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Biosimilars Debate

Rival bills in Congress differ in how long innovators can enjoy market exclusivity

by Glenn Hess
April 6, 2009 | A version of this story appeared in Volume 87, Issue 14

Cutting Costs
Credit: Dreamstime
Generic biological medicines could provide cheaper access to promising treatments.
Credit: Dreamstime
Generic biological medicines could provide cheaper access to promising treatments.

PRESIDENT BARACK OBAMA is calling on Congress to pass legislation that will pave the way for approval of generic versions of pricey biologic drugs, a move that could save patients and insurers billions of dollars and help the federal government pay for a major overhaul of the nation's health care system.

Obama's fiscal 2010 budget policy plan, unveiled on Feb. 26, projects that a legal pathway for cheaper forms of biologic drugs—also called biologics, biotechnology drugs, or biopharmaceuticals—could raise an estimated $9.2 billion over 10 years in reduced Medicare spending and help finance expanded insurance coverage and improved care.

Congress is taking up Obama's charge. During the past month, two rival bills have been introduced in the House of Representatives that address how such a regulatory process would be set up. Both bills would create generic competition for biologics, the fastest growing segment of the global $600 billion pharmaceutical industry. The main rub between the two is how long companies can exclusively market their original biotechnology drug: five years versus 12–14 years.

The bill providing five years of exclusivity is "a pathway filled with potholes," according to the Biotechnology Industry Organization (BIO), which represents more than 1,250 biotech companies, academic institutions, state biotechnology centers, and related organizations.

"Unfortunately, the legislation would take patients and our industry down the wrong path, a path that jeopardizes the continued development of new breakthrough therapies and potential cures for debilitating diseases," BIO President James C. Greenwood says, referring to the Promoting Innovation & Access to Life-Saving Medicine Act (H.R. 1427).

H.R. 1427 is cosponsored by Energy & Commerce Committee Chairman Henry A. Waxman (D-Calif.) and committee members Reps. Nathan Deal (R-Ga.), Frank Pallone Jr. (D-N.J.), and Jo Ann Emerson (R-Mo.). Sens. Charles E. Schumer (D-N.Y.), Susan M. Collins (R-Maine), Sherrod C. Brown (D-Ohio), and Jeanne Shaheen (D-N.H.) introduced a companion measure (S. 726) in the Senate on March 26.

Unlike the case for small-molecule brand-name drugs, the Food & Drug Administration currently has no process for approving generic versions of brand-name biologic drugs, which go by a variety of different names, including follow-on biologics, biogenerics, and biosimilars. These generic versions are similar, but not identical, to the original biologics.

Biotech drugs are large-molecule, protein-based medicines derived from living cells. They are far more complex and much more difficult to produce and replicate than the small-molecule active ingredients of traditional pharmaceuticals. Consequently, they are very expensive. Americans spend about $60 billion a year on biotech medicines for cancer, diabetes, rheumatoid arthritis, and other illnesses.

"While biologics are highly effective medications, they often cost on average 22 times more per daily dose than chemical medications. The most expensive biologic costs well over $100,000 per year," Deal says. "It is expected that approximately 50% of all drugs approved in 2010 will be biopharmaceuticals, a projection that only underscores the need for this legislation as the strain on state and federal governments grows."

The new legislation will lead to healthy competition and long-term savings for patients and will preserve innovation in the biotech marketplace, says Waxman, coauthor of the 1984 law known as the Hatch-Waxman Act, which opened the door to generic competition for small-molecule brand-name drugs.

"Above all, this bill guarantees that FDA has the scientific discretion to hold these drugs to the same high standard to which the original products are held," Waxman says. "The only way we can succeed in establishing robust competition for biotech drugs is with biosimilar drugs that doctors and patients know they can count on."

If H.R. 1427 becomes law, it would open a lucrative new market for manufacturers of generic drugs, such as Israel-based Teva Pharmaceutical. "It's a law that can provide a vast benefit for all Americans and save billions at the same time," says William S. Marth, president and chief executive officer of Teva North America. A 2008 economic study found that a U.S. biogenerics market would generate cost savings of just over $100 billion over the next decade, he says.

