AbbVie's Humira Exclusivity Ends: Two Decades of $20 Billion Market Monopoly Comes to a Close

One of the most profitable market monopolies in the history of the pharmaceutical industry is coming to an end.

In January 2023, the first copycat version of Humira, an injectable drug approved for a range of inflammatory conditions, is scheduled to launch in the United States. This marks the end of the drug's two-decade market exclusivity, during which Humira's manufacturer, AbbVie, generated nearly $20 billion in revenue from the drug.

Eight more biosimilars, which are copycat versions of biologic drugs, are expected to launch later in 2023, putting pressure on AbbVie. To prepare for competition, the company has spent the past several years trying to reduce its reliance on Humira, which still accounted for more than half of its revenue in 2019.

Although pharmaceutical companies periodically face such "patent cliffs," the one AbbVie faces with Humira is steeper than any before. The most profitable drug to lose patent protection previously was Pfizer's cholesterol-lowering medication Lipitor, which had peak annual sales of about $13 billion. In 2021, Humira sales totaled $20.7 billion.

The arrival of Humira biosimilars could also be a significant moment for the industry as a whole, as it is the biggest test yet of whether biosimilars can save health systems significant amounts of money. To date, biosimilars that have launched have not lived up to the high expectations previously set for their impact.

The issue is not just about AbbVie, as several drugs similar to Humira, such as Enbrel and Stelara, will also lose patent protection within this decade.

"The number of biologics facing competition over the next decade is quite substantial," said Joe Azzinaro, head of biosimilars commercialization at drugmaker Organon, which expects to launch a Humira biosimilar in 2023.

Replacing a blockbuster

AbbVie sells Humira today because its former parent company, Abbott Laboratories, acquired Knoll Pharmaceuticals, the pharmaceutical business of German chemical company BASF, in 2000. At the time, Humira was known as D2E7, and analysts thought its future annual sales might be between $500 million and $1 billion.

However, Abbott, and AbbVie after its spinoff in 2013, proved that Humira could treat more than just the rheumatoid arthritis it was initially approved for, gradually expanding its indications. At the same time, AbbVie carefully built a wall of intellectual property, sometimes called a "patent thicket," around Humira and each of its new indications.

According to the advocacy group Initiative for Medicines, Access & Knowledge, AbbVie has filed about 250 patent applications for Humira in the United States, 90% of which were filed after the drug was approved in 2002, and 130 have been granted.

The reinforced patent shield extended AbbVie's legal monopoly in the United States by six years beyond the expiration of Humira's main patents in 2016. Since then, AbbVie's Humira sales in the United States have totaled nearly $75 billion, boosting the company's stock price and enabling it to pay billions of dollars in dividends to investors. (The situation was different in Europe, where biosimilars entered the market in 2018 and quickly eroded Humira's market share.)

The extra revenue, along with a 41% price increase for Humira under Medicare between 2016 and 2020, also allowed AbbVie to invest in deals and research to replace Humira.

Most notably, AbbVie spent $63 billion to acquire Allergan and its blockbuster product Botox, which generated nearly $5 billion in revenue in 2021. Other deals were less successful, such as the $5.8 billion acquisition of Stemcentrx, whose experimental lung cancer drug ultimately failed.

Humira's extended patent protection also bought AbbVie time to launch two new immunology drugs, Skyrizi and Rinvoq, which the company believes will make up for Humira's revenue loss.

Company executives now claim the hit to AbbVie's balance sheet will be short-lived.

"Following the U.S. Humira [biosimilar entry] in 2023, we expect to return to rapid growth in 2024 and achieve high single-digit growth from 2025 through the end of the decade," Chief Executive Richard Gonzalez said on the company's February 2022 earnings call. That outlook has since been adjusted, with Gonzalez telling investors in January that 2023 should represent the "bottom" for revenue and that there is a "path to strong sales growth in 2025."

Negotiation tactics

Humira biosimilars will roll out gradually in 2023, with only one product from Amgen on the market until mid-year, when five more will launch. This raises the question: by next year, will enough drugmakers sign big enough contracts with insurers to affect the market?

