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In The News

Trends in Biosimilars

Staff Writer
October 2018
Financier Worldwide

Trends in Biosimilars

Staff Writer
October 2018
Financier Worldwide

Read below

Patrick Gallagher
Patrick C. Gallagher

Duane Morris’ Patrick Gallagher, partner and chair of the firm’s Pharmaceuticals and Biopharmaceuticals Litigation and Regulatory group, participated in a Financier Worldwide roundtable. Below is an excerpt of his commentary, which appears in the magazine’s October 2018 issue.

Already a multi-billion dollar market, biosimilar products are set to become even more prevalent as brand-name medicines progressively lose their grip on exclusivity rights and patent protection. Indeed, newer companies are spending vast amounts of time and resources manufacturing almost identical copies of original pharmaceutical drugs in a bid to facilitate market entry. And while there is some uncertainty as to how ‘similarity’ is assessed by regulatory bodies, with applicants and approvals on the rise, the biosimilars market seems set to continue its march toward interchangeability.

 FW: Could you provide an overview of what you consider to be some of the main trends and developments to have emerged in the biosimilars space over the past 12 to 18 months?

Gallagher: Over the past 12 to 18 months, we have seen an increasing rate of biosimilar applications being filed and FDA approvals of biosimilar products. While we expect that trend to continue, FDA approvals of biosimilars has not yet equated with commercial availability or market uptake of biosimilars in the US. Both the FDA and the Federal Trade Commission (FTC) have expressed concern that biosimilar approvals have not led to market availability and price competition for biologic medications. While there are many factors from various aspects of the healthcare industry that will impact growth of the biosimilars market as it matures in the US over the next few years, two influencers that will unquestionably play a key role in the growth of biosimilars will be prescribers, as they become more comfortable and familiar with biosimilars, and payors, as the pricing and formulary structure for biosimilars develops.

 FW: What does the increase in US Food and Drug Administration (FDA)-approved biosimilars tell us about the health of the industry?

Gallagher: The industry is strong and ripe for growth. Companies are looking for opportunities to develop products that can differentiate themselves in the market, and help differentiate the company’s overall product portfolio. As more clarity comes to the regulatory pathway for biosimilars in the US, more companies will be open to taking advantage of those opportunities. The trailblazers have established a pathway to approval for biosimilar products in the US, and there will be more to follow. Additionally, the increase in FDA approvals signifies the strength of the biosimilars industry globally.

 FW: What impact do you expect recent legislation, such as the US Biosimilar User Fee Act (BSUFA), will have on the biosimilars industry?

Gallagher: At this point, the most significant impact in terms of policy for biosimilars in the US is likely to be coming from the FDA rather than from Congress. User fees are a part of doing business in the US for pharmaceutical companies, whether small molecules, generic products, biologics or biosimilars, and BSUFA was expected. In July 2018, the FDA published its ‘Biosimilars Action Plan’ outlining its initiatives to improve biosimilar competition and market availability. On 4 September 2018, the FDA held a public hearing to get stakeholder input on the initiatives in the Biosimilar Action Plan. As evidenced by the robust discussion at that meeting, policy and guidance developed by the FDA in areas relating to interchangeability, naming, information in the Purple Book, study design, and data analysis and collection, would have a significant impact on the industry.

FW: How would you characterise the implications of the 2017 Sandoz v. Amgen case? What lessons should the biosimilars industry learn from the judgements handed down by the Supreme Court?

Gallagher: The BPCIA is not particularly a model of clarity, but its lack of clarity can create opportunities for varying interpretations. The Sandoz v. Amgen case epitomised two examples of provisions in the statute that were susceptible to interpretation. First, the question whether a biosimilar applicant had the option not to participate in the ‘patent dance’, and second, whether the FDA had to licence a biosimilar before the sponsor could send a notice of commercial marketing. As the case proceeded through the appellate process all the way to the Supreme Court, it became clear that the judges and justices wanted to know the FDA’s position or guidance on the issues.

FW: What, in your opinion, does the Sandoz v. Amgen litigation mean for the credibility of the Biologics Price Competition and Innovation Act of 2009 (BPCIA), as well as the process known as the ‘patent dance’?

Gallagher: Without question, the decision in the Sandoz v. Amgen case creates a multitude of options and opportunities for biosimilar applicants. On a case-by-case basis, the biosimilar applicant and the reference product sponsor will need to evaluate whether partaking in the ‘patent dance’ is more or less advantageous than foregoing the statutory exchange. The answer will not be the same for each product a company develops, and may change as the process unfolds. The BPCIA creates a framework of incentives for a biosimilar applicant and reference product sponsor to negotiate patents to be litigated in advance of approval and launch of a biosimilar product.

