Biosimilars Update: Keys for the Next Year and Beyond

The biosimilars market in the U.S. will not grow large overnight. However, over the next 4 to 10 years, a lot of companies are going to become players. During this same period, health plans, pharmacy benefit managers, Medicare, and Medicaid are going to start reaping savings by buying less expensive biosimilars. By a decade from now, sales of biosimilars will be creating new winners and losers in the overall biopharmaceutical marketplace.

In light of this, I was recently asked: what should a developer or investor be looking to achieve over the next year in the area of biosimilars? What should they be looking to achieve in the years after that?

Over the next year: Assuming the U.S. biosimilar law survives the upcoming Supreme Court decision (concerning the constitutionality of the President Obama’s health reform program), then the last roadblock to creating a biosimilar marketplace in the U.S. will have been eliminated.

The key, then, becomes: how quickly can FDA complete the multiple steps  necessary to establishing a viable system for evaluating and approving biosimilars. Here are some key indicators to watch in judging the agency’s progress:

• the number of investigational new drug applications (IND's) being issued for biosimilars, which would be a “leading indicator” of slowdown or snags in FDA’s initial intake process;
• publication of draft policy guidances dealing with critical details such as nomenclature, label warnings, unique names, etc. (until these issues are settled, FDA will be reluctant to approve anything);
• revised estimates of how many fees the FDA expects to collect each year under the new biosimilars user fee program (a rough gauge of FDA’s view of its timeframe for approvals).

For those looking to be active in the biosimilars market, the next year provides an opportunity to build and strengthen relationships with payers (especially purchasing groups). Payers are going to be focused on the strength of clinical, animal and laboratory data comparing the biosimilar to the original biologic product. There will be a need for biosimilars to be offered at a discount to the cost of the original, but high-quality biosimilars with a 15%-20% discount will dominate the market over biosimilars of questionable quality with 30% to 40% discounts.

Similarly, it is not too soon for companies developing biosimilars to start working with practicing physicians—to calm their fears that they will be forced to use inferior biosimilar products that will result in treatment failures. While payers, not physicians, will drive this market—payers will avoid products likely to generate criticisms and resistance from physicians.  

Finally, for those interested in the biosimilars market--stay cool over the next year. Biosimilars are a sure bet for the long-term. However, it will (quite legitimately) take FDA some time to create the new complex approval pathway that is required.

Looking beyond one year. Stay cool is still good advice. Some companies are going to slip behind or drop their investments because of corporate pressures for short-term return on investment (ROI). The biosimilars market is a battle for the long-haul and will belong to those who are prepared to stay the course through the several years it will take for FDA to develop policies and implement them consistently.

Another potential restraint on developers’ and investors’ commitments over the next several years is the persistent allegation that the U.S. biosimilars market will be limited unless FDA makes a determination that a biosimilar is interchangeable with the original product. However, FDA has placed a low priority on establishing a pathway for determining that an approved biosimilar is also interchangeable with the original biologic product.   

This “controversy” is a throwback to the implementation of Hatch-Waxman in the 1980’s. At that time, substituting copies for originals was a new concept, quality was low, purchasing was decentralized, and doctors had no incentive to prescribe generics.  Allowing forced substitution of FDA-approved generic drugs because they were “interchangeable” was an important dynamic in the growth of the generic drug industry.

However, none of these same underlying conditions are present at the beginning of the U.S. biosimilars market—substitution is widely accepted, quality biosimilars will be available, purchasing is far more centralized, and physicians will have incentives to prescribe biosimilars. FDA designation of "interchangeability," key to generic drugs, is almost irrelevant to biosimilars.

As a final thought: the rise of generic drugs made it necessary for innovators to work harder to develop new, patent-protected products that were better than drugs available generically. The same dynamic is going to play out over the next 10 years for biologic products. The biosimilars pathway adds further urgency for innovator companies to be refilling their pipelines with products that are better than ones currently available.  
Steven

Biosimilars and the U.S. Supreme Court: FDA Program Could Be Nullified

The U.S. Supreme Court will rule on the constitutionality of the Affordable Care Act (ACA) (also known as ObamaCare) no later than early July. One of the possible results is nullification of the entire Act, although FDA Matters thinks this is the least likely outcome.

Nonetheless, the U.S. biosimilars law—passed as a separate section of ACA—could be rendered void if the Supreme Court overturns the entire ACA. Where would that leave FDA? What about those companies that have invested hundreds of millions of dollars to be part of the emerging U.S. biosimilars marketplace?

Controversy over The Affordable Care Act. The ACA, passed in March 2010, creates a comprehensive national approach to the problems of access and affordability of health care.  While not a pure “national health insurance” program that would be recognizable in most of the world, it is more far-reaching than any prior U.S. health legislation since the creation of Medicare (for the over-65 population) and Medicaid (a federal-state program for the poor) in the mid-1960’s. Numerous cost-containment provisions are also included in the ACA.

The ACA nearly didn’t pass Congress at all….and heated opposition has not lessened since its passage. A number of lawsuits have attacked the constitutionality of the law—with the leading case being led by the attorneys general of about 20 states. The US Supreme Court listened to oral arguments earlier this year and will decide the case before it adjourns in early July.

Biosimilars at Risk.   The Supreme Court may uphold the entire law as constitutional. Or they might decide only specific parts of the law are unconstitutional, none of which relate to biosimilars.  In either scenario, FDA will proceed with its current plans to implement the biosimilars law.

However, the Supreme Court might decide that a constitutional problem with one part of the law (e.g. mandating that individuals buy health insurance) is so far-reaching that the entire law is unconstitutional. In this last situation, FDA might be stripped of its authority to implement the biosimilars program enacted into law as part of ACA.

Little Precedent on What Comes Next. The Supreme Court rarely rules that Congressional actions are unconstitutional. When it does so, the Court usually looks for the narrowest Constitutional grounds possible—trying to preserve as much of the legislation as it can. This makes it most likely that biosimilars will survive the Court’s review. It also means there is little precedent as to what would happen to the biosimilars program if the ACA is invalidated in its entirety.  

One possibility is that FDA has innate authority to create and regulate a category of biosimilar drugs and does not need a legislative grant of authority.  This was discussed when Congress was first considering biosimilars legislation seriously in 2007 and 2008. At the time, FDA wisely deferred on the question, stating that it wanted Congressional guidance (meaning legislation). 

Should the law be overturned, the “innate authority” question might be re-raised, allowing FDA to continue with little or no change in its plan. The agency might even argue that Congress has given the agency guidance—treating the language of the 2010 law as a directive rather than a mandate.*

There is no hint as to whether FDA is thinking along these lines. When I asked FDA, I was told: we are confident that the Affordable Care Act is constitutional.

Failing a decision by FDA that it has the innate authority to approve biosimilars, it would fall to Congress to find a way to restore the program by legislation.  According to the trade publication, FDA Week, biosimilars’ leader, Hospira, is gearing up to pursue a legislative re-enactment should the Supreme Court overturn the biosimilars program. The Biotechnology Industry Organization (BIO) and Congress would also want to assure there is a biosimilars pathway.**

The problem: legislative re-enactment might not be so easy. While Congress is generally happy with the current biosimilars law, it was the product of a series of compromises and political maneuvering that left winners and losers. Merely re-adopting current law might prove surprisingly difficult.

Meantime, we all await the Supreme Court’s decision. And it’s safe to say that no one in the bio-pharma community is looking forward to the possibility of a new fight over biosimilars.

Steven

* There is no lack of support in Congress for the biosimilars program. Both the House and Senate versions of the user fee reauthorization legislation contain a new user fee to cover part of FDA’s costs for reviewing applications for biosimilar products approvals.

** For those with subscriptions to FDA Week, the article can be found at: http://insidehealthpolicy.com/FDA-Week/FDA-Week-05/11/2012/hospira-to-pursue-biosimilars-bill-if-scotus-strikes-down-health-care-law/menu-id-721.html

The FDA Matters “Guide to the User Fee Reauthorization Process”

The prescription drug (PDUFA) and medical device (MDUFA) user fee programs, which run for 5 years, must be renewed by September 30 of this year (last day of the current fiscal year).  House committee staff has just released a 205-page first draft of reauthorization legislation. The Senate has starting releasing drafts on specific issues and has a March 29 hearing scheduled.

Because the PDUFA and MDUFA provisions are pre-negotiated by FDA with industry and patient groups, they are likely to change little. Congress’ focus will be on the backlog of FDA-related legislative proposals that have accumulated while awaiting a “must pass” FDA legislative vehicle. This is FDA Matters’ guide to the process and likely amendments.

To understand the unfolding process for user fee reauthorization in 2012, it is useful to think in terms of four levels of legislative proposals that Congress will consider.

Level One: Renewal of Existing Legislation and Uncontroversial New User Fees. In addition to PDUFA and MDUFA, there are two other programs on the same 5-year reauthorization cycle. The Best Pharmaceuticals for Children Act (BPCA) and the Pediatric Research Equity Act (PREA) are certain to be reauthorized and may be made permanent.

