At the end of June, the European Medicines Agency (EMA) recommended approval of a pair of copycat versions of Johnson & Johnson’s blockbuster rheumatoid arthritis drug, Remicade. While Europe in recent years has already approved other biosimilars, these therapies from Korea’s Celltrion and the big generics company Hospira are the first of a wave of pioneering antibodies that promise to shave a significant chunk off the price of some high-profile blockbusters.
“Remsima will be more than 30% cheaper than the original drugs,” Kim Hyoung Ki, senior vice president and chief financial officer at Celltrion, told reporters. The recommendation virtually assures European marketing approval. “We’re confident in Remsima, as it has price competitiveness, while it has the same effect as the original drugs.”
The prospect of a regulatory approval in Europe underscores several key points about the emerging biosimilars market: Primarily, Europe has clearly taken the lead over the FDA in establishing a regulatory pathway for approving biosimilars. But even as an ongoing shakeout reduces the number of major competitors, several big manufacturers are moving forward with late-stage development projects that promise to finally deliver therapies that are discounted compared with the original drugs that currently command multibillion-dollar markets.
About the same time that Remicade found itself facing competition in Europe, Sandoz — the generics arm of Novartis — trumpeted its own lineup of late-stage biosimilars. The generics group currently has seven Phase III biosimilar programs — pivotal studies designed to produce the data needed for regulatory approval — in the clinic. Sandoz is working on Filgrastim (a copy of Amgen’s Neupogen, being positioned for a U.S. filing); epoetin alfa (Procrit/Epogen for the United States and the EU); etanercept (Enbrel); and pegfilgrastim and rituximab for follicular lymphoma. Just last July, Eli Lilly and Boehringer Ingelheim said they will be following the EMA’s pathway on biosimilars for a new, long-acting insulin they have been developing.
For payers who have been shelling out billions a year for these drugs, the biosimilars can’t arrive too soon.
“It’s a little frustrating that it’s taking as long as it is,” concedes Sharon Frazee, vice president for research at Express Scripts, which manages more than a billion prescriptions a year. But payers also see the need for a cautious, step-by-step regulatory approach. “We firmly believe that the FDA is definitely the authority that should handle the science on this. While we would like to see the pathway happen as quickly as possible, to provide safe and affordable medications, we don’t want bad science to occur.”
“The main holdup in the United States is the lack of more specific regulatory guidance,” says Aimee Tharaldson, a senior clinical consultant in the emerging-therapeutics department at Express Scripts. The FDA has yet to hammer out final regulations to govern the approval of these drugs, leaving developers with draft rules to guide them for now. Biosimilars also require an ambitious and expensive development program to deliver the late-stage safety and efficacy data that the FDA demands.
Unlike small molecules that rely on an easily copied chemical ingredient, biologics are made inside living cells. Even moving manufacturing operations can trigger subtle, unexpected changes that can affect safety and efficacy.
“You can have differences beyond the normal things you see with small molecules and with the mechanism of the drug,” says Frazee. “It’s a protein; there are more moving parts at the cellular level. And so it’s called a biosimilar, because it’s similar, not the same thing.”
These projects are also very expensive.
A few months ago Express Scripts projected that the specialty pharma market — mostly made up of biologics — would cost about $115 billion in 2014. By next year, $4 of every $10 spent on drugs would go to the sector, which is used by only 2% of the U.S. population. The cost will be about evenly split between the pharmacy benefit and the medical benefit.
Based on what its analysts call very conservative figures, Express Scripts concluded that utilizing only 11 biosimilars — including imitations of such drugs as Remicade (2012 sales of $3.8 billion), Humira ($4.5 billion) and Rituxan ($3.2 billion) — would save about $250 billion by 2024. But there’s a wide gap in the study, as Express Scripts’ projections don’t factor in any new biosimilar competition until 2019.
Not everyone is as conservative as Express Scripts in making projections. Fitch Ratings, for example, issued a report in early August predicting that the first round of U.S. approvals will occur in 2015. Andrew Bourgoin, an analyst for Thomson Reuters, expects to see the first of the big new entrants file U.S. biosimilar applications as early as the end of next year. The progress being made in Europe today, he adds, can also result in better marketing applications in the United States.
“I wouldn’t be surprised if we see companies file an application in Europe, then parlay that work into the United States,” says Bourgoin. “The FDA is open to data from the EU. And if the FDA doesn’t see enough proof in the EU studies, it will require additional work case by case.”
One of the big manufacturers in the field also says the FDA’s draft guidance has helped clarify the U.S. scene.
“Overall, the FDA’s draft biosimilars guidance issued in 2012 is aligned with Hospira’s expectations,” says Dan Rosenberg, a spokesman for the company. “Like the regulatory process in Europe, the FDA’s draft guidance is well rooted in robust science. It’s also encouraging that the FDA has approached regulatory agencies in countries where biosimilars are already on the market to learn from their experience regulating these products.
“This is a market that’s still establishing itself,” adds Bourgoin. One way it’s doing that is through alliances among multinational players. The Korean conglomerate Samsung, for example, added the R&D experience at Biogen Idec to guide its work, while Merck recently stepped in to bolster the marketing work that will be needed. AstraZeneca, meanwhile, has reportedly been scouting a rumored buyout of Celltrion.
But it’s also a rapidly shifting scene. The generics drug maker Lonza split up with Teva after concluding that the cost of development was much, much higher than it had estimated, raising the stakes on the investment needed to play in this global game. Merck initially dropped its own biosimilar development plans before leaping into the joint venture with Samsung.
A host of issues could hamper the swift success of any new biosimilars. Brand manufacturers and generics manufacturers, for example, are still squabbling over whether, in the United States, biosimilars will be marketed under the same “International Nonproprietary Name” shared by generics and branded treatments, a source of potential litigation.
Some states, meanwhile, have been passing new laws at the urging of some of the big biotech companies — in particular Amgen and Genentech — that require pharmacies to contact prescribing physicians if they substitute a biosimilar for a branded treatment.
Express Scripts has allied itself with the opposition in that fight, saying that bills Amgen calls consumer protection statutes would simply slow adoption of less expensive rivals.
Initially, this new drug business will also have to get started without a rule that allows payers to automatically substitute biosimilars.
“Interchangeability is going to be key to this issue,” says Tharaldson. “As more guidance becomes available, which we don’t have now, that is the route manufacturers would like to go down.”