Progress of biologics slow in the United States

Biogeneric drugs still are a long way from seeing the light of day in the United States. Proposed legislation appears to be pushing the issue forward, but the case for this industry seems to be: One step forward and two steps back.

The situation in Europe is much more promising: Four biogenerics—known there as follow-on biologics or biosimilars—have been approved, three of them this summer. The first to be approved, in April 2006, was Sandoz’ human growth hormone Omnitrope, and more recently there’s Binocrit developed by Sandoz, Epoetin alfa Hexal, from Hexal Biotech and Abseamed from Medice Arzneimittel Putter—all generic versions of Johnson & Johnson’s anemia blockbuster Eprex, which is used to treat anemia associated with kidney disease and cancer therapy.

In the United States, the outlook for biogenerics is less optimistic. In June of this year, the Generic Pharmaceutical Association said it applauded legislation crafted by Sens. Edward Kennedy, Michael Enzi, Hillary Clinton and Orrin Hatch that would authorize the Food and Drug Administration to create a pathway for the approval of biogenerics.

However, the legislation, The Biologics Price Competition and Innovation Act of 2007, leaves Kathleen Jaeger, president and chief executive officer of GPhA with many significant concerns.

“First, we continue to oppose the extension of 12 years of market exclusivity that this legislation grants brand biotechnology companies,” she said. Under the Hatch-Waxman Act, pharmaceutical drugs are given five years of market exclusivity.

“Such an arbitrary and excessive period of time is not only unprecedented and unwarranted, but more important, would unjustifiably delay access to affordable competition and choice for consumers and businesses alike.”

She also pointed to another provision she says is flawed that would allow brand companies to make minor changes to their products and receive an additional 12 years of exclusivity. “This provision could allow brand companies to make multiple minor changes to their products and receive 12 years for each change, in effect maintaining their monopolies in perpetuity,” she said.

This practice is commonly known as ‘evergreening,’ and would essentially keep biogenerics off the U.S. market indefinitely.

Mark Merritt, president of the Pharmaceutical Care Management Association, agreed. “The fact that they’ve created a pathway is very significant,” he said, “but we don’t see any reason why biotech drugs should get longer [exclusivity] than small molecule drugs.”

But he was optimistic that this is the beginning of a movement toward creating a pathway for the approval of biogeneric drugs. “It could all look better next year, and the year after. This [legislation] is going to help in the next phase.”

Barath Shankar, research analyst with Frost & Sullivan, also could see a positive side: “The FDA has always been more challenging [than the equivalent in Europe] to work with, so there’s more need for a safety profile and for adverse events to be reported. The downside is that it delays the launch of biogenerics, but the good side is the safety.”

Biogeneric drugs would make a huge difference in costs for pharmacy benefit managers, consumers and health care companies. “They’re truly the lowhanging fruit in Washington in terms of bringing down costs,” according to Dr. Steve Miller, chief medical officer of PBM Express Scripts.

The average biotech prescription, he said, costs close to $1,500 per month. “People cannot afford this; it can devastate a family, but with biogenerics, we would love to see discounts of 20 to 25 percent.”

If the proposed 12 years of exclusivity is passed, these savings are a long time way away. “Twelve years would be very anti-consumer,” Miller said.

Miller pointed to the example of the Hatch-Waxman Act. “We have 20 years experience with Hatch-Waxman and it’s saving us tens of thousands of dollars every year. [With biogenerics] the savings will grow dramatically and slowly because as many drugs lose their patents, we’ll see more biogenerics.”

Despite his worries, Miller also commended the legislation because it leaves the decision of how much testing needs to be done of biogeneric drugs up to the FDA. “We believe that’s the correct approach but the whole key is balancing what’s in it for the innovators so we can keep research strong, but also keep costs down.”

Despite this ongoing controversy, not everyone believes that there is a place in the market for biogeneric drugs.

The FDA’s stance is that biosimilars cannot be approved easily because they are not exact replicas of biologic products.

At a conference last year, Rep. Henry Waxman, D-Calif., a big proponent of biogeneric legislation, countered this, explaining that there are some sensitive scientific questions that are unique to these products, but said: “I believe [the FDA is] wrong and instead, the uniqueness of biological products suggests only a case-by-case approach for evaluating each type of product. We can’t afford to wait for a time when we have a universal test.”

GPhA’s Jaeger agreed with him. “The FDA needs to determine the appropriate scientific background [of these drugs],” she said. “One size fits all won’t fit here.”

Jason Napodano, a senior biotech analyst with Zack’s Equity Research said he doesn’t see a place for biogenerics because they are so different from the biotech drugs they attempt to replicate. Even if a pathway is paved for approval of these products, he didn’t expect a stellar future.

“Even if there is approval for follow-on biologics, it will be a very small niche and it will be a very small market—at least for the next decade.”

Biosimilar companies would have to incur “a whole lot of costs” to prove their drug is the same as the biotech equivalent, he said, and there would likely be too many patents to getaround. Unlike with small molecule pharmaceuticals, which tend to have just one patent, biotech drugs are covered by numerous patents covering molecules, cells, manufacturing, etc. “The whole process is patented, so to produce a generic biologic patent, [a company] would have to either violate patents or pay a royalty.”

Jason Kolbert, a biotechnology analyst with Susquehanna Investment Group, foresaw too many complications in trying to replicate a biotech drug. “It’s very complicated and would almost suggest that generic drug makers need to run a mini clinical trial—and even that may not be enough.”

He also felt that the wrong people are involved in legislation aimed at creating a pathway for approval of biogenerics. “Science ought to be driving legislation, not politics. I don’t see how scientifically the FDA can prove a biogeneric is safe unless it’s been tested in clinical trials. It’s only a matter of time until somebody gets killed. And the amount of lawsuits that will occur if biogenerics kill somebody would shut down the industry.”