In this same level are two proposed new user fee programs: the Generic Drug User Fee Act (GDUFA) and the Biosimilars User Fee Act (BSUFA).  These have gone through an abbreviated version of the PDUFA and MDUFA negotiation process, meaning that the FDA proposals reflect input from industry, patient groups and other stakeholders.

Level Two:  Areas of Strong Consensus to Act; Specific Provisions Not Yet Agreed Upon. Despite Congress’ deep partisan differences, there are several areas in which both political parties appear to be in general agreement about adding programs or strengthening authorities at FDA. 

In this level are proposals dealing with drug shortages, incentives for antibiotic drug development, import safety, a core set of medical device process reforms, and some adjustment in the FDA “accelerated approval” pathway for drug and biological products. There is also consensus for dealing with drug supply chain integrity (e.g. anti-counterfeiting), which may be advanced as a separate bill this spring or be folded into the reauthorization legislation.

For the most part, the consensus to act in these areas does not yet include specific legislative language that has bi-partisan support in both the House and Senate. So negotiations are certain, may even be testy at times…but final agreements are near-certain.

Level Three: Areas of Disagreement Where Compromises Are Possible. Ultimately, committee leadership will have to deal with FDA amendments where there are sharp disagreements or a lack of consensus that action is needed.

The two most prominent such issues are the extent of medical device reform and the amount of change needed or appropriate for the drug approval process. In both areas, there is a more limited, core set of proposals that are in level 2.

As with all such areas of disagreement, compromises may ultimately develop. Unlike the issues in level two, these proposals start with disagreements that may lead to negotiations, but with no assurance of inclusion in final legislation.

Beyond those mentioned, the list of issues and amendments that might be offered (and controversial) is limitless, but it is possible that we will see Congress again debating drug re-importation, re-opening the 2010 biosimilars legislation or even considering amendments to Hatch-Waxman. There may also be food safety amendments.

Level Four: Proposals to Dramatically Re-shape FDA and Likely to Be Rejected. A small number of Members of Congress think FDA’s role should be significantly smaller. They see radical surgery on the agency mission as the necessary response to the restraints they feel the agency imposes on industry and on patient access to new therapies.

The possibility exists for amendments that might substantially reduce the agency’s jurisdiction over medical devices or significantly roll back the 1962 Kefauver Amendments that require drugs to demonstrate efficacy (not just safety) before entering the market. There is no reason to think there is a majority in either the Senate or the House for such radical reform or substantial reduction in FDA’s mission. Nonetheless, such proposals may be offered.

Conclusion.  In enacting a timely reauthorization of the user fee programs, Congress will need to consider a range of legislative proposals. As these are offered and discussed, this FDA Matters analysis provides a guide to understanding Congressional activities.

Steven

This blog column is a much-shortened version of an article I wrote that appears in the March 2012 issue of Scrip Regulatory Affairs, entitled “Reauthorizing US FDA User Fees: A Slow-Moving Train Wreck?” Readers interested in a copy of the longer article should contact me at sgrossman@fdamatters.com.

FDA Matters Mailbag: Hatch-Waxman, Biosimilars, User Fees and More

Over the last month, FDA Matters has covered a wide-range of FDA-related topics: the agency, industry, and Congress, as well as medical innovation, user fee reauthorization legislation, food safety and post-market surveillance. The response has been great: FDA Matters has many new readers and I received a number of interesting questions.

Today’s column touches on biosimilars, Hatch-Waxman, user fees and FDA management. Keep the questions coming!

Is FDA becoming too large for food, drugs and medical devices to be in the same agency?

Last summer, the Commissioner re-organized her office to better manage the growing responsibilities and complexity of the agency’s work. She divided the agency’s work into four parts:

• food and veterinary medicine
• medical products
• global outreach and inspection, and
• administrative matters overseen by a chief operating officer 

The key is that each of these individuals has line authority to manage their part of the agency, rather than being a staff advisor to the Commissioner.  

With specific regard to foods, there are proposals to move the Center for Food Safety and Applied Nutrition (CFSAN) out of FDA. I believe the Center is best served by being part of the public health focus of FDA.

How do Europe and the US compare in their approaches to biosimilars?

Both the European Medicines Agency (EMA) and FDA are acting cautiously, but in different ways. Europe has focused on a limited number of reference products, building their knowledge and experience one therapeutic category at a time.

In contrast, FDA has already met with sponsors to discuss 11 reference products, presumably covering a number of therapeutic categories. Given FDA’s broader approach, proceeding case-by-case with strong scientific requirements is the best way for FDA to acquire knowledge and experience.

A different comparison was also posed to me: an eager EMA versus a reluctant FDA.  In less than two years, FDA has produced multiple policy speeches and articles, three guidances, held multiple sponsor meetings and allowed several sponsors to begin work. I assure you: FDA is fully committed to biosimilars!

As an aside, anyone familiar with the lack of FDA guidance on product-related social media can tell you how FDA behaves when it is reluctant to act. It looks quite different.

If the user fee reauthorization legislation has the potential to be a vehicle for any FDA-related provision, might Congress re-open Hatch-Waxman?

I shudder at the possibility, but can’t rule it out. I asked a knowledgeable friend what he would propose if given the chance to amend Hatch-Waxman. His reply: get FDA out of the patent enforcement business, yet assure generics the equivalent of the 180-day exclusivity if they win in court.

Since this would benefit generics, a trade-off for innovators could be longer exclusivity for new molecular entity (NME) compounds that lack intellectual property (IP) protection. It might be the same 10 years they receive in the EU or the 12 years for biologics. Similarly, a stronger incentive than 5 to 7 years is needed to generate interest in 505 (b)(2) drug applications in the absence of IP protection. 

I’m not suggesting this, but thought it interesting enough to give his ideas some visibility.

Companies are telling me: it’s hard to justify investing in the US biosimilars market because of the resources it will require. Why is FDA Matters so optimistic?

I hear some of this, too. Certainly, the first generation of biosimilar applicants (and there seem to be plenty of them) are going to pay more--and live with more uncertainty for a longer period of time-- than those that start 5 years from now when costs have dropped.

However, those who are successful are going to be rewarded, as I explored more fully in How Biosimilars Will Transform the Marketplace. Put simply:

• If the first biosimilar approvals from FDA are for solid products with good data and fair pricing, then hospital purchasing groups, pharmaceutical benefit managers and formulary committees are going to move significant market share away from the reference products.

• In multi-product categories, the market shift may be even greater because there will be therapeutic substitution, not just substitution of the biosimilar for the reference drug.

 I look forward to more reader questions!

Steven

FDA Guidance on Biosimilars: The Two Minute Version

If you are in the business of developing biosimilar products—or thinking about it—then you have to read all three guidance documents published by FDA on February 9, 2012. They provide essential (but not complete) instructions for how to construct and implement a biosimilar development plan.

For everyone else, FDA Matters is providing the short version. Why take an interest? Because over the next 5 to 15 years, biosimilars are going to dramatically transform the marketplacefor biological products, creating new winners and losers. Also, these new rules are going to lead to new, groundbreaking medicines…and not just less expensive versions of old ones.

Nearly two years ago, Congress passed the “Biologics Price Competition and Innovation Act” (BPCIA) to create an abbreviated approval pathway for biosimilars, which are highly-similar copies of already marketed, complex, large molecule biological products. This is a distinct from making exact copies (generics) of relatively simple, small molecule drug products, whose abbreviated pathway to market was created in 1984 (under the Hatch-Waxman legislation).

Even without FDA formal guidance, companies have begun the process of entering the biosimilars market in the US. Thus far, FDA has received early-stage meeting requests for 35 proposed biosimilars that would relate to 11 reference products (innovator biologic products that are already on the market). About 60% of those meetings have been held and 9 investigational new drug (IND) applications have been received.

The three FDA guidance documents, described in this FDA Fact Sheet, are:

• Scientific Considerations in Demonstrating Biosimilarity to a Reference Product

• Quality Considerations in Demonstrating Biosimilarity to a Reference Protein Product

• Biosimilars: Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009

As FDA Matters envisioned when the BPCIA was passed, FDA will handle every biosimilar application on a product-specific basis. Two major concepts embody this approach:

• The agency expects sponsors to take a “step-wise approach,” starting with the structural and functional characterization of the biosimilar and reference molecules, then determine “the residual uncertainty about the biosimilarity of the proposed product and identify next steps to try to address that uncertainty.” The strength of the analytic proof of similarity and the degree of uncertainty will determine the required amount and type of animal and human testing.
• The agency plans to look at the “totality of the evidence” presented by each sponsor.  Every application must include certain elements--structural and functional characterization of the molecule, nonclinical evaluation, human PK and PD data, clinical immunogenicity data, and clinical safety and effectiveness data—but they will be weighed by the overall degree to which they support similarity, rather than by any pre-determined formula.

The law also allows for biosimilars to be deemed “interchangeable” with the reference product. In these guidance documents, FDA has effectively said that sponsors must establish biosimilarity first, and then present additional evidence of interchangeability.

In sum, the guidance documents lay out a daunting, but still feasible pathway for approval of a biosimilar. The first approvals will come slowly over the next 2 or 3 years, and then accelerate after FDA and sponsor companies have more experience.

