CHICAGO — One of the most popular prescription medications in the world is about to face fierce competition in the U.S. — something that could mean lower prices for the drug but a difficult coming year for the Illinois company that makes it.
For years, North Chicago-based AbbVie has worked to delay the day that copycat versions, called biosimilars, of its drug Humira would hit the market. Humira is used to treat rheumatoid arthritis, Crohn’s disease, ulcerative colitis and other conditions. It is AbbVie’s top seller, with sales of $20.7 billion in 2021, making up nearly 37% of the company’s total revenue that year.
The company was able to hold off the competition until 2023 through patent litigation and settlements with other drugmakers. Now that 2023 is at hand, more than half a dozen biosimilar versions of Humira will become available over the next year.
That competition could mean lower prices for the drug, which now costs as much as $81,590 a year before rebates and discounts, according to SSR Health, which tracks drug prices. Insurance typically picks up most of the costs for patients. Patient advocates say the competition is long overdue, and allege that AbbVie has manipulated the legal system to maximize its profits.
“AbbVie, and how it has handled Humira, is the poster child for abuse of our patent system,” said David Mitchell, founder of the advocacy group Patients for Affordable Drugs.
A spokesman for AbbVie declined to comment.
The situation, however, could mean trouble for AbbVie, which spun off from Abbott Laboratories in 2013 and has thousands of workers at its North Chicago headquarters. AbbVie Board Chairman and CEO Richard Gonzalez has said he expects Humira sales in 2023 to fall by anywhere from 35% to 55%.
AbbVie leaders have said they don’t expect to cut back on investments despite that decline in sales.
But Damien Conover, an analyst and director at Morningstar, said it’s possible the company may make some cuts in 2023. “Whenever you lose a huge product like that, there is usually some restructuring that happens,” Conover said.
A yearslong wait
Many patients have been waiting years for 2023 to arrive.
Samantha Reid was about 22 years old and living in Wrigleyville when she started taking Humira. She had been diagnosed with Crohn’s Disease at age 18, and her symptoms were flaring, causing her pain and rapid weight loss. She and her doctors decided she needed a different drug than what she had been taking.
But Reid delayed starting the medication. Newly out of college and cost-conscious, she was intimidated by Humira’s price tag.
“I was lucky enough to still be on my dad’s insurance, but I was definitely still navigating, for the first time, what it meant to pay my own medical bills and have all those expenses,” said Reid, who now lives in Washington, D.C., and is a volunteer patient advocate for Patients for Affordable Drugs. “I think it was very overwhelming.”
Ultimately, she did take Humira for about nine months, and participated in an AbbVie assistance program, which helps people afford their medications. But she worries that others haven’t been as lucky.
“Cost should never be a factor in whether or not people are in pain or suffering or not able to live their lives,” Reid said. But “it is, and the reason it is, is because companies like AbbVie charge so much for these medications.”
Part of the reason drug companies say they charge high prices for medications is because of the time and investment it takes to create them. Humira is a type of drug called a biologic, meaning it’s made from a living organism. Biologics are more complex than traditional drugs.
When a new drug is created, that drug generally has patent protection for 20 years from when the patent is filed. The idea behind the patent protection is to give the drug’s creator time to reap a profit from the drug’s creation. It’s a system that’s meant to encourage investment in research and the development of new medications.
“The cost of developing and producing biologic therapies is typically dramatically higher than for” traditional medications, AbbVie said in its most recent annual report. “Significant investments in biologics infrastructure and manufacturing are necessary to produce biologic products.”
In the drug industry, however, it’s become common for pharmaceutical companies to get numerous patents on a single drug, patenting different aspects of the medication. That can delay the time that a competitor may be able to reach the market without infringing on any of the patents. AbbVie took out an especially high number of patents on Humira, building up more than 130 patents around it — which some call a “patent thicket.”
The core patent for Humira expired in 2016, and the U.S. Food and Drug Administration began approving biosimilars for Humira that year. But in another move common in the drug industry, AbbVie sued the biosimilar makers for infringement on its other patents. AbbVie and those other companies then settled the lawsuits, with agreements that the companies would not try to sell their biosimilars in the U.S. until 2023.
“When you have a patent thicket with more than 100 patents involved, it’s really tricky for the biosimilars because they don’t want to be found guilty of patent infringement,” said Michael Carrier, a law professor at Rutgers University who specializes in intellectual property and antitrust law in pharmaceuticals. “That can be very costly for them.”
