Fate of biosimilars hangs in limbo of healthcare reform debate

9/28/2009

WASHINGTON —While it appeared all but certain a few months ago, the possibility of biotech drugs facing competition from follow-on knock-offs has become caught in the legislative traffic jam holding up healthcare reform.

Legislation to create a regulatory approval pathway for biosimilars has been tied into the healthcare reform bills that have generated controversy throughout the country and turned town hall meetings into shouting matches, leaving its fate uncertain.

“If [healthcare reform] fails to win passage in Congress, then we are back to square one,” IMS Health analyst Doug Long told Drug Store News.

If it does pass, however, it will mark the beginning of a new competitive and regulatory era for drugs and the stores that sell them.

Under current legislation, the most likely scenario is a 12-year market exclusivity model for biotech drugs, whereby innovated biologics would remain on the market for 12 years before facing competition from biosimilars, compared with the five-year model for pharmaceutical drugs. The biotech industry has adamantly pushed for longer exclusivity periods, contending that unlike pharmaceutical patents, biologic patents cover the process used to make them rather than the drugs themselves, which would allow a biosimilar manufacturer to use a different process to create a similar drug, thus circumventing the innovator company’s patent. A longer exclusivity period would prevent the Food and Drug Administration from using an innovator company’s product data to approve a biosimilar until the exclusivity period ended, even if the biosimilar manufacturer had found a way around the innovator’s patent.

A longer exclusivity period would also add to the factors making a biosimilars market quite different from the existing generic drug market. “Since these products will be similar instead of interchangeable, players in the space will have to have sales forces to call on docs and hospitals and have marketing departments,” Long said.

Creating those marketing departments requires a lot of money, as do developing research and development facilities and conducting clinical trials. According to some estimates, developing manufacturing facilities for biotech drugs can cost anywhere from $250 million to $450 million. The high costs limit the creation of biosimilars divisions to the handful of companies that already have them—such as Sandoz, Teva and Dr. Reddy’s Labs—and the larger generic and branded companies that have expressed an interest, such as Mylan and Pfizer. These factors, Long said, would conspire to create a smaller pool of manufacturers.

“I would see fewer players in the market, and they would be a combination between generic companies and brand/bio companies,” Long said.

The regulatory environment would likely be a lot more complex than the one for generic drugs, as well. When a company wishes to market a generic, it simply files an abbreviated new drug application with the FDA, certifying that its drug is chemically and functionally identical to its branded counterpart. With the FDA’s approval, the company can use machines to crank out one bottle after another. Biologics, on the other hand, are manufactured inside living cells, meaning subtle genetic differences between the cell line used to make an innovated biologic and the one used to make the biosimilar can result in drugs with different effects on patients. Because of this, biosimilars would have to undergo testing for immunogenicity, the ability of a substance to provoke an immune system response.

“Testing for immunogenicity is standard and expected these days,” Tufts University Center for the Study of Drug Development senior research fellow Janice Reichert told Drug Store News. “This should be a fairly straightforward step for any biosimilars. The FDA will likely use existing guidelines; there should be no need to set up new ones for biosimilars.”

Despite requirements for pre-clinical and clinical trials for biosimilars, the process would probably not be as rigorous as the one for innovated biologics.

“In theory, the whole development process for a [biosimilar] should be faster and cheaper to do, since it was done once already by the innovator company,” Reichert said. “The requirement for phase 3 studies, which can commonly take two to three years, should not apply, for example.”

The relative ease and inexpensiveness of developing generic pharmaceutical drugs has allowed scores of small companies to compete with branded drug makers, in some cases resulting in drugs with 20 or more generic competitors that reduce the price and force the brand company to withdraw its product. This has helped pave the way for the $4-generics programs offered by many retailers, but customers at retail and specialty pharmacies are unlikely to see $4 monoclonal antibodies any time soon. Nevertheless, biosimilars could still create opportunities.

“The new and expanding field of specialty pharmacy could bring more biologic products into the pharmacy space, meaning some biologics that are now limited to clinics and hospitals will join insulin and the few others now in pharmacy,” Long said. “If the experience with small molecules is any indicator, pharmacy could enjoy good margins with biosimilars, although maybe not quite as robust as with chemical drugs.”

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