What about the part where the FDA guidance documents on biosimilars eventually result in new, groundbreaking medicines? The key to approval of a biosimilar is to be able to characterize the structure and function of specific biological molecules and, also, to define the conditions under which the human body is likely to reject a large molecule biologic as a foreign substance (immunogenicity).  

These requirements are forcing companies to invest hundreds of millions of dollars in order to better understand human biology and therapeutic biological products. That knowledge is going to make it possible to find and create wholly new therapies, as well as develop significantly better versions of existing medicines.

We are likely to have biosimilars approved long before this impact hits. However, in about six to ten years, we should see the start of a wave of groundbreaking new medicines that emerge from knowledge that was gained as a by-product of creating biosimilars.   

Steven

For a longer commentary on the new biosimilar guidances, I recommend: First Bio-Similars Guidance Issued by FDA by James Czaban at the Wiley, Rein law firm.

FDA’s Busy Summer of 2011

Once upon a time, Washington slowed a little over the summer. Those days are long gone…and this was a particularly busy summer. Congress went down to the deadline on the debt limit/deficit reduction legislation, then left town for August. There was a continuous stream of FDA headlines in June, July and August.

FDA Matters focused on a number of the most pressing issues: post-market safety and surveillance; barriers and opportunities for increased drug discovery and approvals; the rising tide of imports; prospects for biosimilars and medical devices; FDA funding; and various crises facing the agency.

Here is a recap of the summer’s stories:

FAQ: How Biosimilars Will Transform the Marketplace      August 21st, 2011

Biosimilars will be a huge success--used by most prescribers at least some of the time. Much of the current negativity about the market for biosimilars is fed by a mismatch of expectations: the Biologics Price Competition and Innovation Act (BPCIA) is barely 18 months old, while the transformation of the marketplace will take a decade or longer. FDA Matters explores the likely evolution of the marketplace in a set of FAQs.  Read the rest of this entry

FDA Funding Prospects Altered by the Budget Control Act     August 14th, 2011

The Budget Control Act of 2011 (BCA) will have a heavy impact on FDA’s future. Under this new law, most discretionary spending programs will shrink—not merely cease to grow. Yet, FDA’s growing responsibilities and resource needs are not diminished because federal spending is being reduced. Our nation is less safe and less healthy if FDA cannot excel at its mission. Read the rest of this entry

People, Not Science, Make Decisions  August 8th, 2011

To FDA Matters, the people making the decisions at FDA are its strength. They are smart, conscientious and committed. Yet, when asked about bottlenecks at FDA, I have to admit that people slow the process down. There are good reasons why this is so. Read the rest of this entry

Medical Device Melodrama: A Great Story With a New Plot Twist  August 1st, 2011

Two years ago, FDA Matters urged FDA and Congress to review the 510(k) approval process for moderate-risk medical devices and predicted meaningful changes that would work for FDA, industry and consumers. FDA and industry have been proceeding along these lines (albeit with some tough negotiating and lots of rhetoric)…until the Institute of Medicine (IOM) declared that the current system is so flawed that a new regulatory framework is needed.  Read the rest of this entry

FDA, Reorganization and the Four Crises    July 24th, 2011

Dr. Hamburg’s reorganization plan addresses four crises that beset the agency: industry discontent with the medical product review process; public concern about import safety; implementation of the Food Safety Modernization Act; and Congressional concerns that the agency is inefficient in its use of resources. The new structure should drive better decisonmaking and greater productivity…. at a time when the agency is struggling to fulfill its growing mission and faces the potential for budget cuts.  Read the rest of this entry

Complexity, Uncertainty, Unpredictability: Not Necessarily Bars to FDA Approvals      July 17th, 2011

In most discussions of science and medicine, there is an implicit assumption that the human body is a complex biological machine. “The human body as a machine” is a metaphor, not a fact. Once we accept this, FDA Matters believes we can become liberated from unrealistic expectations about medical discovery and FDA’s role as a gatekeeper for new products that benefit patients. Read the rest of this entry

Should FDA Have an Independence Day?     July 4th, 2011

FDA Matters thinks that making FDA an independent agency will not make FDA more effective or more efficient. Although the idea is not truly harmful, proposing independent agency status is a seductive distraction from the tough job of improving FDA. Read the rest of this entry

Imports: FDA Issues a Cry for Help   June 26th, 2011

 No challenge to FDA’s mission looms larger than the rapid globalization of the world markets for food, drugs, medical devices and other FDA-regulated products. By way of making this point, the FDA released a special report, entitled “Pathway to Global Product Safety and Quality.”  FDA Matters read the report carefully and heard a cry for help, if not an actual primal scream. Read the rest of this entry

Post-Market Safety: Getting the Most Out of Inferences That Aren’t Proofs   June 21st, 2011

FDA has expanded its post-market efforts, including development of a monitoring system (called Sentinel) that will be able to track drug usage and medical history information on tens of millions of patients. Although such information will be useful, it can only provide post-hoc inferences, not proof of causation. Even with this limitation, FDA Matters thinks developing the system is worthwhile and may provide multiple benefits.  Read the rest of this entry
Steven

FAQ: How Biosimilars Will Transform the Marketplace

FDA Matters thinks biosimilars will be a huge success. FDA-approved products similar to off-patent biologics (“biosimilars”) will be available in the US by 2014 or 2015, with more added each year. There will eventually be price competition in the range of 20% to 40% discounts. Biosimilars will be used in most health care settings with most prescribers using them at least some of the time.

Much of the current negativity about biosimilars is fed by a mismatch of expectations: the Biologics Price Competition and Innovation Act (BPCIA) is barely 18 months old, while the transformation of the marketplace will take a decade or longer.

Will the biosimilar market be similar to the generic drug market? Over the last 25 years, generic drugs have grown from 12% of all prescriptions to nearly 75%. Discounts can be as great as 80% off the original innovator price. Because of their greater complexity and higher production costs, biosimilars will never achieve similar market penetration nor sell at such a steep discount.

However, generic drugs and biosimilars share a common premise: the willingness of physicians and pharmacists to use alternative products (generic and biosimilars) instead of the innovator (or reference) product with which they are most familiar. As generic drugs have become accepted by prescribers, so too will biosimilars.

Will biosimilars fail if they don’t generate substantial discounts?  Biological products are more expensive than drugs and at the extreme end may cost $100,000 to $300,000 in a year. In order to gain market share, biosimilar manufacturers will have to provide discounts to purchasing groups, wholesalers and benefits managers of at least 20% off the originator’s prices. Deeper discounts are likely if there is more than one biosimilar competing for sales. To payers and purchasers, saving $20,000 on a $100,000 medication is both substantial and significant.  

If physicians and pharmacists don’t accept biosimilars, how will the market grow? It took more than 25 years for generic drugs to reach 75% of all prescriptions. As with generics, physicians will gain experience with biosimilars as they become available. Meantime, powerful forces of change--led by payers, purchasing groups and formulary committees--will start to narrow the choice of products easily available to physicians and pharmacists. This will become evident by 2015, although it may take as long as a decade for the pace of new biosimilars to transform the marketplace.

Why is therapeutic substitution important in understanding the market for biosimilars?  Increasingly, payers and purchasing groups have treated drugs within a therapeutic class (e.g. statins) as interchangeable and insisted on use of the least expensive one or two. Similarly, biosimilars are eventually going to be judged in the marketplace by safety and efficacy within a therapeutic class, rather than the degree of similarity to the reference product. FDA will create the basis for this approach by looking at the totality of the evidence before deciding the testing requirements for a biosimilar….but has already made clear that some clinical trials (i.e. more concrete proof of safety and efficacy) will be needed as part of the first generation of biosimilar applications.

Why does the success of biosimilars seem so certain to FDA Matters, even in the face of their slow evolution and the many unanswered questions about details? Knowing that it may be months before the first guidance is issued, key FDA leaders are making clear that they are active and serious. Agency leaders recently authored a “perspectives” article, published in the New England Journal of Medicine, that explains their approach.  In June 2011, the head of CDER’s Office of New Drugs indicated that FDA had already held 15 drug development meetings with representatives of 21 companies interested in nine different biosimilar products.

Bio-pharmaceutical companies are not just asking for meetings with FDA. Large sums of money are being invested in the belief that a substantial and profitable biosimilars market will evolve. For example, a large pharmaceutical company recently closed a deal worth up to $720 million for the rights to a biosimilar version of another company’s blockbuster biologic product.

Biosimilars will transform the drug marketplace. We are just in the early stages, which makes it hard for some to see the degree of change that is coming.  

Steven

The FDA’s August 3, 2011 article on biosimilars in the New England Journal of Medicine is at: http://www.nejm.org/doi/full/10.1056/NEJMp1107285.

Forget the Hype: Change Takes Time

FDA Matters is always impressed by how much FDA does. The everyday tasks are overwhelming: reviewing, approving, monitoring and inspecting the products and facilities responsible for 80% of our food supply and 100% of drugs, biologics, medical devices, vaccines, and animal drugs. Then there are the policy issues, big and small, that must be tended to.

