Regulation and Science: Biosimilars Waiting to Debut in the US

Editorial by Josh Sternberg, Editor-in-Chief at Northeastern Univeristy Political Review

The pharmaceutical industry is experiencing tectonic shifts, with widespread effects on the traditional business models of pharmaceutical companies. Drying pipelines, pricing pressures, health care reform, and rising costs of research and development are forcing pharmaceutical companies to re-think how they develop, market, and sell drugs all over the world.

One particular trend in drug development in the United States — the growth of the biosimilars market — has the potential to create new revenue streams for market leaders and market entrants alike, while providing patients with additional treatment options. However, the growth of the market is highly dependent on the efficacy of the regulatory frameworks for biosimilar products — untested waters both for the FDA and for pharmaceutical companies .

Pharmaceuticals can be broadly segmented into chemical and biological products. Chemical pharmaceuticals are typically small molecule synthetic or semisynthetic compounds. Such products currently make up the majority of the pharmaceuticals market in the US. Biopharmaceuticals, or biologics, are products synthesized from a biological source, such as a plant, animal, or human.

Currently, monoclonal antibodies make up the majority of the biologics market, but additional therapies include recombinant DNA and immunotherapies. These biologics have emerged from technologies that are based on a better understanding of cell-line production and protein identification, expression, and engineering. Not all biologics are based on new technologies though: human insulin, the first biologic drug, was approved in 1982 in the US.

Biologic products are complex, with high molecular weight, and are often used to treat conditions for which there are no other options. Biologics are also blockbuster products: in 2012, seven of the top 10 best-selling drugs worldwide were biologics, with top-seller Humira grossing roughly $9 billion. Sales of biologics are expected to grow to $170 billion worldwide in 2017, and approximately 30% of the total pharmaceutical industry pipeline are biologics. However, 18 blockbuster biologics are going to lose patent exclusivity in the next several years, opening the door for potential competition in the form of biosimilars.

Until 2010, there was no established regulatory pathway for biosimilars in the US. The Biosimilar Price Competition and Innovation Act (BPCI), enacted with the Patient Protection and Affordable Care Act, created the regulatory framework for biosimilar approval. A Biologics License Application (BLA) is the biologic equivalent to a New Drug Application (NDA), filed with the FDA under the 351(a) licensing pathway. A BLA license provides 12-year marketing exclusivity for the product, and requires significant safety and efficacy demonstrations in the form of clinical trials.

The BPCI-created “abbreviated” pathway, the 351(k) biosimilar license, theoretically allows manufacturers to make use of referenced product’s clinical trials by “demonstrating similarity,” and provides 12-month marketing exclusivity. Similar to generic pharmaceuticals manufacturing, leveraging completed clinical trials data and other research would theoretically reduce the monetary investment by biosimilars manufacturers, thereby reducing the price forpatients. However, due to the complexity of biologic products, “demonstrating similarity,” is easier said than done.

Unlike generic pharmaceuticals, biosimilars are not bioequivalent to the branded products they reference. Generics are largely interchangeable, whereas biosimilars are not — “even if a biosimilar uses the same gene as the originator.” Due to variability in several key product development areas, such as gene cloning, protein expression, protein production, and protein validation, a different manufacturing process will produce a different product. As a result, significant manufacturing expertise is required to produce biosimilars, which incurs significant development cost — between $30 and $100 million (compared with between $3 and $5 million in generics manufacturing).

In addition to manufacturing costs, the necessary evidence to demonstrate similarity could incur substantial cost. Since demonstrating true interchangeability of novel biologics and biosimilars is significantly more complicated than for generic and novel small molecule drugs, the technical evidence (such as cell-line quality) and clinical evidence (such as toxicology, efficacy, and safety) could reduce the biosimilar cost differential to 20–30% — compared with 90% cost differential in generics.

The cost differential is critical, because it has direct effects on the price of the drug for patients. Since small molecule generics cost less to produce, they are a low-cost alternative to branded innovator drugs. If the cost associated with producing a biosimilar remains high, the cost savings for the patients may be nominal. Still, the Congressional Budget Office estimates that the biosimilar pathway could save the US $25 billion in pharmaceutical expenditures over 10 years.

Pharmacy benefit management organization Express Scripts predicts $250 billion in savings between 2014 and 2024 as a result of biosimilar introduction. The Pharmaceutical Research and Manufacturers of America (PhMRA) maintains that while the cost effect from biosimilars will not be the same as the effects from traditional generic drugs, the introduction of the biosimilars pathway creates a similar lifecycle for biologics that provides for competition and continued innovation.

Much of the speculation about cost of biosimilar approval is just that, speculation. The 351(k) pathway has not been tested, due to the FDA’s slow release of guidance and standards for the pathway. In May 2014, the agency released updated guidance on how it will evaluate clinical pharmacology studies for biosimilars, as well as a four-tiered assessment to grade a biosimilar: not similar, similar, highly similar, and fingerprint-like similarity.

This guidance is the first step towards a clear biosimilar pathway, since it addresses the design and use of pharmacology studies, but major gaps remain in the 351(k) pathway. These gaps include clinical safety and efficacy requirements by molecule type, nomenclature and interchangeability, and reimbursement policies. Until these gaps are addressed, the debut of biosimilars in the US market may be on hold.

However, for some pharmaceutical companies, the allure of biosimilars is too great to wait for the FDA to release clear guidelines. For example, Israeli generics giant Teva gained approval for Granix, a “near-biosimilar” to Amgen’s G-CSF blockbuster Neupogen, in 2012. Amgen sued Teva to block the launch of Granix, pushing back the launch to 2013.

Although the products share the same active ingredient, Teva’s product is not technically a biosimilar, as defined by the FDA’s regulatory licensure, since it was filed under a BLA. In July 2014, Sandoz, the generics division of Novartis, announced that the FDA had accepted it’s 351(k) application for a filgrastim biosimilar, the first biosimilar application accepted by the FDA. Sandoz’s progress using the pathway will be closely watched, as it will be the first real test of biosimilar regulations in the US.

Biologics represent the future of innovation in pharmaceutical development, leveraging advanced scientific research on technologies like gene-therapy and vaccines to improve the health of patients. However, the complexity of biologic products requires new regulatory frameworks to preserve the safety and efficacy standards established for pharmaceuticals, as current US generics frameworks are not adequate.

The ever-present pricing pressures in research and development of biologics will continue to affect pharmaceutical commercial strategies, as well as patient expenditures, even as regulatory frameworks evolve to cover the new technologies. The debut of biosimilars in the US may not bring a new era for affordable and widely available biologics in the short-term, but as the pharmaceutical industry shifts to accommodate new technologies and strategies, regulators and patients alike must understand the new paradigms to better set policies and expectations.

Regulation and Science: Biosimilars Waiting to Debut in the US

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