enabling lower prices and reduced expenditure. All the countries leave the final decision on whether to prescribe a biosimilar to physicians. The majority of countries allow, or even recommend, switching patients from reference medicines to biosimilars, usually tied to certain preconditions like shared decision-making with patients and close monitoring. A few years ago even countries that endorsed biosimilar prescribing for naïve patients did not recommend switching for patients already on biologicals, but this has changed. This development reflects scientific insights driven by the so-called switch studies, which investigated the consequences of switching a patient’s medication to a (different) biosimilar. They found no negative impact of switching on safety and effectiveness, but highlighted the need for information and monitoring [e.g. Jørgensen et al. (2017), Belleudi et al. (2019)]. The latter is fundamentally important to enable informed choice and decision-making for patients and providers. As observed for generics over the last decade, the acceptance of biosimilar medicines by patients and health care providers, in particular prescribing doctors, plays a major role for their uptake: concerns raised so far mainly relate to safety and efficacy, while the savings potential and continuous supply are seen as advantages of biosimilars (Baji et al., 2016; Leonard et al., 2019; Kovitwanichkanont et al., 2020; Sarnola et al., 2020). These concerns need to be addressed, and trust has to be built in the quality of biosimilars, as otherwise demand-side measures would not be able to exploit their potential to foster uptake. Good communication to both patients and health professionals is key for positively impacting their attitudes (Gasteiger et al., 2020). Some countries, such as Belgium and Germany, use prescribing targets or quotas to steer the use of biosimilars, but this is not a common approach in the study sample. It is expected that such measures would contribute to cost-containment in two different ways: by directly reducing public expenditure and by encouraging biosimilar suppliers to join the market, thus strengthening competition. Generally, the implications of these measures cannot be fully evaluated at present, as their implementation is relatively recent.

In contrast to generics, substitution for biosimilars at pharmacy level is not yet commonly applied; an exception among the countries in this study is Germany, where biosimilar substitution is planned to be implemented beginning of 2022. The contribution of the measure to cost-containment will have to be evaluated in due time. Any measure that influences dispensing at pharmacy level needs to be considered in conjunction with the remuneration for community pharmacy. Any price-oriented remuneration (i.e. pharmacists are remunerated for filling prescriptions based on the price of a medicine), even if designed as a regressive margin scheme, will incentivize the dispensing of higher-priced medicines (WHO, 2020). Alternative payment schemes for community pharmacy (performance-based remuneration) have been increasingly introduced in European countries, at least as additional remuneration components (Vogler et al., 2019). In Switzerland, pharmacists are rewarded for each generic substitution (Santesuisse, 2020). Actual savings from such measures, which can possibly lead to higher payments to pharmacies, would need to be determined. In the meantime, consolidation mechanisms in price-oriented remuneration for community pharmacy, as applied in France, could be employed.

For the calculation of potential savings from the implementation of different policies for biosimilars, this work adopted the German health system perspective. The results of scenarios 1 and 5, which were based on the lowest prices among comparator countries, indicate for biologicals what previous research (Busse et al., 2017; Schneider et al., 2018) has suggested for German prices, namely that they are relatively high in the European context. While the assumption of considering prices from countries of lower income than Germany might be challenged, it should be reminded that even for high-income countries lower prices are possible, as the evidence for generic prices demonstrates (TLV, 2020). This discrepancy between biosimilars and generics prices in Germany can be attributed to the relatively recent (or still pending) implementation of policies to foster the use of biosimilars. At the same time, the other countries also do not have a long experience in the application of policy measures for biosimilars either, and would thus benefit from the cost-containment potential of biosimilars. For instance, NHS England expects annual savings of up to € 330 million until 2021 following the implementation of relevant policies (NHS England, 2020).

Each scenario that was explored for the example of Germany has shown the potential to reduce public expenditure. It can be assumed that a combination of policies to encourage the use of biosimilar medicines would have an even higher impact. The European overview of national policies presented in “Overview of Pricing and Procurement Mechanisms and Demand-Side Measures to Endorse the Use of Biosimilars in European Countries” Section of this manuscript pointed to such bundles of measures, even though policies for biosimilars have only been implemented rather recently in some countries. Some policies are complementary, whereas other measures are applied by different actors in sequence. For instance, a price is first statutorily set by the pricing authority (i.e. based on the provisions of the price regulation, e.g. a “price link”), and in the next stage a public procurer (e.g. NHS, hospital procurement agency) tenders for the biosimilar and obtains a possibly lower procurement price, or will conclude a contractual arrangement such as a managed-entry agreement.