These are largely functional tasks—someone has a job (or several) and does them. Yet, FDA has another life, as the bridge to the future of foods, drugs and devices. This responsibility is vitally important to our nation. It also takes time to bear fruit.

FDA is determined to help develop the fields of personalized medicine, nanotechnology, biomarkers, population-based adverse event tracking, safe use of genetically-modified foods, and regulatory science. By statutory directive, the agency is also helping to develop the fields of generic biologics (formerly bio-similars), medical countermeasures against bio-terrorist threats, and antibiotics for emerging infectious diseases. Advocates usually offer these activities as the rationale for strengthening science at the agency.

There is something more that connects these initiatives--the role of FDA in accelerating public benefits from the increasingly complex science generated by medical and food product companies, academia and federal agencies. There is understandable impatience from stakeholders. While there is a resource issue (more people working on these issues equals faster progress), there is also a rate-limiting aspect--procedural and scientific--to success.

Some have wondered (including me) as to why FDA did not appear more ready to take on generic biologics when the new legislation passed….or why the agency’s subsequent action have exhibited more energy than urgency.

One reason is that FDA has unveiled new complexities of interpretation and implementation each time it has moved forward on generic biologics. Since this is, arguably, the first new approval pathway for medical products in 20 years, perhaps we should all take a deep breath…and acknowledge that a viable program (with regulations, guidances, scientific support and usable precedents) might take four to six years or more to implement. The field itself will be developing for years to come.

Patience is also needed for personalized medicine, biomarkers, antibiotics, etc. At a minimum, we know that clinical trials often fail, sometimes quite miserably, just when everyone is surest that the solution is logical, success is guaranteed and progress is certain. The human body is almost always more complex and subtle than we can discern, even with the best tools.

My yardstick is the history of biotechnology. As with all great transformative achievements, latecomers might imagine that success was inevitable and progress was smooth and relatively trouble-free. The reality has been quite different:

·         A rocky childhood, including efforts to restrict or ban experiments (1970′s)

·         The “next big thing,”  with a very limited number of successes (1980′s)

·         Finally a significant impact, but also several “near death” experiences (1990′s)

·         Some biotechs mature and big pharma swallows small biotechs for their knowledge, capacity and pipeline (2000′s)

There was almost 20 years between childhood and impact…and about the same amount of time between initial successes and a track record of success. Nearly forty years later, biotechnology is still as much about promise as it is about accomplishments.

So, forget the hype and re-calibrate your expectation about how fast the future will arrive. FDA is fully committed and only needs sufficient resources to hasten that day. Just as importantly, don’t lessen your own (or your organization’s) commitment to the future. Despite frustrations with the seemingly slow pace of change, the benefits to patients and other stakeholders will come in due time.

Steven

 

Some related columns:

FDA: An Honest Broker on the Slow Path to Biosimilars

October 24th, 2010

FDA Matters’ enthusiasm for biosimilars is a matter of public record. The market will build slowly, but 10 years from now the new law will be seen as ushering in a new age of biopharmaceutical product development. FDA will be satisfied (and successful) if the new law stimulates biosimilars, bio-betters, and innovative new biological products, along with a dramatic increase in knowledge about the nature and characterization of biologic products.  Read the rest of this entry

Long-term Challenges Need Short-term Attention

December 13th, 2009

FDA Matters  sees seven long-term challenges for FDA. Some of these challenges may take years to accomplish; all need to be started now. Three or four years from now, the Commissioner will be judged by whether she moved the agency forward in these areas. I think she has gotten off to a very good start, but there is immense amount of work still required. Read the rest of this entry     

“Must-Pass Legislation” Key to FDA’s Future

This is the fifth straight column looking at FDA and Congress. This reflects FDA Matters' belief that the 2010 election will profoundly affect the agency's mission, priorities, funding, standards and work flow. Eighteen months from now, FDA's leadership team will probably be the same, but the agency won't be.

Identifying and understanding the likely changes to FDA requires examining the meaning of "must-pass legislation" and its escalating importance as a quarrelsome Congress turns into a divided Congress. At the moment, there is only one "must-pass" item on Congress' FDA agenda: the next round of user fee renewals that will come before Congress in the Spring of 2012. 

"Must-pass" legislation is a bill or resolution that Congress is compelled to pass in order to maintain the functions or functioning of government. The best examples are appropriations bills, Congressional budget resolutions, and legislation to increase the limits on the national debt. Sometimes, "must pass" is defined by the agenda of a political party or the President, as was the case with health care reform.

Looking at this Congress' two FDA-related legislative accomplishments, "must pass" played a role in both. Representative Anna Eshoo (D-CA) had the votes to advance her version of bio-similars in place of the version supported by House Energy and Commerce Committee Chair Henry Waxman (D-CA). Occasionally Committee Chairs don't have the votes to prevail; they re-gain leverage by not scheduling a mark-up. This was not an option for Waxman because Eshoo's bio-similars bill was offered as an amendment to the "must pass" health care reform bill.

Because of the breadth of mostly bi-partisan support for food safety legislation, it was possible for it to advance as regular legislation in both the House and Senate. However, procedural barriers have now stalled the Senate-passed version in the House and it might not become law. The House responded by adding food safety legislation to the FY 11 Continuing Resolution (CR) that will fund the government when the current one runs out at midnight on December 18. This tactic may not ultimately work, but the CR is definitely "must pass legislation."

With some exceptions, it is hard to anticipate what pieces of legislation become "must-pass." In theory, FDA might go an entire Congress without enactment of any major legislation. This can't be the case for the incoming Congress because authority to collect both prescription drug and medical device user fees expires on September 30, 2012. In the months prior to that date, Congress will face a choice: pass re-authorizing legislation or deprive the agency of $700 million in revenue each year. Thus, "user fee legislation" = "must-pass legislation."

User fees need to be renewed every five years. The last round of user fee re-authorizations resulted in the Food and Drug Administration Amendment Act (FDAAA). It is complicated and emerged after extremely tough negotiations. The final legislation was 155 pages long and had 11 separate Titles. It is at: http://www.gpo.gov/fdsys/pkg/PLAW-110publ85/pdf/PLAW-110publ85.pdf.

Commissioner Hamburg, Members of Congress, and most FDA stakeholders have wish lists of ways they would change FDA and the laws it implements. None of these--at least not any major ones--are likely to pass in 2011 without broad bi-partisan support.

But 2012 will be another story. In the process of adopting the "must pass" user fee reauthorizations, we can anticipate Congress considering dozens of provisions and programs that don't relate to user fees. Lawmakers and stakeholders will all have a chance to put their mark on the FDA in 2012.

Steven

Two Strategies for FDA Legislation in 2011          December 5th, 2010
The current Congress has two primary FDA-related accomplishments: an abbreviated approval pathway for bio-similar drugs; and a food safety bill that may be enacted before Congress adjourns. FDA Matters believes that any FDA-related legislation will falter in 2011 if it does not follow the strategy behind one or the other of these efforts. Read the rest of this entryy

FDA Funding and the Appropriations Drama       November 28th, 2010 
 The process for passing appropriations bills should be similar from one year to the next. After all, it is a one-directional, regimented process. Yet, I have been through 30 or so appropriations cycles and each one seems to have its own unique story to tell. This year's efforts would make a riveting "made for television" movie "based on a true story." FDA Matters doesn't know how it will end, especially for FDA. Read the rest of this entry

FDA and Election 2010: Oversight and Investigations   November 13th, 2010 
President Obama's election and the health reform debate have distracted us from the disruption that "divided government" imposes on FDA. With the new Republican majority, the agency will find itself buffeted by political forces that are as concerned about "scoring points" as they are about improving government. FDA Matters thinks this will have a large impact on FDA, as well as the agency's stakeholders. Read the rest of this entr 

FDA and Election 2010: Deficit Reduction and Appropriations     November 6th, 2010 
 So-called "wave elections"–where one party overwhelms the other–are particularly hard to judge. The ground rules are going to change dramatically– in ways that no one can fully anticipate. At first, each side refuses to compromise. Then, something happens that sets the pattern for whether people will work together and on what issues. This may take months to resolve or may occur before the new Congress arrives. As things change, FDA Matters thinks there are some key issues for FDA-watchers to monitor. Read the rest of this entry  

Two Strategies for FDA Legislation in 2011

The current Congress will be remembered for its 15-month battle to enact health reform legislation. The FDA-related accomplishments have been less visible: an abbreviated approval pathway for bio-similar drugs included in the health reform law; and a food safety bill that may be enacted before Congress adjourns later this month.

In both cases, unanimity was never possible, but working majorities formed and prevailed. FDA Matters believes that any FDA-related legislation will falter in 2011 if it does not follow the strategy behind one or the other of these efforts. 

Bio-similars. The Democrats (Senator Kennedy and Representative Eshoo) leading the bi-partisan effort—and most of the Democratic rank and file who supported the legislation--come from high-tech, life sciences states and districts. Republicans joined the Democrats because of similar home-town support from life sciences companies and interest in promoting a pro-innovation, pro-economic development agenda.

