FDA Sets Path for Biotech Drug Copies

By THOMAS M. BURTON and JONATHAN D. ROCKOFF

The Food and Drug Administration on Thursday created the first shortcut to the U.S. market for "biosimilar" drugs—cheaper versions of expensive and complex medicines made from biological matter.

Examples of such blockbuster drugs are erythropoietin for anemia, Remicade for rheumatoid arthritis and the cancer drug Herceptin. Erythropoietin alone costs the federal medical system an estimated $4 billion, and the FDA's guidelines for cheaper knockoffs are designed to put a dent in such ballooning medical costs. Versions of erythropoietin are made by Amgen Inc. and Johnson & Johnson. J&J sells Remicade in the U.S., and Roche Holding AG makes Herceptin.

The FDA's release of guidelines for the cheaper drugs sets out a series of steps that companies must comply with. It will be "an abbreviated pathway that will depend on existing data" on the already-existing, more-expensive drug, said Rachel Sherman, FDA associate director for medical policy.

"Instead of starting from scratch, these companies will be starting in the middle of the process," said Dr. Sherman. The new guidelines add details to the original proposal for introducing biosimilar drugs, contained in President Barack Obama's 2010 health overhaul.

The FDA action lags those in the European Union, which already has more than a dozen biosimilar drugs on the market.

Biologics are among the biggest-selling medicines today. In 2010, seven out of the top 20 selling drugs in the U.S. were biologics, led by anemia fighter erythropoietin, which has $3.3 billion in U.S. sales, according to Morgan Stanley Research. Biologics with $30 billion in U.S. sales are expected to lose patent protection by 2020, according to Bernstein Research.

Given the stakes, drug makers including Merck & Co., Novartis SA and Pfizer Inc. have stepped up efforts to develop knockoffs and tap into the market. Most recently, biotechnology giant Amgen said it was partnering with generic drug maker Watson Pharmaceuticals Inc. to develop unspecified biosimilars treating cancer.

Biologics are far more complex than other drugs generally, and so producing a true generic version—one that is chemically identical to the brand drug—isn't possible with today's technology. Left unanswered in the FDA's latest guidelines is whether the bio-knockoffs can use the same name as the original brand drug.

Sales of the knockoffs could reach $8 billion by 2020, Bernstein Research estimates. And they might be more lucrative than generic versions of small-molecule drugs, if the complexity of developing these larger molecules limits competition. Payers who were surveyed by Bernstein said they expect biosimilars to cost 10% to 20% less than the brand products. (Traditional generics can be as much as 90% cheaper.)

Yet companies must overcome technical, financial and commercial challenges. Amgen sought a partner in Watson because it wanted to share the $150 million to $200 million cost of developing a biosimilar, and because it lacked the skills a traditional generic drug maker like Watson had selling lower-cost medicines to health plans and hospitals.

"There are so many unknowns commercially," said Scott Foraker, who heads Amgen's year-old biosimilars unit. "We don't know what the competitive environment will look like. We don't know what the pricing will be. And there still is regulatory uncertainty."

Many of the knockoffs will be classified as comparable to branded biologics, but not copies that a pharmacist could automatically substitute. As a result, manufacturers expect they will have to do more than sell the therapies based on price, as companies do with traditional generics. They will have to promote biosimilars to doctors, as they do for brand-name drugs.

"The essence is not going to be a typical generics business," said Michael Kamarck, who's heading Merck's biosimilars effort. He said the brief history of biosimilars in Europe, where the medicines are approved, showed the need for "actively promoting" the medicines in order to get them used.

The market share for biosimilar versions of anemia therapy erythropoietin is less than 13% in France, while in Germany it is 72%, according to IMS Health, a data firm.

Manufacturers will have to get doctors to overcome their comfort and experience with using branded biologics and persuade them to prescribe something comparable, said Gillian Woollett, a biosimilars expert at consulting firm Avalere Health.

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