While AbbVie will primarily negotiate with Amgen in 2023, by the 2024 contract cycle, the landscape will change as more biosimilar makers' products come to market.

Ronny Gal, a former Bernstein analyst who tracked AbbVie and closely followed the biosimilar market, said last year that AbbVie's assessment of the biosimilar impact could be wrong.

"I think the more likely scenario is slower market erosion in 2023 and faster in 2024," he said. Gal is now an executive at Novartis.

AbbVie may have some leverage, depending on the negotiation tactics it employs in 2023 as it works to make Humira the preferred treatment choice on insurers' formularies.

Drugmakers' tactics in these negotiations can be aggressive, with at least one case raising antitrust concerns. In a 2017 lawsuit, Pfizer accused Johnson & Johnson of using exclusive contracts and threatening to withhold rebates if insurers made Pfizer's Remicade biosimilar a "preferred" option. The companies later agreed to drop the lawsuit.

Because Remicade is administered in hospitals and other healthcare facilities, Johnson & Johnson had more leverage in retaining market share. For example, Pfizer claimed that if insurers did not reimburse, these facilities would have no incentive to purchase its biosimilar.

In contrast, pharmacists can provide Humira directly to patients, which may create more opportunities for biosimilar makers to penetrate the market. Gal said AbbVie would not threaten to cut rebates to prevent Humira from losing preferred status, but rather "will use Humira discounts to protect Skyrizi and Rinvoq," two newer drugs approved for some of the same indications.

Still, biosimilar makers expect AbbVie will not give up easily. "Our expectation is that AbbVie will be very aggressive in defending its product," said Organon's Azzinaro.

Price will not be the only factor. AbbVie's experience in the immunology drug market will also be an advantage.

One tool in AbbVie's arsenal is a patient support program called Humira Complete, which includes nurse consultants, insurance assistance, and injection training. This assistance has sometimes been controversial and was mentioned in a lawsuit filed by California's insurance commissioner in 2018.

"In my view, Humira was never just a drug," said A. Mark Fendrick, director of the University of Michigan's Center for Value-Based Insurance Design, who has consulted for AbbVie. "With Humira and Humira Complete, you saw high utilization of a high-priced drug. With biosimilars, you might see low utilization of a low-priced drug."

"I hope biosimilars offer the exact same thing: not just a Humira biosimilar, but a Humira biosimilar plus," he added.

But it is unclear how much such programs help and how much insurers weigh them when deciding coverage.

"If these efforts truly improve real-world adherence and thus lead to better clinical outcomes, there would be data," said Steve Pearson, president of the Institute for Clinical and Economic Research, a nonprofit that evaluates the cost-effectiveness of drugs and other medical interventions. "We have not seen actual data on this yet."

Pharmacy substitution

Predictions of Humira's decline are complicated by the different labels biosimilars can carry and differences in device and formulation for the most commonly used Humira dosage forms.

For example, some later entrants will receive an "interchangeable" label from the U.S. Food and Drug Administration, allowing pharmacists to choose a biosimilar instead of Humira when dispensing, without a prescriber's specification.

Amgen's biosimilar has not yet been approved as interchangeable, at least not yet, and does not offer the most commonly used Humira dosage form. The first interchangeable biosimilars, from Boehringer Ingelheim and Alvotech, will launch on July 1, 2023, with more expected in 2024. Of these, only Alvotech, whose biosimilar is still awaiting FDA approval, will offer the more commonly used dosage form.

How interchangeable Humira biosimilars perform compared with other biosimilars will reveal how important this designation is to insurers. The designation was created by the legislation that authorized FDA biosimilar regulation and does not exist in European markets.

"Understanding what interchangeability is and is not is very important," said Steven Selde, director of the biosimilars council at the Association for Accessible Medicines. "It is not a marker of superior quality; it is just a regulatory designation. Pursuing an interchangeable designation is costly, and it is unclear how many companies will incorporate it into their business models."

So far, the impending loss of Humira's market does not seem to be troubling AbbVie executives. They speak confidently about Skyrizi and Rinvoq reaching combined sales of $17.5 billion by 2025, up from $4.6 billion in 2020, and predict the combined peak sales of the two products will exceed Humira's $20 billion peak.