The combination of Democrats with biotech interests and Republicans became a powerful force. It is also an approach that can be duplicated next year with a reasonable chance of success.

Indeed, another such effort is already underway regarding the medical device review process at FDA. Two weeks ago, 8 members of the Minnesota Congressional delegation sent Commissioner Hamburg a letter stating:

We support the FDA's work to improve the process for the approval of safe and effective Class II medical devices but we must work to ensure that we continue to foster life-saving innovation and growth….and a larger goal of saving and improving patients' lives….Changes that may jeopardize that goal should not be made unless there is clear evidence that the changes are necessary to address a public health problem.

The letter was signed by the state's 2 Democratic Senators, 3 of its Republican House members and 3 of its Democratic House members. Elsewhere, the letter mentions that Minnesota has over 500 medical device companies that employ almost 35,000 residents at average pay-levels almost 50% higher than the state average.

Food Safety. As with bio-similars, there was a widespread consensus that food safety reform legislation was needed. The similarities between the two efforts end there.

Hill staff and key constituency groups held extensive discussions about needed changes. After lots of disagreements and some very tough negotiating, most Democrats and Republicans found enough common ground to move forward in the House.

The Senate also evolved a compromise version—somewhat different from the House, but with a similar breadth of support. Action stalled in the Senate because of cost issues and concerns about small food producers. But the core of support never disappeared.

When those concerns were addressed in the Senate, the other extraneous issues and disagreements fell away. Even the House appeared to have signaled that they would accept the Senate bill, rather than face further negotiation that might delay action until next Congress. Such deference has become increasingly uncommon in Congress.

I don't want to minimize the difficulties in establishing and conducting negotiations on food safety. It may still fail. What made agreement possible was the willingness of constituency groups to work together, despite strongly held views that were often opposed. This approach can also work next year for other issues, as a broad-base of constituency groups lead Congress to a bi-partisan agreement on legislation.

---

The current Congress has not been known for its bi-partisanship. Some commentators think bi-partisanship may disappear altogether in the new Congress. Nonetheless, FDA is an area where getting the parties together is possible.

If consumer and patient groups, industry and associations and the Administration or Congress want to get anything done in 2011, they would do well to consider how the bio-similars and food safety strategies might apply to their cause.

Steven

The Minnesota delegation's letter to Commissioner Hamburg about changes in the process of approving medical device. http://www.hpm.com/pdf/MNLegConcerns.pdf

Some relevant past columns:

All FDA Stakeholders Affected by Medical Device Reforms        October 31st, 2010
There are so many visible, contentious FDA issues right now….that reform of the medical device approval process has received only a fraction of the attention it deserves. Other centers at FDA and non-device stakeholders need to be watching more closely. FDA Matters is. Read the rest of this entry

FDA: An Honest Broker on the Slow Path to Bio-similars      October 24th, 2010
FDA Matters enthusiasm for bio-similars is a matter of public record. The market will build slowly, but 10 years from now the new law will be seen as ushering in a new age of biopharmaceutical product development. Read the rest of this entry

Fall Scorecard for Follow-on Biologics        September 11th, 2009
The creation of a regulatory pathway for follow-on biologics (FOB) has become a favorite topic of FDA Matters. The substance of the legislation is important and the politics are fascinating. It should get even better this fall. Read the rest of this entry

FDA: An Honest Broker on the Slow Path to Biosimilars

FDA Matters' enthusiasm for biosimilars is a matter of public record. The market will build slowly, but 10 years from now the new law will be seen as ushering in a new age of biopharmaceutical product development. FDA will present the next glimpse of the future on November 2 and 3, 2010, when it holds hearings on implementing the new approval pathway.

The key to the future will be the FDA's strong commitment to expanding prescriber and patient choice among biological products. FDA will be satisfied (and successful) if the new law stimulates biosimilars, bio-betters, and innovative new biological products, along with a dramatic increase in knowledge about the nature and characterization of biologic products.

Misunderstandings abound about the new law and how it is likely to reshape the biopharmaceutical landscape. Experts keep saying that innovator (reference) products have been granted 12 years of market exclusivity. Reading the sentences carefully, data exclusivity prevents biosimilar products from being approved through the new abbreviated biosimilars pathway for 12 years. It does not prevent approval of a biosimilar through a traditional biological license application (BLA).

There is also the perception that the biosimilars market will be limited to billion-dollar products and a few companies that have the capital to enter the marketplace. Despite this view, there are at least five or six companies ready to advance biosimilar and bio-better products over the next few years. More will come.

Over time, innovation will bring costs down and significantly lower barriers to market entry. Competition will bring prices down to competitive levels. Discounts may not be as low as those in the generic drug market, but significant savings will result from 20% to 30% discounts on drugs costing $50,000 per year and more.

We are told many things about the agency: it is going to lower standards, be extremely cautious, fail to develop adequate guidance for industry or proceed with no ground rules, etc. Passage of Hatch-Waxman 26 years ago elicited similar concerns. A quarter century later, that law has resulted in 70% of US prescriptions being filled with generic drugs.

The path to a more vigorous biopharmaceuticals market will not be easy. The law is not well-written and the patent provisions seem an additional barrier. FDA will be very cautious about the new approval pathway, but it may look favorably on biosimilars submitted as BLA's. Although I don't agree, it has been suggested that even a single serious safety problem for an approved biosimilar will kill the market. Also, at least one reimbursement expert has told me that a biosimilars market may never emerge because doctors lack financial incentives to use these products.

The Federal Register notice for next week's FDA hearings lists a careful series of questions upon which the agency wants comment. At the hearings, expect little, if any, feedback from FDA. They won't ask many questions either. At the risk of leaving everyone guessing, the agency will keep its own counsel, determined to be an honest broker among competing interests.

Guidances and regulations take years to develop and publish. FDA will proceed carefully and consistent with its public responsibilities. The impact will not be measured by how many products come through the new abbreviated pathway (perhaps not many) or how many products are deemed "interchangeable" (maybe none).

FDA's ultimate success will be the broad expansion of biopharmaceutical products. This will happen eventually, but patience will be required.

Steven

Background on the FDA hearing on biosimilars:

http://edocket.access.gpo.gov/2010/pdf/2010-24853.pdf

Information if you want to attend the hearing or watch the webcast:

http://www.fda.gov/Drugs/NewsEvents/ucm221688.htm

Data Exclusivity and Bio-Similars: Both More and Less Than It Seems

May 2nd, 2010

FDA Matters has been very upbeat about the prospects for the bio-similar marketplace. With this in mind, this column explores why there is a persistent belief that the bio-pharmaceutical industry got something better than data exclusivity. I also explore whether data exclusivity will really provide valuable protection for original reference biologic products. Read the rest of this entry »

Follow-on Biologics: 1-2-3-GO

March 21st, 2010

The long fight is over for follow-on biologic (FOBs). The world of biopharmaceuticals will never be the same, but not in the ways that many players expect. Here is FDA Matters' guide to understanding the next phase. Read the rest of this entry »

The Follow-on Biologics Market

Since the debate began several years ago, the policy and politics of follow-on biologics (FOB) have been driven by assumptions and projections of the anticipated market. FDA Matters believes there has been a lot of fuzzy thinking about what type of companies will be players and how they will position themselves. The Federal Trade Commission report, released last week, is just the latest illustration. Read the rest of this entry »

Hot Town, Summer in the City—2010

For the news media, the only FDA story this coming week will be the two-day advisory committee meeting reviewing the diabetes drug, Avandia. Based on an earlier article (link below), FDA Matters will be looking at how Dr. Hamburg's FDA handles the discordant voices coming from within the agency.

Missing from public dialogue is the extraordinary (perhaps unprecedented) number of large, consequential projects that FDA will be working on this summer. Every part of FDA is involved in some initiative that could become a "game-changer" for the agency.

FDA shares at least two summer issues with Congress: comprehensive food safety reform and drug safety reorganization. Food safety legislation has passed the House. A different version is awaiting Senate floor action. Since final legislation is not guaranteed, FDA is working hard to develop an approach that is not dependent on statutory changes.

Although drug safety is not an active legislative item, several senior Members of Congress have been persistently calling for re-organization and other changes in how drug safety is evaluated and tracked. The Avandia advisory committee meeting has providing focus for these critics, but their positions do not depend on the outcome.

FDA's efforts to stay in control of drug safety are reflected in at least three initiatives that FDA is working on this summer: creating workable risk management plans (REMS) to accompany drug approvals; safety issues that are becoming part of the negotiations on renewal of drug user fees; and continuing efforts to update Sentinel and related tools for tracking adverse events and safety signals in large populations.

FDA continues its efforts to clarify its policies on safety and effectiveness of medical devices. Pre-approval issues include possible changes in the 510(k) pathway. Post-approval efforts include better device tracking.

Follow-on biologics (now re-named bio-similars) are also keeping FDA busy. This is the first new drug approval pathway in 25 years and FDA has already declared itself ready to accept product applications. At the same time, the agency has acknowledged that there are multiple policy issues to be resolved before agency guidance will be available. What FDA decides now (both on applications and policy) will reshape the world of bio-pharmaceuticals.