But so far, the law has been on AbbVie’s side.
The U.S. Court of Appeals for the 7th Circuit in August upheld a lower court’s decision that AbbVie did not violate antitrust laws by taking out so many patents, or by settling with the biosimilar makers. One of the judges in that case, U.S. Circuit Judge Frank Easterbrook, wrote, “What’s wrong with having lots of patents? If AbbVie made 132 inventions, why can’t it hold 132 patents? The patent laws do not set a cap on the number of patents any one person can hold — in general, or pertaining to a single subject.”
He wrote that tech companies have much larger portfolios of patents, and Thomas Edison held more than 1,000.
A bill introduced in Congress last year would have limited the number of patents companies can try to protect, in litigation, for a single drug, but that bill didn’t become law.
Biosimilars for Humira already entered the market in Europe in 2018, because of different patent laws there.
Humira costs significantly less in Europe than it does in the U.S., Mitchell said.
Uncertain future
It remains unclear exactly how much the price of Humira might fall in the U.S., and how AbbVie, as a company, might weather the change.
Jeffrey Stewart, AbbVie executive vice president and chief commercial officer, said during a November conference that he expects AbbVie “will concede price” as needed. But a number of factors complicate the issue.
For one, biosimilars, unlike generic version of traditional drugs, are not identical to the drugs they’re imitating. That can make some doctors and patients hesitant to switch to a biosimiliar, because they don’t know exactly how the patient might react to the new version.
For that reason, it’s unlikely there will be a flood of patients suddenly switching from Humira to biosimilars. Rather, it’s more likely that patients needing Humira for the first time may try a biosimilar first, Stewart said.
Also, the number of patients who use biosimilars rather than Humira will depend on how insurance companies cover the drugs. Companies called pharmacy benefit managers work for insurers, negotiating with drug companies to buy medications on their behalf. Those pharmacy benefit managers reach agreements with drug companies to cover their drugs and put them on formulary tiers that affect whether patients can get certain drugs covered, and, if so, at what cost to them.
A number of major pharmacy benefit managers have already said they plan to include Humira biosimilars on their formularies, meaning the biosimilars will be covered by many insurance plans. AbbVie has also said that it expects Humira to still be on enough insurance formularies to be available to at least 80% of people in the U.S.
“We anticipate strong access for U.S. Humira throughout 2023, and project biosimilars will share access as they become available,” AbbVie’s Gonzalez said during the company’s most recent earnings call.
AbbVie has been preparing for competition to Humira for years in a number of other ways as well.
In anticipation of 2023, AbbVie has been focusing on drugs Skyrizi, which treats plaque psoriasis, and Rinvoq, to treat rheumatoid arthritis. AbbVie’s on track to sell $7.5 billion of those drugs this year. AbbVie expects the revenue from those two drugs to continue to grow, eventually exceeding what Humira brought in at its peak.
But that will take time.
“Skyrizi and Rinvoq could replace Humira sales over time, but it may take a while for this to completely unfold,” said John Boylan, a senior equity analyst for Edward Jones.
It may take a few years for AbbVie to fully recover its sales, Boylan said.
It’s possible the company may make some modest cuts to deal with that, such as by not filling jobs as they become vacant or spending less on research and development, Conover said.
AbbVie, however, expects to return to strong top line growth in 2025.
“We’re not going to be cutting back investment, because we expect to return to growth quickly,” Robert Michael, AbbVie vice chairman and president, said during the earnings call. “So, you’ll see us not necessarily cut back, but certainly put more behind this business to drive that long-term growth, which we expect to be industry-leading over the long-term.”
It’s also possible AbbVie might try to handle the loss of Humira by acquiring more companies. AbbVie acquired Botox-maker Allergan for $63 billion in cash and stock in 2020, partly to help it reduce its reliance on Humira.
“I don’t think they’ll be able to do another acquisition of that magnitude, but small acquisitions are very likely,” Conover said.
AbbVie is expected to release more details in the coming months about what 2023 may look like at the north suburban company.
Investors, patients and AbbVie workers will be watching closely. It’s unusual for a medication to have to compete against so many incoming biosimilars, but because Humira’s sales have been so huge, many other drug companies want a piece of the pie.
“This will be a big test of how well can biosimilars perform to lower prices in this country,” Mitchell said.
