Although the Patient Protection and Affordable Care Act (PPACA) creates an abbreviated approval pathway for biological products that are demonstrated to be ?highly similar? (biosimilar) to or ?interchangeable? with an FDA-approved biological product, only time will tell how long it will take for these biosimilars to reach the marketplace.
Although the Patient Protection and Affordable Care Act (PPACA) creates an abbreviated approval pathway for biological products that are demonstrated to be “highly similar” (biosimilar) to or “interchangeable” with an FDA-approved biological product, only time will tell how long it will take for these biosimilars to reach the marketplace.
FDA will assume responsibility for issuing guidance and setting standards for biosimilar approval. Immediately after the new statute was enacted, FDA formed the Biosimilar Implementation Committee (BIC) to ensure that the process of evaluation, review, and approval of products within this newly defined product category will be achieved in a consistent, efficient, and scientifically sound manner.
Challenges of biosimilar approval
What’s challenging is that follow-on biologics (FOBs), as they are also called, are not considered identical to their innovator drugs, which are manufactured using living organisms and cannot be scientifically characterized in the same way as small-molecule chemical drugs. Biosimilars resemble their innovator products, but are not therapeutically interchangeable.
While Terry Hisey, vice chairman, U.S. Life Sciences leader for Deloitte, recognizes that the new legislation provides a framework for biosimilar approval, he believes the provision in the PPACA has not pinned down the specifics. “We are not yet on the eve of a clearly defined pathway,” he said.
Peter Reichertz, partner with Sheppard Mullin, a Washington, D.C.-based law firm, said that given the high standards for meeting FDA approval for “interchangeability,” many drug manufacturers seek approval for FOBs by filing full approval applications as new products rather than pursuing the “abbreviated” pathway. He noted that FDA, due to healthcare reform legislation, should require much more rigorous data for approval that demonstrates “biosimilarity” than what is necessary for small-molecule generic drugs that have identical active ingredients as their branded counterparts.
“The level of clinical testing for a biosimilar is almost the same as it is for a new biologic,” Hisey added. “In addition, a new biologic will receive 12 years of exclusivity, while the follow-on has a much shorter market exclusivity. There may be the opportunity to review the product from an efficacy or safety standpoint, which may present the chance to come up with a ‘better product’ to treat the same condition or situation. In this case, this product would not be viewed as a follow-on, but rather an innovative product that you are going to use to displace an existing therapy.”
He predicts that some manufacturers of brand-name biotechnology drugs will opt for the traditional biologic license application (BLA), the marketing application for brand-name biotech medicines, rather than try to bring a biosimilar to market.
Only a small tweak in the manufacturing process for an already-marketed biologic could offer another 12 years of exclusivity to its owner.
Gil Bashe, executive vice president and director of the health practice for Makovsky & Company in New York City, has other concerns. “Not only do policies, safety measures and systems still need to be put into place to accommodate biosimilars but also, companies producing traditional generics may not have the manufacturing capacity, regulatory experience, or scientific acumen to participate in the new space,” he said. Bashe anticipates that large manufacturers already invested in biologics will assume the role of innovators.
New exclusivity period for reference drugs
PPACA also puts a stamp on exclusivity periods for both reference drugs and biosimilars: 1) grants a 12-year exclusivity period to brand-name drug manufacturers; 2) assigns a 4-year waiting period after approval of the reference product before filing an application for a biosimilar; 3) provides an additional 6-month period of exclusivity for pediatric products; and 4) gives a year of exclusivity to the first biosimilar drug that FDA declares interchangeable with the original biologic drug.
“While a 12-year exclusivity period is shorter than some suggested timelines, we believe that it could have been reduced and still have the ability to encourage research and development, and maintain safety and efficacy, while allowing our members to have access to lower cost biologic alternatives sooner,” said Brian Sweet, chief pharmacy officer for WellPoint, Indianapolis.
While some industry leaders agree with Sweet, others are concerned that an insufficient period of patent protection for brand-name manufacturers’ intellectual property could be a limited incentive to invest in the costly development of biologics.
On the other hand, the Biotechnology Industry Organization (BIO) applauded the new legislation for providing sufficient incentives. In its statement after reform passed the pathway for biosimilars, BIO stated: “This provision includes the incentives necessary to attract the massive investment required to speed the discovery and development of the next generation of breakthrough therapies and potential cures for the world’s most debilitating diseases. This language establishes equity with the Hatch-Waxman Act, which spurred the availability of the generics market for traditional pharmaceuticals, while bringing the same benefits of increased access, lower costs, and expanded competition.”
Costs may slow market entry for biosimilars
Cost is another factor that could put a dent in the development of biosimilars. The Federal Trade Commission predicts that the costs to obtain FDA approval, plus the substantial fixed costs to develop manufacturing capacity, will likely limit the number of competitors that make FOB products. These FOBs can take 10 years to develop and cost between $100 million and $200 million, while small-molecule generic development typically takes 3 to 5 years and costs between $1 million and $5 million.
“The biosimilars will require a new sales force and an additional investment in resources,” Hisey said.
On the other hand, the Congressional Budget Office estimated that the United States could save $25 billion from the use of biosimilars between 2009 and 2018. Bashe estimates that biosimilars will cost 15% to 20% less than the original biologics.
WellPoint’s Sweet is optimistic that FDA-approved biosimilars have a strong potential to reduce costs of drugs by providing lower cost alternatives to brand- name biologics, but he also believes that this should be done in a way that is safe and effective, which is the standard for FDA-approved products. “In terms of costs, we anticipate [follow-on] biologics have a potential to lower costs, but it’s too early to estimate that impact,” he said.
Mari Edlinis a healthcare writer in Mill Valley, Calif.
See list that follows for legislative details.
Legislation opens door to follow-on biologics
Known as the Biologics Price Competition and Innovation Act of 2009, the legislation sets forth the following: