Biosimilars Ramp-Up: Five Themes for the Future

April 8, 2015
Casey McDonald

Casey McDonald is Senior Editor, Pharmaceutical Executive.

Pharmaceutical Executive, Pharmaceutical Executive-04-01-2015, Volume 34, Issue 4

Although the strategic hurdles of biosimilars market entry are not new, the task of imitating substantially more complex molecular entities offers up a host of new operational questions for pharma.

In-boxes and newswires filled up on March 6 with victory cheers, notes of caution, and, of course, ubiquitous calls for regulatory clarity. The historic moment: Sandoz, a generics division of Novartis, received the first-ever FDA approval for a biosimilar product, Zarxio.

The reference product is Amgen's Neupogen (filgrastim). The drug, which was originally approved in 1991 and still brings in north of a billion dollars for Amgen annually, is used to increase white blood cell counts in cancer and bone marrow transplant patients. It may no longer be a multibillion-dollar blockbuster, but Zarxio's impact would be a symbolic knock to one of biotech's "old guard." A cursory reading of biotechnology's history would note Neupogen as one of its early revelations, no doubt enshrined in its Biologics Brand Hall of Fame.


Photo: Thinkstock

As we stand, Amgen and Sandoz tease out a legal spectacle; on March 19, a federal judge denied Amgen's request for a preliminary injunction to stop Zarxio's US launch. The case revolves around differing opinions on what must be disclosed in the "patent dance" of the Biologics Price Competition and Innovation Act (BPCIA). There likely will be an update (if not several) to this saga before this article goes to press.

The legal dispute is seen by many as a predictable step to delay the inevitable-roadblocks to buy Amgen another couple weeks, or possibly a fiscal quarter before competition begins to erode sales. Market entry is inevitable and likely will come this year. But for the remaining period, laws of big numbers apply. Weeks or months of sales for a billion-dollar drug still count for something.

Their arrival has been combative, but the time has come, and as many as three more biosimilars could get FDA nods in 2015. As we await the inevitable, Pharm Exec decided to examine five additional issues that warrant consideration.

1.) Levels of acceptance: Extrapolation, interchangeability, and switching

Zarxio, known in Europe as Zarzio, now has the FDA's OK for use across all indications included in the reference product's label. The "extrapolation" across all of the innovator drug's approved indications is one notable win for biosimilar makers. Running trials for each disease state would be costly.

The FDA's approval of Zarxio was quick and though it was expected, full extrapolation confirmed that the FDA is indeed "favorably disposed to having biosimilars in the market place," notes James Langley, chair of the Healthcare and Life Sciences Practice at The Mead Consulting Group.

A formal designation of interchangeability from the FDA will be another step as drugmakers, payers, doctors, pharmacists, and patients will contest a power struggle over whether a script can be transferred to the biosimilar and how.

Current state legislation for biosimilars (both passed into law and currently before various state legislators) regarding substitution, notification, etc., is widely varying. Some states may allow the pharmacist full discretion to make a substitution. Others might require notifying the physician before or after a change. Still others might only grant a substitution with physician's approval.

"Keep in mind that most debates around how substitutions will happen have made the assumption that biosimilars will gain interchangeability, but it's unlikely in the first year or two," says Langley. The FDA's 2012 guidance suggested that a company can apply for interchangeability, but it will be a high bar.

Biosimilar makers will go for one additional level of acceptance to be fully ingratiated into the marketplace-switching. Early on, only new patients will be put on biosimilars. Physicians treating patients with biologics are heavily concerned with immunogenic responses to the large foreign molecules floating in their patients' circulatory systems. Reactions are not generally responsible for severe adverse events, but they do mean that the immune system is saying it's had enough, blocking the treatment and greatly diminishing its therapeutic action. Likelihood of a reaction is already high, and lot-to-lot variation of biologic treatments concerns physicians as it is. Until switching studies can show that a biosimilar does not raise the incidence of an immunogenic response, expect physicians to be extremely hostile to the idea of switching a patient who is being successfully treated by the innovator. For a good while, biosimilars will be limited to new patients.

2.) Some biosimilars might be better, others might seem better

The mindset surrounding biosimilars is that they will be a lesser version of the original. The argument made by those supporting biosimilar entry is that with solid manufacturing, they will be up to spec.

But in some cases, the biosimilar might be superior to the innovator product. This might fly in the face of some who see biosimilars as an inferior copy of the original. In comparison, how often is the cover version of a song better than the predecessor? This writer has always preferred the Isley Brothers' version of "Twist and Shout" to the Beatles'. Of course the flip side of that debate is "Hurt" by Johnny Cash.

The question comes down to variability, which is the whole reason we're sticking to the term "biosimilar." Biosimilars will vary from the innovator drug and, consequently, may have lower efficacy, greater safety concerns, and increased immunogenicity. But biologic therapies have considerable variation already. Biologics have variation from lot to lot; a fact that is at the core of working with biological systems and manufacturing complex molecules. Anyone who has worked with cell cultures knows how fickle they can be-with a slight humidity change, a different phosphorylation pattern results.

On top of lot-to-lot variation, physicians will speak of a perception of variation over time that exists. Statements like "2005 Humira is different from 2015 Humira" are not uncommon.

So who's to say that a biosimilar product won't vary on the side of slightly better levels of efficacy and safety rather than being slightly worse? No doubt these differences may be nearly impossible to determine as statistically significant in controlled trials.

But take heed. It's human nature to make judgments based on anecdotal evidence-doctors and patients included. Be prepared for case study "evidence" and trials of small numbers. Expect headlines saying biosimilar X is less expensive AND better! A headline like that could go viral.

