A decade ago the focus of the biotech world was on biologicals. The names Humira®, Enbrel®, Lucentis®, Remicade® etc. were common place with analysts accurately predicting billion dollar global sales of these products. In the last five years, while the biotech community continues its endeavours to build the biological platform with the likes of the CAR-T technology and the CRISPR/Cas 9 gene editing technology, the phrase “biosimilars” keeps cropping up with this subset of large molecules hogging the limelight routinely.
In layman’s terms, a biosimilar is a generic of the biologics world. In reality, these products being molecules that are produced by a cell or cell line, are more complex and so have a higher estimated cost for development ($100 million and $250 million) when compared to their generic counterparts ($1-4 million) (“The Economics of Biosimilars”/ September/October 2013 Vol 16, No. 8). In addition, the regulatory hurdles (detailed below) are somewhat complex as well. These challenges however have not stopped the market from developing biosimilars simply because the anticipated revenues from these products far exceed the development costs.
For example, Merck who markets Remicade® outside the US, Japan and China reported a 4% drop in sales attributable to the launch of the Remicade® biosimilar products in India and smaller eastern EU markets. With the launch of Remsima and Inflectra now across most of Western Europe, the market anticipates a further fall in the $2bn European sales of Remicade®. Hospira recently reported that its product Inflectra will be 20% to 30% cheaper than Remicade® which in the UK costs about £420 per vial. For these biosimilar companies, even capturing a low percentage of the Remicade® European (and eventually global) market would over time return a healthy profit.
The biosimilar development pipeline is therefore unsurprisingly looking pretty full given the imminent patent expiry dates for the likes of Lucentis®, Mabthera®, Enbrel®, Neulasta® and Humira®. Sandoz and Amgen are both vying for the $11bn Humira market with their respective biosimilar products already posting positive Phase III results while India’s Zydus Cadila has launched a Humira biosimilar in India at a fifth of the price of Humira. Amgen has biosimilars for Avastin and Herceptin in Phase III already while Hospira fresh from its success with Inflectra is busy developing a Lucentis biosimilar. Sandoz recently entered the US market with Zarxio – a biosimilar for Amgen’s Neopogen (filgrastim) thus introducing the first biosimilar to the US market. The Global Biosimilar Market 2020 which was worth US $1.89bn in 2014 is expected to reach US $25.53 bn by 2020. This is a business model here to stay.
How easy will it be to substitute the original biological with a biosimilar?
In the overwhelming number of cases, a generic small molecule compound will be considered to be sufficiently similar to the originator’s small molecule product and so will be substituted for the more expensive originator product as soon as it is launched. Indeed, many national health systems have mechanisms that actively drive prescribing and/or dispensing of the cheaper generic product rather than the originator’s product in order to contain health spending.
The widespread adoption of generic switching is possible because, in addition to the generic small molecule being proved to be bioequivalent to the originator’s product, the active pharmaceutical ingredient will be chemically identical as the compound is easy to characterise and reproduce. This is not the case for biosimilars as characterisation and reproduction of the active ingredient is far from straightforward and often impossible, hence the preferred term of ‘biosimilar’ rather than ‘generic’ for this class of medicinal products.
Biosimilar switching has therefore been seen by many as potentially risky on the basis that the products cannot be considered to be clinically equivalent despite the introduction of an abridged regulatory approval pathway for biosimilars. Uptake of biosimilars on launch has therefore tended to be slower than for classic generic products, and switching preferences have often been left in the hands of the prescriber. However, national health services and regulators are now beginning to issue guidelines on switching to biosimilar medicinal products, not least due to the financial savings to be made.
The first significant move was taken by the Dutch regulator (the Medicines Evaluation Board), which issued guidelines on 31 March 2015 accepting substitution or interchangeability of biosimilars, particularly for new patients so long as adequate clinical monitoring was performed and the patient was properly informed. Finland’s regulatory authority has now also issued a formal statement (in May 2015) also supporting switching of patients (from the original biological to the biosimilar) on the grounds that there is no evidence that doing so causes any adverse events. The Australian government is implementing a new package (announced in May 2015) that will provide for substitution of biosimilars at the pharmacy level on a case by case basis, and further European countries are consulting on introducing similar measures. The future will therefore likely see faster adoption of biosimilars on launch.
When can biosimilar companies accessing the regulatory data for the originator biological molecule?
Biologicals are complex and challenging to manufacture and are subject to stringent regulatory requirements before they can be placed on the market. Bio/pharmaceutical companies have to conduct rigorous pre-clinical and clinical trials in order to demonstrate the quality, safety and efficacy of the medicinal product they are seeking to commercialise under a marketing authorisation (MA).
In recognition of the significant investment required to generate the necessary scientific data, legislation provides that the scientific data would be protected for a specific period of time during which no other applicant for an MA would be able to refer to it in support of its own application. This period is referred to as regulatory data protection (“RDP”) (also referred to as ‘data exclusivity’ in the US).
