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Recent trends suggest the biosimilars market is poised to grow rapidly in the near future-just in time for the fast approaching tenth anniversary of the Affordable Care Act’s Biologics Price Competition and Innovation Act of 2009 (BPCIA).
The BPCIA had a clear purpose: to encourage the development and approval of lower-cost biosimilar pharmaceutical products through an abbreviated regulatory review process. And because the U.S. biologics market is a $74.3 billion dollar industry, many expected the BPCIA to cause a more immediate biosimilars explosion.
But despite a sluggish start, three key trends have arisen as sign posts of the impending growth. First, we expect biosimilars to be approved in even greater number going forward. Second, there has been, and will be, more litigation involving biologic patents, with a concomitant increase in the number of settlements and inter partesreview (IPR) challenges to biologic patents before the U.S. Patent Trial and Appeal Board (PTAB). Third, while the health care market has been slow to adopt biosimilar products, new FDA initiatives could lead to increased biosimilar uptake-and potentially realize the BPCIA’s ultimate goal of reducing the cost of biologic drugs.
1. Biosimilars Approvals Will Continue to Increase
The increase in approved biosimilars may be due in part to two things: greater clarity in the FDA review process and in the legal framework surrounding biosimilars litigation. Companies are now better able to plan for their Abbreviated Biologics License Applications (ABLA) and related litigation strategies. Encouragingly, the FDA published its Biosimilars Action Plan in July 2018, further committing itself to improve the biosimilars review process. Greater regulatory clarity and efficiency should help maintain the upward approvals trend.
Here is a brief snapshot of the upward trending numbers: The FDA approved the first U.S. biosimilar in March 2015, five years after the BPCIA was enacted. To date, FDA has approved 16 biosimilars. Seven of these approvals came in 2018, up from five approvals in 2017. This positive trend has excited the industry.
2. Biosimilars Litigation is “Booming”
The ABLA approval process encourages applicants to resolve patent disputes before a biosimilar launches. As manufacturers have become more comfortable with the complex regulatory and litigation schemes associated with filing a biosimilar application, they have filed more biosimilars applications. And as more applications have been filed, more biosimilar-related lawsuits have been filed. Based on publicly available information, as of mid-2018 there were 14 pending lawsuits relating to biosimilars, and at least three settlements. These numbers will likely increase as more ABLAs are filed.
Likewise, there have been many IPRs filed involving patents on biologics. To date, parties have filed 108 IPR challenges to patents covering 11 biologics drug products. Over half of those IPRs were filed in 2017. The number of biosimilars IPRs filed in 2018 decreased from the previous year, perhaps because the PTAB denied a significant number of institutions. But challengers will become more sophisticated and more selective in the types of IPR challenges that they mount based on these recent decisions. For example, challengers have been relatively successful in filing IPRs against method-of-use patents related to biologic products.
Another development is growing diversity in the parties involved in both traditional litigation and IPRs. Litigants on the biosimilar side of these disputes include smaller companies, traditional generic manufacturers, and even large branded companies. We expect this diversity to continue as companies become increasingly comfortable with the process, and the stakes remain high.
3. Education to Speed Market Uptake
Approved biosimilars have not seen the market penetration that Congress had hoped for, though the groundwork is being laid to improve biosimilar uptake. Of the 16 biosimilars approved in the U.S., only three have been commercially launched. Currently, biosimilars account for only 4% of the overall U.S. biologics market, compared to 13% to 19% in Japan and India. The size of the biosimilars market is in stark contrast to the U.S. small molecule market, where generic drugs account for 89% of dispensed prescriptions.
There are several reasons for this contrast. First, a lack of automatic substitution at the pharmacy is a major barrier to biosimilars market entry. Without automatic substitution, biosimilars manufacturers must actively promote their products and compete with well-established biologics. But a more fundamental problem is a lack of education among both doctors and payers, who are hesitant to prescribe and reimburse for biosimilar use. The industry recognizes this deficiency-so much so that the FDA’s Biosimilars Action Plan includes a commitment to increase biosimilars education among health care providers and the public. Once the industry educates prescribers and payors about the safety and efficacy of biosimilars, the uptake of biosimilars will dramatically increase, just as similar educational initiatives increased the acceptance of generic drugs in the 1990s and early 2000s.
But even with the initial slow market uptake, the U.S. biosimilars market is projected to be worth $11 billion by 2022. As the biosimilars regulatory and legal landscapes continue to develop, and with increased education for health care providers and the public, the number of approvals, litigations, settlements, IPRs, and market competitors will undoubtedly continue to grow.
Kevin Nelson and Tara Kurtis