It can be expected that the combination of supply-side and demand-side measures can amplify the effect both on the increased use of biosimilars and on savings. In particular, when in the outpatient sector tendering is combined with prescribing by INN, substitution by pharmacists and/or a reference price system, this may likely boost competition and decrease prices and, at the same time, enhance the uptake of the “winning” or “preferred” medicine, as empirical evidence has demonstrated for generics (Dylst et al., 2011; Vogler et al., 2017). While similar developments may be assumed in the biosimilar medicines market, experience is not yet available, also because of the novelty of related measures (limited implementation of biosimilar substitution in contrast to generic substitution in European countries; exclusion of biosimilars from INN prescribing in some countries, e.g. Belgium, France, and the United Kingdom; and tendering for outpatient off-patient medicines used sometimes solely for generics but not biosimilars, e.g. Sweden, if at all).

All the scenarios calculated in this manuscript led to savings for the publicly funded health system in Germany, but the scenarios based on the assumption of full implementation of a reference price system for biologicals also have an impact on private expenditure: in a reference price system (in Germany as well as in other countries), patients have to pay the difference out of pocket if they opt for medicines priced above the determined reference benchmark amount. However, the impact on patients’ expenses should be limited in extent: data only about 7.6% of all prescriptions in Germany in 2019 concerned medicines priced above the reference price (Bundesministerium für Gesundheit, 2020).

This study did not aim to provide a budget impact assessment of policy measures. Rather, by highlighting the savings potential of policies to encourage the uptake of biosimilar medicines, it adds to several budget impact assessments that have already been conducted for one or more of the biological substances investigated here (e.g. infliximab, rituximab, trastuzumab) in European countries. All those studies identified important savings potentials in the case of a change from the originator reference medicine to biosimilars (Kanters et al., 2017; Gulácsi et al., 2017; Jang et al., 2021; Brodszky et al., 2016; Brodszky et al., 2014; Jha et al., 2015; Aladul et al., 2017). While budget impact assessment is a common methodology to estimate the financial impact resulting from the use of biosimilar medicines instead of the originator biological, such an analysis requires a wealth of data (e.g. epidemiological data, volume, market research information, prices over a longer period) to build a model that complies with good practice principles for performing a budget impact assessment (Sullivan et al., 2014). This was beyond the scope of this work, which intended to provide an illustrative example of the savings potential of selected relevant biosimilars if Germany applied measures used in other countries, or changed the design of relevant measures, or had prices as those reported in other countries. This study has some limitations. Despite careful data collection on country-level policy measures (based on predefined definitions) and validation, the authors cannot exclude misunderstandings and/or errors in reporting. The same policy measures may have been implemented differently across countries, and this is a major limiting factor in the comparison. The information on policy measures in Belgium and France was not validated for mid-2020 and may reflect the situation as of the end of 2019. For the calculations of scenarios 1 and 5 (based on prices in other countries), Ireland and Portugal had to be excluded due to missing price data. Our calculations accounted for the statutory manufacturer discount set out in German legislation, but any additional commercial … discounts granted by the pharmaceutical companies could not be taken into account because of their confidential character. Price data from the other countries also reflect list prices, without consideration of confidential discounts. Furthermore, the calculations reflect a cross-sectional view based on the reality of the German pharmaceutical market in 2018; they do not consider dynamic changes (e.g. share of biosimilars, supplier’s responses on policies) over time and may not be transferrable for other systems. The illustrative calculations for Germany in “Impact of Selected Measures on Pharmaceutical Expenditure Under Different Scenarios” Section of the manuscript were conducted for some but not all the policy options presented in “Overview of Pricing and Procurement Mechanisms and Demand-Side Measures to Endorse the Use of Biosimilars in European Countries” Section. Furthermore, the descriptive comparison of policies in European countries itself is not exhaustive; rather, those policy measures that have been recognized in the literature (Kovitwanichkanont et al., 2020) as major for generic medicines were investigated here for biosimilars. Further pricing, procurement, and reimbursement policies (e.g. external price referencing; managed-entry agreements; gain-sharing, where savings are shared between the payer and the providers who have achieved them) may also be applied to generics and biosimilars, though only in few countries.

In conclusion, this article uses the international comparison as an instrument for generating evidence-based ideas for the development, implementation, or adjustment of policy measures. Specifically, it looked at a number of supply-side and demand-side measures that influence the prices and use of biosimilars, and thus their impact on expenditure, in sixteen European countries. While differences are observed among countries for individual measures, there are discernible tendencies (price link for biosimilars with few exceptions, tendering in the inpatient and occasionally outpatient setting, reference price systems, switching allowed and/or recommended, prescribing quotas in several countries, pharmacy level substitution is rather the exception than the rule). The potential for savings of some of these measures was clearly demonstrated. However, there is room for further research on the impact of other policy options (e.g. tendering or biosimilar substitution) on public expenditure not explored in this manuscript. At the same time, it is of key importance to recognize that the relative recency of biosimilars on the pharmaceutical market means that related measures have not had sufficient running time to be evaluated yet. It is therefore vital to adhere to best practice, and monitor and evaluate existing and newly implemented policies, not only regarding their effect on reducing public expenditure but more holistically, and especially in regard to patient welfare.