In the EU, the data supporting the MA application will benefit from an eight-year period of RDP running from the date of authorisation in the EEA/EU during which other companies may not use that product as a reference product. In addition, the product will benefit from an additional two-year period of marketing protection. A further one-year period of marketing protection (covering the full dossier) may become available if, within the first eight years from the date of authorisation in the EEA/EU, the MA holder obtains an authorisation for one or more new therapeutic indications. This is known as the ‘8+2+1 formula’. In practice, this means that biosimilar applicants can apply for the marketing authorisation after the 8-year period of RDP, but they cannot enter the market until marketing protection expires (i.e. 2 or 3 years later). Under the EU regulatory framework the duration of RDP for both biologics and traditional chemical molecules is the same.
By contrast, in the US, traditional small molecules are afforded a period of five years of protection whereas biologics enjoy twelve years. The twelve year data exclusivity period for biologics was established in the Affordable Care Act following intense debate, and has continued to attract criticism. It is argued that in light of the huge costs and resource associated with bringing biological products to market, a twelve year term is justified in order to stimulate continued investment and innovation.
The period of protection afforded to biologics in the US has come under scrutiny and is a major policy issue in the Trans-Pacific Partnership (TPP) negotiations. The TPP is a proposed free trade agreement being negotiated among the United States and eleven countries across the Asia-Pacific and Latin American regions. The US is the only country in the TPP negotiations that offers greater RDP for biologics. Under current proposals from the Obama Administration, participating countries would be required to match the US term of twelve years data exclusivity. However, it remains to be seen whether participating countries will embrace the merits of additional data exclusivity for biologics, namely that of stimulating continued investment and innovation and thereby creating a harmonised standard across TPP participating countries.
Should they do so, the shorter period of RDP in the EU may begin to appear out of step. So readers, does the duration of RDP in the EU provide an appropriate level of protection considering the significant additional costs incurred by bio/pharmaceutical companies in bringing a biological to the market as compared to a small molecule?
Are the biosimilar companies challenging the patents covering the originator biological?
Given the magnitude of the market, and the important position that patent litigation has held within the traditional pharmaceutical industry, it is interesting to consider whether patent litigation will be a prominent feature in the biosimilars landscape.
One would think that this is a question with an easy answer: yes. That may well turn out to be the case. But at present, there is very little patent litigation, despite the fact that we are teetering on the edge of a so-called “patent cliff”, with a number of patents protecting key products about to expire.
In order to find reasons why this might be the case, the European market is probably the best place to start. In terms of granted marketing authorisations for biosimilar products, Europe is well ahead of the US. So why haven’t the MA grants triggered litigation?
Considering the regulatory position, could it be the case that the main patents protecting the originator product have expired by the time biosimilar MAs are granted? Biosimilars require great investment and must clear much higher regulatory hurdles than generic small molecule chemicals. This all takes time. As stated above the regulatory dossier of the biological is protected by RDP for an initial period of 8 years. The originator product will also have taken longer to develop than a new chemical entity. Hence the term of the original patent filing is likely to have been significantly eroded by the time the biosimilar gets access to the originator data, and then eroded further still whilst the biosimilar is developed. Maybe the combined process takes longer than the typical patent term (20 years without extensions)?
Another reason may relate to risk. The high investment in biosimilar products may cause their owners to be risk averse. Celltrion spoke openly on first launching biosimilar infliximab, saying that it would launch in Eastern Europe first so as to avoid blocking patents in Western Europe. If the remaining patent term is short, and competition scarce (as will inevitably be the case), why not watch and wait until the road ahead is clear?
In the UK, generics in the pharmaceutical sector have traditionally taken steps to clear the way prior to launch. This strategy makes sense in relation to chemicals, which are relatively cheap and easy to copy and so become the subject of fierce competition when the market is valuable. The first generic entrant into the market can make a killing and so often generics are willing to pay litigation costs to clear patent obstacles from the path. The market dynamic is different with biosimilars because the products are more costly and difficult to produce and hence there are fewer competitors. The incentives to clear the way are weaker.
Having said that, we have recently seen a number of clearing the way cases in relation to biosimilar trastuzumab/Herceptin, brought by Hospira against Genentech. Hospira was successful in revoking several secondary patents before the UK Patents Court in decisions handed down in April and November 2014 and now in June 2015. This presumably indicates that Hospira is seeking to bring biosimilar trastuzumab to market. Interestingly, however, the litigation appears to be significantly ahead of any product launch. Hospira does not yet have a trastuzumab marketing authorisation. There is risk in clearing the way early – one may end up doing the hard work for somebody else’s benefit. It could therefore be that the race to bring biosimilar Herceptin to the market is now on.
Written by, Sahar Shepperd, Greg Bacon, Grant Strachan and Dominic Adair, Bristows LLP, 4 July 2015
The One Nucleus blog is written by individuals and is not necessarily a reflection of the views held by One Nucleus.