3.) Doctors dubious

"Based on the surveys we have done, physicians feel they will have a strong voice in the adoption of biosimilars, but most of the discussion in the industry to date has been about payer influence," says Mark Ginestro, a principal at KPMG, where he focuses on healthcare and life sciences. Some are choosing to be vocal claiming they should have a greater say.

But what they say is mixed. Speaking to physicians, you see some surprisingly divergent views on biosimilars, some being very open to use and others are much more cautious. This presents an "opportunity to differentiate products via communication to physicians," says Ginestro.

Clearly, advertising and education campaigns will be necessary for biosimilars, notes Joshua Cohen, research associate professor, Tufts Center for the Study of Drug Development. "Even if the FDA has done its job regarding safety, efficacy, and quality, there will be some skeptics," says Cohen. "There's a diffusion curve for any new product, and it will be hard to get early adopters. Some doctors will play a waiting game and look for more data on each biosimilar."

To "facilitate" doctor acceptance, there will no doubt be payer pressure using mechanisms like formulary exclusion. It will be challenging to force the issue on physicians, so expect payers to participate in educational programs, adds Cohen.

The loss of authority for physicians is nothing new, says Langer. Their greatest aversion, besides overall safety, concerns immunogenicity, which they fear will result from any kind of forced switching for patients already on the branded drug.

For now, the mindset is the same for physicians with biosimilars and biologics. When a patient is doing well on a treatment, don't change them. And once a response is lost due to immunogenicity, it is lost forever. New patients will be a different story.

Consider this: with the concerns over immunogenicity resulting from switching, won't doctors also be highly averse to switching from biosimilar and upgrading to the branded drug? Switching "up" or "down" could result in greater potential for immunogenicity. This factor makes biosimilars distinctly different from small-molecule generics, where a patient might try the generic and then bump up to the branded version to see if they can get a better result. With biosimilars, the initial decision will lock a patient into one therapy-at least until switching studies provide sanction.

4.) Trends driving acceptance-and the Sovaldi context

For the last few years, estimates for the likely range of price reduction for a biosimilar drug have been 25%-30% compared to the innovator product. So news out of Norway, that Orion Pharma is offering a 72% price reduction for Remsima, the infliximab biosimilar via the nations' tender system could cause a "shock wave," according to Joseph Fuhr, Professor of Economics, Widener University. This could give other groups in the European Union and US the gumption to demand significantly greater reductions.

Generally speaking, the incentive to launch biosimilars in the US should be greater because companies can compete with greater discounts, notes Cohen. Price controls in Europe tend to keep the price of the innovator lower, and thus the percentage difference for the biosimilar is smaller. This is evident in Europe's generics market, which is less developed. This makes the tender offering by Orion all the more impressive.

Along with this potential shockwave, the conflagration over Sovaldi and resulting pacts that payers have made with hepatitis C virus (HCV) drugmakers make timing intriguing. Lessons have been learned; precedents have been set. Where a new drug enters the market in the same class as another drug, there is greater opportunity to negotiate and deeper rebates are possible.

Presenting at CBI's 10th Annual Summit on Biosimilars in late January, Langley pointed to additional driving factors that will incentivize lower-cost products. In addition to the HCV market as a primer, payers using formulary exclusions like the Express Scripts block will no doubt take advantage of biosimilars to cut out brands as cost-cutting measures.

Additionally, new payment system changes like accountable care organizations, bundled payments, and value-based measures will drive significant economic incentive to utilize lower cost products, says Langley. Other factor like hospital consolidation and integration of the full-care spectrum will demand greater cost per quality of patients' lives.

5.) Things will get complicated

Several regulatory issues remain, one being nomenclature standards. Zarxio's approval came with a placeholder nonproprietary name, filgrastim-sndz, rather than certainty on the issue.

Hopefully this, and some other questions, will be answered once the biosimilars truly start to complicate markets. Five tumor necrosis factor (TNF) inhibitors is a complicated market already. But start wrapping your head around two or three, and eventually five or six, products for each molecule.

The markets will settle and saturate, notes Ginestro. He says manufacturers could enter markets in waves-maybe a few biosimilars to start with, then maybe another wave with lower-cost manufacturers. As pricing gets more aggressive, originator manufacturers may start pulling out.

"A 30% discount isn't the bottom," says Langley. As more products enter, you'll see more pressure on price, more negotiations with payers, and deeper discounts.

In spite of the confusing markets with low prices, several big Pharma and biotechs want in-Sandoz is a subsidiary of Novartis, Pfizer bought Hospira, and Amgen will have its own biosimilar wing, just to name a few. Big names ultimately confer manufacturing confidence with the consumer.

It will be important for these companies to seek balance, says Ginestro. Those that want to share in the biosimilar pie need to think about core competencies. Is innovation or operational excellence at the heart of each company?, asks Ginestro. Without clear divisions, an organization can end up with dual identities. It will be key that those hoping to do both keep biosimilars efforts from impacting their innovation engine, Ginestro stresses.

Timing into markets could also be key. Unlike with innovator drugs where "first to market" can be crucial, biosimilars may see a second-mover advantage, notes Fuhr. Sandoz is taking the brunt of costs not just battling the innovator company in courts but also navigating the nebulous FDA. It will be interesting to see if Apotex's pegfilgrastim can enter the market using benchmarks set by Sandoz. Depending on how delayed Apotex's biosimilar is, there could be substantial time for Sandoz to earn its investment back, but it could also absorb extra cost educating the market for their competitors' benefit.

But considering the many complexities and the potential massive systemic cost savings, can anyone blame FDA from taking its time for further guidance? Rather be late and right, than early and wrong.

Casey McDonald is Pharm Exec's Senior Editor. He can be reached at cmcdonald@advanstar.com.