THE LEGISLATION authorizes FDA to approve "biosimilar" versions of brand-name biological products through an abbreviated application process. A maker of generic drugs would need to demonstrate to FDA that there are no clinically meaningful differences between a biosimilar and the branded product.

In addition, the biosimilar producer must show that the two products are "highly similar in molecular structure" and that the biosimilar shares the same mechanism of action as the reference biologic, if known. The bill would also allow a generics manufacturer to show that a drug is a "biogeneric," meaning it is interchangeable with and can be safely substituted for the original product.

A similar legislative effort failed in the last Congress, but prospects appear to be brighter now with support from the White House and a desire to cut soaring health costs (C&EN, May 19, 2008, page 34). Waxman, a close ally of House Speaker Nancy Pelosi's (D-Calif.), has called the effort one of his highest priorities this year.

Waxman's measure mirrors the system established for small-molecule pharmaceuticals in the Hatch-Waxman Act and would give original biologic products five years of market exclusivity. It would also give three years of market exclusivity for new formulations of existing drugs in some cases. Exclusivity could be extended by up to one year for pediatric studies or new uses, according to a summary of the legislation.

THE BIOTECHNOLOGY industry supports the development of a scientific regulatory structure for the review and approval of biosimilars, but only if it includes an adequate period of market exclusivity for the original products and safety protections for patients, says BIO's Greenwood, a former House Republican from Pennsylvania. "This bill seeks to cut prices but instead cuts corners," he declares. "The legislation does not strike the necessary balance for patients or the economy."

A minimum of 14 years of "data exclusivity" is necessary to enable biotech firms to make a profit and reinvest in research and development, BIO argues. During such a period of competition-free marketing, a generic drug manufacturer cannot use an innovator's clinical trial and related data to substantiate the safety of its medically equivalent drug. At present, generic versions of a new biological drug can come to market only if the manufacturer follows the same costly, rigorous testing requirements that the innovator undertook to gain FDA approval. The ability to use the innovator's data would abbreviate the approval process for biogenerics and make that process far less costly.

In a white paper issued on Jan. 28, BIO maintains that a 14-year data exclusivity term is the "bare minimum required" for biotechnology companies to secure a fair return on the research investments required to bring a new biologic medicine to market. The five-year exclusivity for small-molecule drugs must not be applied to biologics, Greenwood says. "You cannot put the square peg of biologics into the round hole of Hatch-Waxman. These products are challenging and very expensive to develop and manufacture."

Biotechnology companies, Greenwood says, must have some certainty that they can protect their investment in new breakthrough therapies for a sufficient period of time to secure the necessary resources from venture capitalists and other funding sources. "Such certainty can most predictably be provided through lengthy data exclusivity," he says.

Opposing BIO is the Generic Pharmaceutical Association (GPhA), which lobbies on behalf of generic drug manufacturers and says Congress should use the Hatch-Waxman Act as a model for biogenerics legislation. "With countless patients struggling to pay the high cost of biopharmaceuticals, an approval pathway for safe, effective, and affordable biogeneric medicines that provides access sooner rather than later is desperately needed," says Kathleen Jaeger, the organization's president and CEO.

The exclusivity provisions of Hatch-Waxman, Jaeger says, "have been successful, fostering innovation and competition while saving hundreds of billions of dollars, and this same success can be achieved with biogenerics." The issue of exclusivity, she adds, "is likely the 'Gordian knot' that must be cut loose for us to reach consensus and get legislation passed."

Waxman's bill leaves many of the details of the approval process up to FDA, including the discretion to determine what scientific studies are necessary to establish that the drug made by the generics company is as safe and effective as the original product. Greenwood says the lack of a clinical testing requirement could put patient safety at risk.

The approval process "must recognize that biologics are much more complex than traditional pharmaceuticals and that the regulatory standard for approval of biosimilars will be based on similarity rather than sameness, as is the case with traditional generic drugs," Greenwood explains.

Biotech drugs, Greenwood notes, are so molecularly complex that current science does not allow for an exact copy to be made. "Even minor differences in the purity of a biotech drug can change its efficacy and safety. We can take no shortcuts to safety when it comes to biosimilars," Greenwood says.