Some other top-level agency initiatives with potentially large consequences:

• FDA is grappling with its role in comparative effectiveness research.
  
• The FDA's Transparency Task Force has just reported its findings and recommendations.
  
• Upgrading inspections and enforcement are an immediate and ongoing priority for the agency.
  
• FDA is building a new relationship with NIH through a series of initiatives that will fail without serious attention.
  

Around the agency, here are a few more that could bring significant changes:

• FDA, NIH, patients and industry are trying to upgrade research on rare diseases and increase approvals of orphan drugs.
  
• FDA has promised guidance later this year on medical product communications on the Internet and in social media.
  
• FDA is wrestling with antibiotic use in food animals and kicking up some controversy.
  
• Implementation of the year-old tobacco legislation is ratcheting up after various provisions became effective in June.
  

Even upcoming product reviews may have interesting consequences. Over the next few months, FDA will be looking at three new drugs to treat obesity. This is a difficult product category with a history of safety problems. Yet, millions of Americans are likely to use these products if they are approved.

Despite the number of potential "game-changers" I have identified…no one knows better than Drs. Hamburg and Sharfstein how incomplete my list is. Fortunately, FDA has a great staff. I suspect most of them will be overloaded this summer.

Steven

FDA commissioners need to stay focused on their legacy, while dealing with the mountain of important issues discussed in today's column:

Not Too Soon to Consider the Hamburg Legacy
May 27th, 2010

May 18 marked one year since Dr. Margaret Hamburg was sworn in as Commissioner of the US Food and Drug Administration. The challenges are great, the torrent of issues is never-ending and most days you can smile but you can't win. It may seem premature to be discussing "the Hamburg legacy." But you know that she is thinking about it (all commissioners do), so why can't FDA Matters talk about it? Read the rest of this entry »

My earlier column that relates to the Avandia advisory committee meeting:

Dissent and Efficiency: Difficult Trade-offs for FDA
May 9th, 2010

FDA has a reputation for being tough on dissent, whether it comes from employees or regulated companies. Whatever the truth has been in the past, FDA is trying to develop an institutional cultural that welcomes and accepts dissent from employees, industry and other stakeholders. It is difficult, even messy, to do this. Yet, FDA's reputation and authority rests on showing that it listened to all competing views–without unreasonably slowing the decisionmaking process. Read the rest of this entry »

Orphan Drugs and Bio-Similars: Is 12 Better than 7?

In the new bio-similars legislation, orphan drugs were granted protection for the longer of 12 years of data exclusivity or 7 years of market exclusivity. Since both are triggered by the date of approval, many people have assumed that 12 years protection is always better than 7 years protection.

FDA Matters says: not so. Other than patent protection, the Orphan Drug Act's grant of market exclusivity to orphan drugs is still the best friend of an innovator company.

The new bio-similars law creates a regulatory pathway by which biologics similar to ones already on the market can get approved more quickly and with less original data. In a prior column, FDA Matters pointed out that the data exclusivity provisions were both more and less beneficial to originators than it seemed:

• More because no bio-similar can use the abbreviated approval pathway if the reference (originator) drug was approved less than 12 years before. This "pathway exclusivity" includes data exclusivity, but is more far-reaching. Even if a bio-similar has its own data, it still can't use the new pathway to approval.
  
• Less because the new law protects reference (originator) products against bio-similars for 12 years, but only if the bio-similar seeks to use the new abbreviated approval process. Many of the companies planning bio-similars are going to use the full BLA approval process instead, where the 12-year pathway/data exclusivity doesn't apply.
  

When this is applied to orphan drugs, two different situations emerge:

• If the bio-similar wants to use the abbreviated pathway, then the 12 years of pathway/data exclusivity protects the original orphan product. In this case, the 12 years is better for the originator than 7 years of market exclusivity.
  
• If the bio-similar wants to use the regular BLA pathway, then the 7 years of market exclusivity protects the original orphan product. The 12 years of pathway/data exclusivity doesn't apply at all.
  

What comes next depends heavily on FDA. The law is new and lacks clarity on many key points; the patent provisions border on the unworkable. The new pathway may not turn out to be usable.

Nonetheless, the new law clearly empowers FDA to find ways to get more bio-similar products on the market. Since, at best, this can only be partially achieved through the abbreviated pathway, I believe the agency will be looking for ways to make the BLA process friendlier for bio-similar and bio-better products.

This suggests that bio-similars of orphan products are going to use the BLA process a lot. Seven years of market exclusivity will still be the core protection that all orphan companies will want for their products.

For innovators of orphan drugs, the message is: prepare for competition. Don't assume that you will have more time because of problems with the new pathway or the protections it grants. Seven years of market exclusivity is all you can really count on.

For those planning bio-similars of orphan drugs, the message is: don't violate the originator's patent(s) and get your own data to support a BLA filing. Also, prepare to discount in order to get market share. It will never be like the generic drug market, but with biologics costing upwards of $300,000 per year….offering a 20% discount is serious money that will be welcomed by health plans and patients.

A final thought: costs to enter the bio-similar market are going to come down over the next 5 to 8 years. This means that orphan products with less than $1 billion in annual revenue are going to see competition much sooner than many predict.

Steven

My earlier column:

Data Exclusivity and Bio-Similars: Both More and Less Than It Seems
May 2nd, 2010

FDA Matters has been very upbeat about the prospects for the bio-similar marketplace. "Smart money" (i.e. companies currently making billions from their ability to discover or license new bio-pharmaceuticals and market them) decided to play before they knew the ground rules on exclusivity and patents. We can only conclude that there must be substantial amounts of money to be made, regardless of the specifics.

With this in mind, FDA Matters explores why there is a persistent belief that the bio-pharmaceutical industry got something better than data exclusivity. I also explore whether data exclusivity will really provide valuable protection for original reference biologic products. Read the rest of this entry » or go to: www.fdamatters.com/?p=921.

Data Exclusivity and Bio-Similars: Both More and Less Than It Seems

FDA Matters has been very upbeat about the prospects for the bio-similar marketplace. "Smart money" (i.e. companies currently making billions from their ability to discover or license new bio-pharmaceuticals and market them) decided to play before they knew the ground rules on exclusivity and patents. We can only conclude that there must be substantial amounts of money to be made, regardless of the specifics.

With this in mind, FDA Matters explores why there is a persistent belief that the bio-pharmaceutical industry got something better than data exclusivity. I also explore whether data exclusivity will really provide valuable protection for original reference biologic products.

Those who keep referring to market exclusivity under the new law point to the fact that FDA can't approve a bio-similar under the abbreviated bio-similar pathway until 12 years after the original, reference drug was first approved. That sounds like market exclusivity.

My understanding of the BIO interpretation: it doesn't prevent another company from going and generating its own data and getting its own approval through the existing BLA approval pathway. Hence, all that is protected is the company's data.

The new law "protects" the reference product from competitors….by denying competitors the benefits of the new approval pathway for 12 years. It is not market exclusivity because there are other ways to get a bio-similar approved. It is more than just data exclusivity because the competitive product can have its own data and still not be able to use the new abbreviated pathway for approval.

What has been granted to the reference product is "pathway exclusivity" for 12 years.

This suggests that the market is going to divide. Those who wish to market bio-similars of drugs that were approved more than 12 years ago will have a choice between the abbreviated pathway and filing a full BLA application for approval. For those who wish to market bio-similars of drugs that were first approved less than 12 years ago, the choices are: wait or go the full BLA route.

Many companies—even those with the opportunity to take the abbreviated pathway-- are going to decide that the advantages of a full BLA exceed the cost of collecting additional data. Some will take the data from their European bio-similar approvals and talk with FDA about which pathway will work best. Others will work toward approval of BLAs for so-called "bio-betters." These are new products that are bio-similar to an existing product, but are safer, more effective or easier to use.

What comes next depends in part on FDA. The new law clearly empowers FDA to find ways to get more bio-similar products on the market. Since this can only be partially achieved through the abbreviated pathway, I believe the agency will be looking for ways to make the BLA process friendlier for bio-similar and bio-better products.

FDA approval of a bio-similar will not assure a marketplace unless other changes occur. I envision health plans, insurers and government programs shifting toward "therapeutic substitution," where lower-priced bio-similar products will be put on formularies in place of the original reference product.

This has already occurred in the statin market, where an increasing percentage of prescriptions are filled with a generic statin, regardless of whether the doctor wants the patient to have a brand product. Right now, it seems like a stretch for bio-similars to be subject to therapeutic substitution, but FDA approvals of bio-similars and bio-betters will open up this possibility. Insurers needing to save money (and companies willing to lower prices to gain market share) will do the rest.

This brings me back to my other point: that the bio-pharmaceutical industry will find that the benefits of data exclusivity (and pathway exclusivity) will prove to be much less valuable than they seem now. BLAs are going to get easier, the marketplace will start substituting therapeutically, and all that "smart money" will prove to have been well-invested.

What do you think? Post a comment.

