The Biosimilar Uptick

On July 18, 2018, the FDA published its guidance for biosimilars, “Labeling for Biosimilar Products.” This guidance provides an overview of the FDA’s recommendations for biosimilar labeling, so that prescribers can make informed decisions. The FDA states the intent of the guidance is to help manufacturers “develop draft labeling for proposed biosimilar products for submission in an application under section 351(k) of the Public Health Service Act (PHS Act) (42U.S.C. 262(k)).”

On the same day, the FDA also released its “Biosimilars Action Plan,” to provide a deliverable to work in parallel with the Administration’s Blueprint, “American Patients First.”

I am always quick to jump on such breaking news. Though I rarely read articles in their entirety, I see myself subscribed to many different news outlets, where I’m barraged by their headline news updates. Seeing the pop-ups multiple times each day from different sources gives me good background information.

While not breaking news today, I did fully read Trump’s Blueprint “American Patients First” a few times over. Since then, every time I see a new pharma news headline, I reflect back to the four points that the Administration seeks to achieve in the near future for the pharmaceutical industry:

  1. Improved competition
  2. Better negotiation
  3. Incentives for lower list prices
  4. Lowering out-of-pocket costs

The other week, while I was attending the 340B Coalition Conference in Washington D.C., Health and Human Services Secretary Alex Azar was one of the keynote speakers. During his speech, he highlighted how things in our industry need to have a dynamic and impactful change, whether the change takes effect through the 340B program’s structure, chargebacks, or rebate and formulary discount strategies (or even with drug manufacturers slashing prices). Azar conveyed the message that manufacturers have to start to align with the new Administration’s future vision on drug pricing; otherwise, they are going to feel the pressures in different ways, and ‘not be happy.’

What are biosimilars and what role do they play in drug pricing?

The FDA’s formal definition of a biosimilar (351(k) drug) is: “A biosimilar is a biological product that is approved based on data showing that it is highly similar to a biological product already approved by the FDA (reference product) and has no clinically meaningful differences in terms of safety, purity and potency (i.e., safety and effectiveness) from the reference product, in addition to meeting other criteria specified by law.”

For those of you not familiar with biosimilars, the way I think of it is, these products are biologics that get approved based on evidence that indicates that the drug is like an already-approved FDA biologic (the reference product). Yet another way to think of this is the biosimilar has the same effect as a generic equivalent. While this may sound very similar to a generic drug, it is not in fact a generic. There is still a research and development (R&D) factor that drives cost. The R&D costs for the biosimilar are less than the branded drug, but the molecular composition of the drug may not reflect the level of cost savings of a generic equivalent.

Biosimilars must meet five criteria in order to qualify as a substitute for the original manufacturer’s drug:

  1. The biologic must be substantially similar to the reference product
  2. The biologic-license application must show that the biosimilar’s mechanism of action is that of the reference product
  3. The biosimilar and the reference product are labeled with the same conditions of use
  4. The biosimilar’s route of administration, dosage form, and strength are the same as the reference product
  5. The biosimilar is manufactured, processed, packed, or held in a facility that meets standards to assure that the product is safe, pure, and potent

The Biologics Price Competition and Innovation Act of 2009

The Biologics Price Competition and Innovation Act of 2009 (BPCI) was enacted as part of the Patient Protection and Affordable Care Act (Affordable Care Act) (Public Law 111-148) on March 23, 2010. This act is also closely aligned to the Hatch-Waxman Act (1984). Both have the intent to provide alternatives to pricey, branded drugs, new development pathways, and alternative competition. The goal was to create a shorter pathway to market for a biological product that is a biosimilar.

In the U.S., there are currently 11 approved biosimilars. Since the passage of the BPCI in 2010, there has been an uptick in biosimilar approvals starting in 2015. Mylan’s Fulphila, which is the first biosimilar to Amgen’s Neulasta, is the most recent FDA biosimilar approval (June 2018). This month (July 2018), AbbVie granted a non-exclusive license to Mylan for Humira. The move towards more clear guidance on biosimilars provides a clearer path of regulatory direction for the different stakeholders in the pharma ecosystem (established and emerging pharma). However, the process for biosimilars has not always been streamlined, which has led from drug innovation to Supreme Court cases over violations of the ‘patent dance’ – such as in the case of Sandoz Inc. vs. Amgen Inc., over Amgen’s leukocyte growth factor drug, Neupogen.

The growing trend in biosimilar approvals since 2015 demonstrates pharmaceutical manufacturers’ willingness to step up to the plate for the first goal of the Administration’s Blueprint to drive improved competition. That brings me to my thoughts today on this week’s pharma events.

Administrative direction

Is the publishing of the latest FDA guidance for biosimilars and the new Biosimilars Action Plan an attempt for regulatory agencies to provide more direction, so that more manufacturers step forward under the BPCI Act of 2009? I think so. I also think this is a strong indication that the commitment to making the process of getting a drug to market easier, will also help competition and price alleviation, as also indicated by the FDA – “Prices should continue to fall as markets become more competitive.”

I hope that with more traction coming for approvals and more guidance for manufacturers, we will see more biosimilars listed on the FDA website soon, and less issues about “patent dance” violations. This might also lead to revisions around 180-day exclusivity periods.

The Administration’s Blueprint highlights that it will make changes to address this by,“…preventing companies from using their 180-day exclusivity to indefinitely delay real competition and savings for consumers by seeking a legislative change to start a company’s 180-day exclusivity clock in certain instances when another generic application is ready for approval, but is blocked solely by such a first applicant’s 180-day exclusivity.” (HHS, 2018). This approach will prevent delays to alternative generic drugs getting to market if the original generic manufacturer puts its filing with the FDA on hold. Could this also apply to biosimilars in the future?

Will there be impacts to Medicare reimbursement? As of January 2018, the HCPCS coding system was already modified for new billing codes and modifiers to accommodate biosimilars. And there may be further refinement to this per the Administration’s Blueprint, in order to incentivize the development of lower-cost biosimilars.

All-in-all, there are certainly more questions than answers, but as biosimilar approvals grow, manufacturers will need to consider what the effect will be on calculating and reporting prices to the government (e.g., Best Price (the lowest price offered to the retail class of trade for a drug)) as drugs will be able to reach a wider patient population.