Are Biosimilars Ready For Primetime?

As the partisan battles over Obamacare fade, a focus on healthcare costs, and in particular, costly specialty drugs, has emerged as the most hotly contested issue on the healthcare landscape.

Attention is presently focused on Gilead’s Sovaldi, a landmark drug that can cure Hepatitis C, but can also cost up to $1,000 a pill. The sticker shock associated with the drug has generated many headlines, but bringing down the cost of complex drugs known as biologics could have a much larger impact on the market.

It’s been four years since the Affordable Care Act created a regulatory framework and pathway to approve generic versions of biologics, known as biosimilars. The FDA has yet to approve even one application, but appears poised to do so in the near future. Last month, Sandoz became the first ever company in the United States to publicly file for biosimilar approval, and it’s likely other companies have done so privately. Congress has begun approaching the relevant federal agencies to find out where things stand, and in a recent Morning Consult column, Hospira said its first biosimilar products could hit the U.S. as early as next year.

If cheaper biosimilars start hitting the market, the savings could be significant. In 2013, biologics made up 28 percent of drug spending, an increase of nearly ten percent, according to research from IMS Health.

“We know that about half of all drugs will soon be biologics, and just over next few years, I think $71 billion in biologic drugs will come off patent,” said Allan Coukell, the senior director for drugs and medical devices at Pew Charitable Trusts. “If you assume there’s a potential to shift that market by 20 or 30 percent, those are big savings. The potential savings from biosimilars are very, very substantial.”

But regulatory challenges and other barriers to biosimilar adoption could slow these savings down.

The generic drugs on the market today are simple, molecule-by-molecule reconstructions of the drugs they’re copying. Biosimilars, in contrast, can never be exactly the same as the original biologic drug. That’s because scientists build biologics from living cells and tissue, and no two living things are exactly the same. The copies of these drugs will always be slightly different in makeup, even if they exhibit many of the same properties and produce the same clinical outcomes as the drugs they’re modeled after.

Because biosimilars cannot be exact copies, Congress “deliberately set a very high bar for biosimilar product approval,” according to an FDA spokesperson. Therefore, drugmakers face additional obstacles in proving their products don’t meaningfully differ from the source in safety, purity or potency.

And because the patents on biologics are far more sophisticated than patents on molecular drugs, as can be expected for what is a more biologically complex product, it will be considerably more difficult for a drugmaker to argue its case to the FDA.

“To assess biosimilars is a much more complex undertaking than it is for small-molecule generics, and part of the challenge is that the FDA is limited in what they can say in giving general guidance,” said Coukell.

That’s partly due to the fact that because no biosimilar has ever been approved, there are few signposts to direct drug companies along the pathway to approval. But even if there were case studies, there may never be a true template to follow, because the process for every application could be as unique as each biosimilar is from the biologic drug it’s seeking to mimic.

“Determinations will need to be made on a product-by-product basis depending on the nature of the drug,” Coukell added. “The FDA is trying to figure out what data they’ll need to see to approve a biosimilar, and that’s difficult to do in the abstract because scientifically, it’s a moving target.”

Avalere Health CEO Dan Mendelson called the complicated-patents issue a “real diligence cost” for the FDA, but he declined to portray the case-by-case review of biosimilars as an additional burden on the agency.

“These products will need to be assessed on a product-by-product basis specifically because they are unique biologics, and not just chemical copies,” he said. “We need the FDA to assess them individually to ensure that they should in fact be on the market.”

At the moment, the biosimilar approval process is so littered with unknowns that some companies may find it more appealing to start from scratch and take their product through the traditional biologic drug approval process. That process is onerous in its own right, but at least it’s a known quantity. It also means they can charge a higher price.

“It may be in some cases that it’s not much more work to do a traditional [biologic license] application,” Coukell said. “People are waiting for more clarity, but the hope is that there will be a pathway for biosimilars that’s easier than bringing a new biologic to market.”

The bar is even higher when it comes to rules around when a doctor or pharmacy can substitute a lower cost biosimilar when a biologic is prescribed. These rules will be crucial for the adoption of the new drugs, according to the FDA.

“Substitutability helped spur the growth of the generic drug industry at an earlier time and is similarly essential to help foster competition in the biologic drug market,” an FDA spokespeson said. “Ultimately, such competition will spur innovation, improve consumer choice and drive down medical costs.”

With generic drugs, pharmacies are free to fill prescriptions for a cheaper alternative, even if a doctor prescribed the more expensive name-brand drug. That’s not the case with biosimilars.

Under federal law, biosimilars are viewed as a different product than the biologic original, meaning that the drugmaker will have to take the biosimilar through the clinical drug trial as part of the approval process. They’ll also have to prove that there are no adverse effects for a patient switching from a biologic to a biosimilar in the middle of a treatment cycle. Neither of these requirements applies to traditional generics.

“[The FDA] has to go case by case, so determining interchangeability becomes a series of policy questions informed by science about guiding uptake of a drug and achieving potential savings from market competition, yet making sure that patient outcomes aren’t at risk,” Coukell said.

Adding to the confusion is the fact that some states are pushing laws that adjust interchangeability standards, putting them at odds with the guidelines set by Congress and enforced by the FDA.

Experts say these challenges mean biosimilars will roll out slowly at first, rather than in a wave that instantly floods the market. But they agree that they’re coming.

“The pathway is clarified and the FDA is open for business,” Mendelson said. “Now that one has been filed, you’ll start to see others.”