On the other hand, at congressional hearings over the past two years, FDA officials have testified that the science exists to approve safe, effective, and affordable biogenerics, Jaeger says. "Members of Congress have heard that the FDA scientists want the authority and the flexibility to determine how to best ensure safety and efficacy. And they've heard that significant cost savings will result from bringing biogenerics to consumers," she remarks.

The Waxman legislation has been endorsed by a broad range of groups, including the senior lobby group AARP, Consumers Union, General Motors, and AFL-CIO, but the biotechnology industry and brand-name pharmaceutical companies have endorsed an alternative plan offered by Reps. Anna G. Eshoo (D-Calif.), Jay Inslee (D-Wash.), and Joe Barton (R-Texas).

The Pathway for Biosimilars Act (H.R. 1548), introduced on March 17, would give brand-name biologics makers up to 14 years of exclusivity before generic versions could enter the marketplace. It would offer all new biological drugs a base period of 12 years of data protection with the manufacturer's right to obtain an additional two years once FDA approves a further indication for use of the product. The bill would also require generics companies to conduct expensive and time-consuming clinical testing to demonstrate the safety and efficacy of the follow-on product.

Credit: BIO
Credit: BIO
Credit: GPhA
Credit: GPhA

"WITH THIS LEGISLATION, we can create a pathway to lower cost copies of biotech drugs without sacrificing safety or eliminating incentives to create breakthrough medicines," says Inslee, who represents a Seattle-area district with a strong biotech sector. "This is not an either-or situation. We can deliver both safety and broader access to these life-saving medicines while ensuring continued biotech innovation."

H.R. 1548 strikes the right balance between innovation and competition, Greenwood says. "It will help reduce costs by enabling additional competition among biologics but at the same time help safeguard patient safety by requiring demonstration of the purity, safety, and effectiveness of biosimilars," he remarks. "More, the bill includes the incentives necessary for biotechnology researchers to develop new breakthrough therapies and potential cures."

Also supporting the bill is the Pharmaceutical Research & Manufacturers of America (PhRMA), which represents the brand-name drug industry. It says the Eshoo-Inslee-Barton bill is a positive step forward. "We appreciate the seriousness with which the bill's sponsors have examined the challenge of how to responsibly create a regulatory approval pathway for follow-on biologics," says Ken Johnson, the group's senior vice president.

PhRMA's endorsement jibes with the plans of some of the world's largest brand-name pharmaceutical companies to also make biosimilars. Anticipating that Congress will soon reach a deal to allow generic biotech drugs in the U.S., Merck & Co. launched a new division in December, Merck BioVentures, tasked with developing follow-on and novel biologics (C&EN, Jan. 12, page 28). Over the next seven years, the company plans to invest $1.5 billion in the venture and aims to have at least five follow-on biologic candidates in late-stage development by 2012. Merck's new unit will go up against other pharma giants, including Novartis and Pfizer, which are also looking to enter the biosimilars field.


It is crucial to strike an appropriate balance between making room for additional competition and maintaining strong incentives for the investment needed to spur medical advances, Johnson says. "Due to the research-intensive nature of the biotechnology sector, appropriate incentives for continued investment in innovation include both robust patent protections and a base period of data exclusivity of at least 14 years," he remarks.

GPhA's Jaeger disagrees. The Pathway for Biosimilars Act is "the wrong road for patients looking for safe and affordable biogeneric medicines, particularly during these difficult economic times," she says. "It is a long route filled with needless roadblocks that will keep patients from getting needed medicines in a timely manner."

The bill's "unprecedented and unjustifiable" 14 years of market exclusivity will only benefit brand-name companies, Jaeger says. "Given that there is a minimal difference of less than eight months longer in the development of biopharmaceuticals when compared to traditional pharmaceuticals, there is little justification for excessively expanding exclusivity beyond the Hatch-Waxman model," she says.

"Excessive exclusivity means that it will be decades before patients have access to affordable biogeneric medicines. For the countless patients who are choosing between paying for their medicines and putting food on their tables, waiting decades is simply not an option," Jaeger says.


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