In many ways, this was a banner year for biosimilars. It looks like 2017 will be a different story, as two critical issues cast a shadow on their future.
This year, biosimilar makers went right into the heart of the lucrative biologics market. The FDA approved Amjevita (originator, adalimumab [Humira]), Inflectra (originator, infliximab [Remicade]), and Erelzi (originator, etanercept [Enbrel]).
Innovative payer contracting and pricing to combat biosimilars appeals to PBMs because it gives them creative leverage, says April Kunze of Prime Therapeutics.
Erelzi moved biosimilars forward on another front, notes April Kunze, a senior director at Prime Therapeutics. Erelzi was granted approval for all indications of etanercept based on efficacy and safety studies for just one of etanercept’s indications, plaque psoriasis. Extrapolation to multiple indications is important for biosimilar developers because it opens a much wider market for the biosimilar without requiring the clinical trials the originator had to go through to achieve those additional indications.
Still, the high-stakes marketing, regulatory, and legal combat between originators and biosimilars is a long way from over. So far, the originators have been able to hold their ground and thwart the launch of biosimilars with patent lawsuits and business strategies that leave biosimilar developers wondering if there will be a profitable market for their products. These countermoves will significantly curtail the newly approved biosimilars and any others that manage to get FDA approval next year.
Patent litigation is getting increasingly complex. Biologic originators have gone from limiting their legal challenges to the “patent dance”—a series of steps mapped out in the biosimilar law that was supposed to simplify patent challenges—to a broader, shotgun strategy that targets many patents. Executives at companies with biosimilars in their portfolios are increasingly worried that they may be sued in many different ways and tied up in court for years. For example, earlier this year AbbVie sued Amgen, which is marketing Amjevita, on 10 different patents. By AbbVie’s reckoning, adalimumab has another six years of patent protection, so if AbbVie prevails, that would mean no biosimilar competition for Humira through 2022.
All of this means that the moneymaking prowess of biosimilars is in doubt. Gillian Woollett, a senior vice president at Avalere Health, explains that the business model for biosimilars is unclear, especially in the U.S. The cost of developing a biosimilar can range from $200 million to $600 million. Reliable information on market share and profitability is hard to come by. In contrast, generics have a track record that shows they are relatively inexpensive to develop (between $1 million and $5 million) and can quickly take 90% of the market away from the branded drug because they are priced so much lower.
Biologic originators have any number of tactics for foiling biosimilars. In a November investor conference call, Johnson & Johnson executives were sanguine about their prized biologic, infliximab, hanging on to market share when biosimilar Inflectra launches. They noted that infliximab has always had to compete on price and pledged to use “innovative” payer contracting and pricing to combat biosimilars. Kunze says that while that strategy appeals to PBMs by giving them opportunities to contract creatively, Prime Therapeutics supports more biosimilars coming to market as they will eventually help hold down overall costs.
Biosimilars—just as effective and less expensive—may look like a very good deal to a president-elect who talks a lot about making good deals. Yet the originators are the ones who do the heavy lifting of bringing the most complex, innovative drugs to market. How much patent protection and data exclusivity do they deserve? Don’t expect definitive answers to these questions in 2017, but they emerge in the upcoming legal and regulatory wrangling.