Steven

For those readers who want to familiarize themselves with what the new law says, it is pages 686 to 703 at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h3590enr.txt.pdf

More on bio-betters: "Pfizer Pushes on New Biotech Drugs"

http://online.wsj.com/article/SB10001424052748704464704575208580328253618.html?mod=dist_smartbrief#articleTabs%3Darticle

It’s 12 Years of Data Exclusivity

For an updated analysis, go to the May 2, 2010 column: Data Exclusivity and Bio-Similars: Both More and Less Than It Seems.Read the rest of this entry »

On several occasions, FDA Matters has asked Congressional staffers: how many of the Senators and Representatives understand that the follow-on biologics debate is about the amount of data exclusivity, not market exclusivity? In reply, I always get a smile that confirms my suspicion.

The confusion is not limited to the Hill. The New York Times referred to "market exclusivity" in its article on industry winners and losers on the day of the key House vote. A prominent industry trade publication—whose staff clearly knows better—referred to "bullet-proof market exclusivity" in a story the next day. The San Francisco Chronicle got it right—perhaps because of the concentration of bio-pharmaceutical companies in the Bay Area.

None of this would matter if data and marketing exclusivity were similar to each other…or even of roughly equal value. They are not. The future of bio-similar products cannot be understood without grasping the difference.

Intellectual property (IP) protection comes in several forms—the more types you have for the longest possible time, the less likely you will have competition.

The most familiar is patent protection. You own a product, formula or process for a number of years set by law and subject to various other considerations. For example, Hatch-Waxman provides for patent extensions to cover part of the time that pharmaceutical products are delayed in regulatory review.

On the other hand, patents can be challenged both as to their legitimacy and when they expire, thus negating or shortening the patent. At the end of the patent's life, the product, formula or process is (at least potentially) in the public domain, available for copying.

Another form of intellectual property protection is market exclusivity. For a period of time, a regulatory approval agency (FDA) will not accept another application for the same drug and indication. The best-known example is the seven years of market exclusivity granted to orphan drugs.

Market exclusivity runs independently from the patent. It can also protect the ability to market a product that is unpatentable or for which the patent has expired. With some exceptions, market exclusivity cannot be challenged in court….meaning that there are situations where it is better than a patent. Note that market exclusivity is primarily about regulatory forbearance, not ownership.

Data exclusivity under the new law is about ownership of the safety and efficacy data that supported the reference (originator) product when it received regulatory approval. Specifically, for a period of 12 years, FDA cannot approve a bio-similar product using the data (owned by a different company) that supported the original approval.

Data exclusivity does not prevent a second company from generating their own data. Nor does it prevent FDA from deciding that a 200 person trial is sufficient when the original approval was based on 2000 patients. Further, the science of characterizing biological substances is likely to advance rapidly over the next few years, providing the potential for additional ways for a bio-similar product to satisfy FDA requirements.

Data exclusivity is valuable. The investment community's enthusiasm for the 12 years of protection is appropriate. However, patents and market exclusivity are extremely powerful barriers to competition….and data exclusivity is not.

In a future column, I will further explore the implications of these distinctions…particularly, my view that the new law will lead to significant growth in the biopharmaceutical marketplace for both innovator and bio-similar products.

If you are not a subscriber and don't want to miss that column and future analysis of FDA and bio-pharmaceutical issues, I recommend going to www.fdamatters.com to register for free updates.

Steven

Two earlier columns on this topic:

Follow-on Biologics: 1-2-3-GO

March 21, 2010

The long fight is over for follow-on biologic (FOBs). The Senate-passed version of health reform will become law, even while the larger fight continues over the reconciliation package. Within 10 days, FDA will be busy implementing an approval pathway for FOBs.

The world of biopharmaceuticals will never be the same, but not in the ways that many players expect. Here is FDA Matters' guide to understanding the next phase. Read the rest of this entry »

The Follow-on Biologics Market
June 23, 2009

Since the debate began several years ago, the policy and politics of follow-on biologics (FOB) have been driven by assumptions and projections of the anticipated market. There has been a lot of fuzzy thinking about what type of companies will be players and how they will position themselves. Read the rest of this entry »

Mr. Brown Goes to Washington

The election of Massachusetts' new Senator, Scott Brown, has set off a media frenzy about the fate of health care reform legislation. However, the ramifications of his election reach far beyond health reform.

FDA turns out to be a good example. FDA Matters sees at least three consequences of his election that may affect the agency in 2010.

Congressional Focus. Health reform is still alive, but it will require considerable effort to re-start the process and advance new legislation. This could mean yet another year in which the nation's dialogue on health issues will be largely limited to one topic, health reform.

If health reform is re-started, Congress may enact food safety reform and hold scattered hearings on medical devices, drug safety, and medical innovation. However, Congress will lack the time and focus to attend to other important FDA issues.

Regulatory Pathway for Follow-on Biologics. A regulatory pathway for approval of follow-on biologics (FOB) is a probable casualty of the Brown election and the demise of current health reform legislation. Chairman Waxman has never wanted FOB in health reform. In the days before Senator Brown's election, he was reportedly working with the White House and the Democratic leadership to reduce the 12-year data exclusivity that had been in both the House and Senate-passed legislation.

If FOB is to be adopted in 2010, it will probably have to be as stand-alone legislation. This is a mixed blessing for the biopharmaceutical industry. While it gives Chairman Waxman a new opportunity to shape the House version, the strength of the industry has been in the ranks, rather than with leadership. The key to the industry's earlier victory in the House was that the legislation sponsored by Representative Anna Eshoo had 140 bi-partisan co-sponsors from every part of the country.

The time for legislation may also have passed. I believe more companies are going to file full Biological License Applications (BLA), rather than waiting for a generic-oriented pathway. BLA's are more expensive, but there are offsetting proprietary advantages. Some companies may also be able to build their US BLA on clinical data that had been compiled to support abbreviated applications in Europe.

Deficit Reduction. Senator Brown's election may also be a harbinger of another trend that could impact FDA. President Obama had already announced that the Administration's appropriations requests for 2011 (considered in 2010) would focus on deficit reduction.

Congressional enthusiasm for deficit reduction is always strong on rhetoric, but weak on follow-through. Many members of Congress see the Massachusetts special election as reflecting a growing and ugly mood in America about the economy and jobs. Because the federal deficit is an important contributor to this mood, Members of Congress may take deficit reduction more seriously this year.

If the deficit reduction fervor increases further, FDA is at-risk of receiving a very small increase at a time when the agency's needs are growing and it still working to overcome a decade of budgetary neglect.

It is rare for a Congressional special election to affect DC. This one is different and we are likely to see considerable change as Mr. Brown comes to Washington. FDA Matters will continue to watch closely how the election may impact: Congressional attention to FDA, the follow-on-biologics debate and the fate of FDA's appropriation.

Steven

For more background on the battle over FOB's in the House last year:

The Best Little Chess Game in Town

August 3rd, 2009

One of the reigning champions of political chess, Representative Henry Waxman, has found himself in an endgame on follow-on biologics (FOB). His three decades of success have been built on extraordinary mastery of Congressional procedure, artful compromise and strategic alliances. His defeat seems unavoidable, but no one should assume that he can't yet win or draw this game. Read the rest of this entry »

Messages to the FDA-Regulated: Seven Columns to Re-read for 2010

This past year has been a tumultuous one for FDA-regulated industries as they struggled to provide new and safer medical products and safer foods, while weathering much criticism.

FDA Matters has explored a number of industry issues in 2009. As they evolve in the new year, I will continue to provide readers with my analysis and commentary. Meantime, here are seven columns that provide insight about FDA-regulated companies. They provide useful background for 2010:

The Follow-on Biologics Market

Since the debate began several years ago, the policy and politics of follow-on biologics (FOB) have been driven by assumptions and projections of the anticipated market. There has been a lot of fuzzy thinking about what type of companies will be players and how they will position themselves. Read the rest of this entry »

"No Surprise" That Medical Devices Are Under Scrutiny

My column entitled, "Re-Evaluating the Medical Device Approval Process" was not widely-read. I assumed it was because everyone already knew that a review was underway at FDA with more activity coming. Apparently, I was wrong. Read the rest of this entry »

The Beatings Will Continue…

….until the biopharmaceutical and medical device industries clean up their act.

It has been an expensive year for pharmaceutical companies. Billions of dollars have been paid to federal and state governments and whistleblowers in settlement of allegations and lawsuits. The complaints include off-label marketing and overcharging Medicaid, but there are many others. Read the rest of this entry »

Patients Come First

It is a distracting time for the biopharmaceutical and medical device industries. All this frenzy makes it a good time to stop, draw a breath and remember why seriously-ill patients care about the success of biopharmaceutical and medical device companies. Read the rest of this entry »

Black, White, Shades of Gray

Civil and criminal investigations are becoming more prominent in the world of FDA-regulated industries. Being FDA-regulated means "always worrying that you will have to say you're sorry." But it matters whether you are apologizing to FDA or trying to apologize to investigators. Read the rest of this entry »

FDA: Invisible Arbiter of What Constitutes Disease

The nature of disease and constantly changing definitions are pertinent to FDA, which often makes decisions on behalf of society that reshape our understanding of disease. Read the rest of this entry »

Internet Communications: FDA Needs to Divide the Issues to Conquer the Problem

Creating an Internet communications policy for regulated medical product companies is so daunting that FDA has largely ignored the responsibility. FDA needs a different approach. This is not a matter of a large, complicated problem with many facets. Rather, it is a number of smaller problems that can be addressed separately. Read the rest of this entry »

Steven

House Votes on Health Reform: What’s Next?

