After generating $208 billion in sales over two decades, AbbVie’s (NYSE: ABBV) monopoly on its world’s best-selling therapy Humira (adalimumab) is about to end this week as copycat versions enter the US market.
A self-administered injection indicated for rheumatoid arthritis i other autoimmune conditions, Humira generated $21 billion in worldwide sales for AbbVie (ABBV) in 2021, accounting for more than a third of its peak value and becoming the best-selling drug in the world for the tenth year in a row.
Thanks to patent extension strategies and legal settlements, the company has maintained its blockbuster status since former parent Abbott Laboratories (ABT) won the first US approval for Humira in 2002.
After the 2013 spin-off, AbbVie ( ABBV ) added multiple autoimmune indications as it built so-called “patent density” to consolidate its legal monopoly on Humira for an additional six years after the master patent expired in 2016.
Since the first approval in 2002, the company and its subsidiaries have applied for about 250 Humira patents in the US, of which 130 have been granted, according to the Medicines, Access and Knowledge Initiative, which tracks drug patents.
Since 2016, Humira’s annual list price has jumped 60% to more than $80,000, according to research firm SSR Health, while AbbVie ( ABBV ) has filed lawsuits and entered into settlements to delay the threat of biosimilars.
In 2016, when Amgen ( AMGN ) was on the verge of getting FDA approval for its Humira biosimilar, AbbVie ( ABBV ) filed a lawsuit claiming the competitor was infringing on 10 of its patents. About a year later, the two sides settled with Amgen ( AMGN ), agreeing to delay the launch of the Humira biosimilar until 2023.
Similar agreements with nine other drugmakers followed, delaying their market entry until 2023, even as the price of Humira has jumped about 30 times since 2002, including an 8% increase this month. But for the delay, Medicare, which covered the cost of Humira for 42,000 patients in 2020, would have saved more than $2 billion from 2016 to 2019, according to one analysis.
Amgen ( AMGN ), the first to settle with AbbVie ( ABBV ), has a Jan. 31 launch date for its Humira biosimilar Amjevita, while Samsung BioLogics and partner Organon ( OGN ) are set for a June launch of its Humira version Hadlima.
In 2022, the FDA rejected Alvotech’s ( ALVO ) plan to launch a Humira biosimilar with partner Teva Pharmaceutical ( TEVA ), citing manufacturing issues. The agency agreed to reconsider its offer after reviewing the company’s manufacturing location in Iceland, and a decision is expected on or before April 13.
Meanwhile, eight other drugmakers, including Pfizer ( PFE ) , Viatris ( VTRS ) , Roche ( OTCQX:RHHBY ) ( OTCQX:RHHBF ) , Johnson & Johnson ( JNJ ) and Fresenius ( OTCPK:FSNUF ) ( OTCPK:FSNUY ) faltered is launch dates throughout the year.
However, their impact on US medical spending is difficult to predict because of concerns about pricing power and how many patients are likely to switch. Inexpensive biosimilars are not exact copies of Humira, but they share clinical characteristics with the reference product.
“Even though they are finally coming to market, there are several hurdles for Humira biosimilars to reduce healthcare costs,” noted Ralph Pisano, president of RemedyOne, a formulary and rebate optimization company.
“First, given the challenging nature of conditions that Humira treats, such as Crohn’s disease, doctors will be reluctant to switch patients who have achieved stability on Humira to another drug, even if it offers cost savings,” he explained.
According to Pisano, AbbVie ( ABBV ), which is estimated to have paid more than $5 billion in rebates to PBMs in 2021, is comparable to biosimilar manufacturers’ net costs with only a 10% increase in rebates.
AbbVie’s ( ABBV ) deals with biosimilar makers, under which the company is entitled to an estimated 10% of Humira’s net sales, also “effectively create a floor on how much they can lower prices,” Pisano added.
“Finally, Abbvie’s rebate agreements with PBMs and plans clearly stipulate that they cannot provide an advantage, such as lower out-of-pocket costs, for biosimilars to benefit patients,” he said.
RemedyOne and its affiliates, along with formulation optimization company Nuwae, project Humira biosimilars to gain up to 5% market share in 2023 before expanding to a maximum of 20%-25% by 2026.
With rivals close behind and nearly a third of AbbVie’s ( ABBV ) equity at stake, the company’s shares have lost over the past six months, underperforming the rest of big pharma, as shown in this chart.
AbbVie’s ( ABBV ) international revenues fell by ~46% over 2018-2021 as the company lost its composition patent for Humira in most EU countries, allowing the first biosimilars to enter the European market in 2018.
Read: Alpha contributor Edmund Ingham recently maintained his Buy rating on AbbVie ( ABBV ), arguing that the Humira patent cliff “will not derail this company’s strong progress.”