Allowing for the Advantages of Biosimilars Hinges on Fair Competition

Pharmaceutical drug pricing in the United States has reached an apex of national controversy. The affordability of drug therapies, typically specialty drugs, is daunting for patients who pay significant out-of-pocket costs, and where the bill can reach as much as three times the median income of the average American. Costs associated with risk and research and development have long been argued as a primary reason why drugs continue to be sold at higher and higher prices, but their quantitation with market prices are lacking.

In the United States, drug patents provide a valuable incentive for companies to be first to market, typically affording a period of exclusivity. In turn, they also invite high price tags. Any successful therapy will have generic competition (if a small molecule drug) once the exclusivity period expires. As such, branded companies thus seek to recoup a substantial amount of their development costs in this exclusivity period, knowing subsequent competition will alter demand for the branded product once cheaper generic alternatives are available. Indeed, this is the typical life cycle of pharmaceutical drugs, which provides competitive alternatives of older therapeutics at a lower price, allowing the healthcare system to afford to pay for newer, ostensibly improved novel drugs.

Biologics are different than their small molecule drug counterparts, in that they are produced in living systems, as opposed to chemical synthesis. Biosimilars are innovative compounds having no clinically meaningful differences from their biologic reference product, as defined by the FDA, yet are alternatives to the branded biologic therapy. Nowhere is the introduction of competition more important to reducing prices than with these specialty biologic drugs, particularly in the context of their biosimilar competitors. In 2013, Express Scripts released a report predicting an estimated $250 billion in savings from the introduction and uptake of biosimilars for just 11 of the leading biologics. However, a subsequent study from RAND reduced that savings potential to $44 billion, citing “forthcoming decisions from the FDA” that would have impact on “acceptance of biosimilars by physicians, patients and payers.”

This trend of decline in forecasted savings is disconcerting. A number of the leading brand biologics face patent expirations over the next five years; however, originator branded companies are erecting barriers to block or delay fair competition. In particular, originator companies have argued for unique naming conventions for competing biosimilars, citing traceability concerns only substantiated by internal datasets from less regulated regions (such as Southeast Asia), which are in fact discredited by available data from Europe, which has utilized biosimilars effectively since 2006.

The FDA proposed a four-digit suffix to the international non-proprietary name, and invited comments on whether this should be random or reflect manufacturer appellation. Historically, INNs are names assigned to drugs according to conventions coordinated by the World Health Organization. They are intended to avoid prescribing errors resulting from the variety of brand name options available for each medication. Shared INNs, then, convey to prescribers, patients, and pharmacists the high degree of similarity between treatments – a construct that has reigned true throughout the duration of the entire career of virtually every practicing physician since the World Health Organization established the INN in 1953. In fact, Europe utilizes the INN without any modification for both branded products and biosimilars, and virtually all (over 95 percent) of biologic and biosimilar drugs are traceable given the market name used by the manufacturer.

Brand originator companies have urged the FDA to enact the manufacturer identifiable suffix to the INN that will serve to promote their particular brand.  This will diminish competition, creating the very confusion INNs are meant to dispel, and thus minimize the advantages of biosimilar therapeutics.  It is important to note such advantages include increased access for patients (with the advent of biosimilars in the UK, 50 percent more patients have accessed these agents from when only the branded drug was available) and the healthcare system (lower overall costs with increased opportunity to pay for newer biologic drugs).

Moreover, the INN by definition is nonproprietary, thus avoiding branded association. Further, such modification of the INN creates an artificial distinction precisely where none exists. Specifically, this contradicts the FDA admonition that the pathway to licensure in no way impacts the safety and efficacy of biosimilars compared to their branded counterparts. The Federal Trade Commission  noted, “the FDA’s naming convention, which departs from the FDA tradition, may cause physicians to believe mistakenly that the products necessarily have clinically meaningful differences, potentially resulting in reduced price competition in biologic drug markets.”

The FTC further noted such a naming proposal “may create unnecessary costs, and conflicts with efforts toward global naming harmonization.” The disruption of standard drug naming conventions will require expensive adaptations and updates to prescription databases and software. The National Council for Prescription Drug Programs stated that the existing software infrastructure would need to be changed in order to somehow group together two similar drugs with different INNs, a mandatory update should unique names be required for biologics and their biosimilars. The intended purpose of INNs was never to track products, but merely to indicate the active ingredient for prescription purposes. Instead, drugs are traced by identification of brand name, manufacturer name, and National Drug Code, all of which afford a much higher degree of specificity when tracing a drug’s origin. Naming concerns that point to patient safety are, at best, highly misleading.

Biologics and biosimilars represent an important component of the treatment armamentarium for physicians and patients. The lifecycle model rooted in generic competition results in billions of dollars of cost savings for our healthcare system, allowing for increased access to such small molecule drugs and the development of newer ones. We can increase patient access to biologic medicines through the utilization of a similar model for biosimilars, but only if robust competition is fostered through encouraging policies. Support of an active biologics marketplace with biosimilar competition extends patient access to safe, reliable biologic medicines, and is elemental in a comprehensive solution to the high prices of modern therapeutics.

Dr. Bert Liang is the founding and current CEO of Pfenex Inc., a biologics company focused on the development of biodefense products and providing access to biosimilars. Dr. Liang acts as the Chair of the Biodefense Policy Advisory Committee of BIO, and was recently elected inaugural Chair of the Biosimilars Council, a division of the Generic Pharmaceuticals Association.

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