Biosimilars: A little more complicated than we thought…

Most people are familiar with generic drugs and how big the cost savings can be.  Typically, once a branded drug goes off patent, the price drops precipitously, usually somewhere in the range of 80-90% (excluding the 180 days of market exclusivity that the first company to produce the generic gets).  Now that biologics have become such a large part of the drug market (estimates are the will be the top 6 selling drugs by 2014), the most obvious question to ask is “when will generic versions of biologics be available?”

The answer to that question is important to a lot of people, namely  insurance providers who pay tens of thousands of dollars a year for each patient who takes drugs like Avastin, Epogen and Rituxan.  The issue is so important in fact, that the Congressional Budget Office conducted a study that estimated that the government could save up to $25 billion dollars over 10 years from the introduction of biosimilars.

The problem was, until the Health Care Reform Act was passed last year, there was no regulatory process to approve biologic drugs.  With the passage of the bill, the FDA was given a mandate to create such a regulatory process.  Problem solved, right?  Not so fast.  There are two specific issues that seem to be taking the wind out of the sails for those promoting biosimilars.

The first issue is the approval pathway.  Back in August, Janet Woodcock (director of CDER at the FDA) and others published an article in the New England Journal of Medicine outlining the FDA’s view of a potential biosimilar approval pathway (keep in mind that the health care bill simply told the FDA to create a pathway, it didn’t actually lay out how to do it).  The article is worth reading, but the best way to summarize it is “We’ll figure it out as we go.”  Yikes.  Not exactly what companies want to hear when it comes to estimating the risks of investing in the development of a biosimilar.  Now, I’m not blaming the FDA for saying what they said; biologic drugs are incredibly complex compared to small molecule drugs (see figure below) and until the FDA has had a chance to “test” the approval pathway, they can’t really come out and say “Do X, Y and Z and we’ll approve you drug.”  So what does this mean?  For the most part, the only players in the biosimilar market will the big biopharmaceutical companies who have both the expertise and more importantly, financial backing, to forge an approval pathway.  Think of the process less like hiking in the Rockies with a compass and more of using a machete to cut a path through the dense jungles of South-East Asia.

Image taken from ICON Insight, Vol 18, March 2010

 This image gives you some idea of just how complex biologics are.  On the right is a molecule of aspirin and on the left is an antibody (a number of biologics are antibodies).

The second issue is physician and patient perception of biologic drugs.  Small molecule generics are literally the exact same drug as the branded products, at least to the degree that we can tell (which is really well).  Not so with biologic drugs.  Heck, it’s not uncommon for a company that produces biologic drugs to have difficulty producing consistent batches of them in their own plants.  In light of this, physicians will likely be very wary of switching a patient from a branded biologic to a generic, especially since biologics are often used to treat conditions where drug efficacy can be a matter of life or death/debilitation (cancer, MS, etc).  In fact, Decision Resources recently release a report where a majority of surveyed physicians said they would hesitate to prescribe a biosimilar for a patient, unless the biosimilar had gone through phase 3 trial for that indication.  Ouch.  Phase 3 trials are typically the most expensive part of drug development and their costs can easy run into the tens of millions of dollars, if not more.  If a company is required to conduct such trials, the likelihood of a biosimilar being 80-90% cheaper than the branded generic is pretty much zero.

Prediction: Once biosimilars hit the market (and they will, eventually), I can almost guarantee that the companies who own the branded biologics will conduct a marketing campaign, targeted at both physicians and patients, where they hammer away at the “similar” part.  I can see the commercials now “Biosimilars are not like your generic Lipitor, they are only “similar”, not identical.  Do you really want to risk your health on something “similar”?”

So all in all, biosimilars have a pretty rough road ahead.  The big biopharmaceutical companies are already making serious investments in the area since there is a lot of money at stake, but it’s not a task for the faint of heart.  Most likely we’ll start to see biosimilars of the relatively simpler biologics like the insulins, where the cost of development is more predictable and less costly.  Either way, it’s an interesting area to keep an eye on because I have no doubt that there will be some spectacular successes in the area and some spectacular failures.

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