By the incredibly close margin of 220 to 215, the US House of Representatives adopted health reform legislation on Saturday evening, November 7, 2009. In the end, abortion restrictions were added…and liberals were forced to accept these and provide the margin of victory.

The content of the House bill is of little significance. However, its passage is an historic event, creating a near-certainty that President Obama will be signing final legislation in the next 3 months.

Everyone's attention will now return to the other side of Capitol Hill. Senate Majority Leader Harry Reid has only one task: find the combination of health reform provisions that can command 60 votes in the Senate. He knows the answer is not in the House bill.

To get to 60 votes, Reid will need to agree to giving states the option of joining a government-run insurance plan or accept a mechanism where a government-run insurance program is triggered only if insurance reform doesn't reduce premiums. Not unlike the House, President Obama will be needed to persuade Senate liberals that this is a better outcome than no legislation at all.

Holding 60 votes may be as challenging as getting 60 votes. News stories have mentioned the possibility that Senators might offer 2000 amendments, regardless of what package Senator Reid offers. Leaving aside the weeks of Senate floor time this would require, every vote would hold the potential to break apart the 60 vote majority that Senator Reid would have labored to put together.

Sharp limits on amendments will be required. Perhaps, the 60-vote majority will have to agree to a text beforehand and then oppose all amendments. The same problem would recur in House-Senate conference...so there will probably be no conference. Instead, four to 10 weeks from now, President Obama will be back on the House side, persuading liberal members that the Senate bill is the best possible. He will be urging them to vote to accept that bill when it comes back to the House for consideration.

So, the House bill means nothing, but its passage will push forward a political process that Democratic leadership cannot allow to fail. They will have no choice but to twist arms until the votes and the process makes success possible.

Where is FDA legislation in all of this? Some version of follow-on biologics will be in the final legislation. The House bill won't matter. The specifics will be those agreed to in the Senate over the next few weeks.

Where is FDA in all of this? Advocates need to strongly and continually reinforce the relevance of the agency in a political world that will be dominated by implementation of health reform. The arguments may seem obvious: safe and effective drugs, biologics and devices are an essential part of preserving and improving human life. This will be true in a reformed system as much as it is today. The difficulty is knowing whether any Members of Congress will be listening.

Steven

Health Reform and FOB’s: From Debate to Done in Thirty Days

On Tuesday morning, October 13, the Senate Finance Committee is scheduled to vote on its version of health reform legislation. This is ground zero in a contest of political will and national priorities that began over 65 years ago. This is big…a tidal wave of change coming to the US health care system.

The Finance Committee bill, once passed, will be melded with the version passed in the Senate Health, Education, Labor and Pension (HELP) Committee. Although it's a small detail in the massive health reform bill, the future of follow-on biologics (FOB's) depends on what comes next.

Since early July, FDA Matters has expressed its political admiration for Representative Anna Eshoo's bi-partisan success in garnering more than 140 cosponsors for her bill. I have never seen a committee chairman face the overwhelming odds this presented to Representative Henry Waxman.

Yet, I reminded my readers that Chairman Waxman has a long-history of "not having the votes" and winning anyway. I repeated this observation in August and again in September. This was confirmed, indirectly, by Waxman in a speech he gave about two weeks ago when he told his audience that he hadn't given up on his version of FOB legislation. He asked them to keep working to get his bill passed.

There are at least four opportunities for the very similar House and Senate FOB provisions to be altered to favor Chairman Waxman's position:

• when the two Senate committees merge their health reform bills,
  
• when the three House committees merge their bills,
  
• when the bill goes to the Senate floor and can be amended, and
  
• during the House-Senate conference to reconcile differences between versions passed by each body.
  

Three of these opportunities will take place behind closed doors where anything can happen. You don't need to "have the votes" to prevail….only to be in the room when the decisions are made. Chairman Waxman will be in Speaker Nancy Pelosi's office when the deal is cut on the House side. His ally, Senator Charles Schumer, will be in Majority Leader Reid's office when the Senate bill is agreed upon. Both Waxman and Schumer will be on the House-Senate conference committee.

I no longer think it will happen this way. This multi-step process is a recipe for legislation to be bogged down until next year when health reform and FOB's will die an agonizing election-year death.

To avoid those delays, the Senate bill will be the Finance Committee bill with:

• some provisions from the HELP committee version,
  
• some provisions necessary for Reid to get to 60 votes in the Senate to avoid a filibuster, and
  
• a few provisions that are high priorities for the House (other than a public plan).

The President will then endorse the Senate bill. Assuming Reid has negotiated carefully and counted correctly, the agreed-upon bill will be moved quickly to the Senate floor. The 60 Senators will have agreed not to offer amendments on the Senate floor (allowing one amendment will allow hundreds).

As soon as the Senate-passed bill reaches the House, the Speaker will schedule an "up or down" vote. The President will help her keep the Democratic majority together. There will be no House-Senate conference.

The pending "behind closed doors" Senate negotiations may be the only time further changes will be made. Afterward, Members of Congress will be able to blame Reid and Pelosi that they weren't allowed to offer amendments favored by whatever constituents and health care stakeholders they were trying to help.

The bio-pharma and generic industries probably have no more than two to three weeks to persuade the Senate negotiators to take their side on data exclusivity and other FOB issues. There may be no second chance.

We are going to go from "debate to done" in thirty days.

Steven

My prior columns on follow-on biologics are at:

Fall Scorecard for Follow-on Biologics,
September 11, 2009

Health Reform and Follow-on Biologics September 6th, 2009

The Best Little Chess Game in Town August 3rd, 2009

Follow-on Biologics and the Dance of Legislation July 5th, 2009

The Follow-on Biologics Market June 23rd, 2009

Fall Scorecard for Follow-on Biologics

The creation of a regulatory pathway for follow-on biologics (FOB) has become a favorite topic of FDA Matters. The substance of the legislation is important and the politics are fascinating. It should get even better this fall.

The House Energy and Commerce Committee and the Senate HELP Committee have both put FOB provisions into their health care reform bills. If the two FOB bills were to be considered in a House-Senate conference on health reform, it would not be hard for conferees to agree on a final version. Yet, for reasons given below, FOB legislation may not become law this year and the current House and Senate provisions may be changed before (or during) conference.

House status. House Energy and Commerce Committee Chairman Henry Waxman has proposed generics-friendly legislation (HR 1427). Fellow Democrat and committee member, Representative Anna Eshoo, has proposed a competing, bio-tech friendly bill (HR 1548). The two have been in a stand-off since introducing their bills in March of this year. With help from Representative Barton, the ranking minority member of the full committee, Eshoo's bill has amassed 142 bi-partisan co-sponsors, about 1/3 of the membership of the full House and far more than the Waxman bill.

An Eshoo amendment was successful during the July health reform mark-up, so FOB is now part of the House health reform package. Her amendment was similar to her original bill, with some changes to make it closer to the Senate compromise bill.

Although the Eshoo amendment has the upper hand, Chairman Waxman still has options. It is possible that FOB's will not emerge from the melding of the three different House committee versions of health reform. House leadership may help him keep FOB out of the final legislation when it is considered by the House. Perhaps there will be changes in the Senate bill, allowing more room for compromises in the House-Senate conference committee.

Senate status. On the Senate side, the HELP committee put a two-year old bipartisan FOB compromise into its health reform bill. As noted, it is much closer to the Eshoo position than to Waxman. However, the HELP-passed version of FOB may not be the final word in the Senate.

Senator Schumer has introduced the Waxman bill in the Senate (S 726). His bill (and its seven bi-partisan co-sponsors) assures that the HELP bill will not move forward without visible dissent on FOB. The HELP version is also subject to modification when the Senate Finance and Senate HELP committees merge their two versions of health reform.

The health reform factor. Without enactment of health reform, the Eshoo bill and the Senate compromise bill may be dead for this year and, maybe, for this Congress. Short of an equally-compelling, must-pass health vehicle, Chairman Waxman, as chairman, is unlikely to give Representative Eshoo a second chance to offer her FOB amendment. Without passage of health reform, any future House action on FOB is likely to require Waxman's input.

The Senate situation is likely to be similar. If FOB is not in the final health reform bill, then it will be difficult to sustain the Senate FOB compromise version, especially without Senator Ted Kennedy to advocate for it.

The fate of FOB also becomes uncertain if the health reform bills are substantially narrowed in scope. For example, if the final legislation focuses on insurance reform, then FOB might not be in it.

FOB: the substance is important and the politics are fascinating. Stay tuned!

Steven

Prior columns on follow-on biologics:

Health Reform and Follow-on Biologics September 6th, 2009

The Best Little Chess Game in Town August 3rd, 2009

Follow-on Biologics and the Dance of Legislation July 5th, 2009

The Follow-on Biologics Market June 23rd, 2009