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Wall Street BioBeat : May 1, 2008 ( )
Biosimilars Are Poised to Influence the Industry
Political Interest and Physicians’ Need to Drive Down Costs Could Create a Sizable Segment
The high cost of prescription drugs is a hot topic in this year’s U.S. presidential election and is likely to remain a priority to address in the next administration. With prices for treatments like Erbitux or Avastin exceeding $50,000 per year, political pressure is mounting to pave the way for generic follow-on versions of biologics.
Europe has already green-lighted the first biosimilars, as the European Medicine Agency (EMEA) terms them, such as Roche’s versions of erythropoietin. Expectations for biosimilars in the U.S. are increasing as the Biologics Price Competition and Innovation Act (BPCIA) introduced by Democratic presidential candidate Hillary Clinton, works its way through Congress. This legislation would create an approval path, and we could see the first follow-on biologics in the U.S. by 2011.
This market segment, estimated at $43 billion in 2006, may be safe for several years, but the coming impact to the industry could be significant. By 2013, at least 10 branded biologics with total sales of $15 billion will be generic and prime targets for genericization.
The cost advantages of overseas generics players such as Teva, Wockhardt, and others will amplify the effect of bio-generics.
The European Commission approved biosimilar legislation in 2004 and has been working proactively to develop and clarify regulatory paths and scientific guidelines with the EMEA. Europe approved their first biosimilar in 2006—Sandoz’ Omnitrope, a human growth hormone follow-on to Pfizer’s Genotropin. In September 2007, Sandoz’ version of EPO was also sanctioned in Europe.
More importantly, the EPO from Sandoz will receive the same international nonproprietary name (INN) as Amgen’s original Epogen, erythropoietin (EPO) alpha. This should make it interchangeable with the original at the pharmacy. In contrast, Stada has a biosimilar EPO that received the INN of erythropoietin zeta and is not interchangeable without physician consent.
Two competing proposals have been submitted to Congress, one by Henry Waxman, a Democrat favoring the generics industry, and the other by Jay Inslee, a Democrat favoring the Pharmaceutical Research and Manufacturers of America. Waxman’s bill provides for follow-on substitution of branded biologics and offers no data exclusivity. In contrast, Inslee’s proposal offers no substitution and 14 years of data exclusivity.
In June, a balance was struck when the Committee on Health, Education, Labor and Pensions passed the BPCIA. The bill allows for a clear path for approval, some degree of substitution, and 12 years of exclusivity. Further, it gives FDA the ability to decide on the requirements for getting the go-ahead.
While there appears to be support for the compromise bill, it has not yet been voted on by the full Senate or House. Indeed, it may undergo substantial revisions as it is assessed by other committees. Key issues remain to be debated, including approval requirements and clarification of patent concerns. These deliberations and potential modifications are likely to keep the bill from a broad vote until the second quarter.
If the House and Senate approve legislation this year or even in 2009, it could pave the way for follow-on biologics approval in 2011.
The Market in Five Years
Predictions as to where the market will be in the next few years vary with the industry’s, physicians’, and global perspectives.
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