FW: How contentious are the issues involved in naming and labelling a biosimilar? How have biosimilars companies responded to the FDA’s final guidance on the non-proprietary naming of products?

Gallagher: The naming issue was heavily disputed before the FDA issued its ‘Guidance for Non-proprietary Naming of Biological Products’ in January 2017, and it still remains a highly contentious topic. The FDA determined that non-proprietary names for biological products would consist of the product’s original proper name followed by a unique identifying suffix to distinguish among products made be different manufacturers. Many stakeholders in the biosimilars industry point to this as a contributing factor in the lack of market uptake for biosimilars in the US. The FTC opposed the FDA’s proposal to use differentiators for biosimilars, and reiterated that opposition responding to the FDA’s request for comment on the FDA’s Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs. At the FDA’s 4 September public hearing, the FDA’s naming convention, including distinct suffixes for biological products, remained a topic of discussion and disagreement.

FW: In terms of switching patients from originator biologicals to biosimilars, to what extent have you observed a change in attitudes? What guidance are bodies such as the European Society of Medical Oncology (ESMO) providing on this issue?

Gallagher: Attitudes toward switching in the US have been slow to change. For all the attention to FDA policies, regulatory approval pathways, pricing and naming, conservative approaches by physicians to switching is perhaps one of the two biggest hurdles that is currently impeding rapid uptake of biosimilars in the US. This probably should not be a surprise. If a physician is treating a patient who is already on the originator biologic and the patient is responding well to treatment, neither the physician nor the patient has any incentive to switch the patient to a biosimilar, especially when the first product has already been approved by insurance, and the patient will not pay any less out of pocket for switching to the biosimilar. Statements from organisations such as the ESMO are certainly helpful in educating physicians and patients about the safety and benefits of biosimilars.

FW: As far as the pricing of biosimilars is concerned, is the industry doing enough to meet the goal of reducing prices? What can the industry do to balance high manufacturing costs with making biosimilars affordable to the public?

Gallagher: In a free market economy, the market ultimately determines the price it will bear, and the same should generally be true in the biologic and biosimilars market. It remains true that there is significant cost and risk to bringing a biosimilar product to market, and anyone who brings a biosimilar to market should be able to charge a fair price for its investment. No one is expecting the same types of price discounts for biosimilars as exist for traditional small molecule generic drugs. As the biosimilars market matures, pricing should naturally work itself out. Where attention should be devoted are factors that create potential distortions to the market to prevent biosimilars from fairly competing for market share. Formulary access, rebates, discounts and chargebacks all create potential distortions in the market that potentially create unfair disadvantages for biosimilars.

FW: What advice would you offer to biosimilars companies in terms evaluating the ethical concerns they face?

Gallagher: You have one overarching concern and that is to serve your patients. Everything else will fall into place when following that guiding principle.

FW: With more companies now operating in a part-innovator, part-biosimilar capacity, what steps need to be taken to avoid conflicts of interest?

Gallagher: In some ways, the evolution of companies involved on both sides of the branded biologic and biosimilar line itself helps to diminish certain conflicts of interest. There is not a clear branded and generic divide in the biologics and biosimilars industry like there used to be for small molecule Hatch-Waxman products. Companies in the biologics industry see true financial potential for development of biosimilar products, even as they also continue to develop and market new branded biologics. Hopefully, this creates incentives for those companies to advocate for smart health policy, as they see alignment with policies that achieve a balance between incentives for continuing new innovation and access to lower cost alternative biosimilar products.

FW: Looking ahead, what challenges are likely to dominate the biosimilars industry in the coming months and years? How do you evaluate the industry’s future prospects?

Gallagher: The future of the biosimilars industry looks extremely bright, both in the US and globally, as evidenced by the broad interest from those in the pharmaceutical and biotechnology industries to get involved in the biosimilars space. In the near term in the US, two challenges are likely to present the primary hurdles to be faced by those in the biosimilars industry. First, educating prescribers and patients about biosimilars, including product safety and efficacy issues. As prescribers and patients gain a better understanding of the research behind biosimilar products and become more comfortable with biosimilars as treatment options, market uptake is likely to dramatically increase. Second, market distortions created by formulary access and rebates or other financial incentives provided by branded biologic sponsors may need to be addressed so that biosimilar products can fairly compete in the market. The worst possible scenario would be to allow policies to stay in place that cause biosimilars to be unprofitable for the companies bringing them to market.

To read the complete transcript, visit the Financier Worldwide website.

Patrick C. Gallagher chairs the pharmaceuticals and biopharmaceuticals litigation and regulatory group at Duane Morris LLP. He practices in the area of intellectual property (IP) and regulatory law, assisting generic pharmaceutical companies, compounding pharmacies and others in the agricultural, chemical and biotechnology industries with IP and regulatory matters. Mr. Gallagher assists clients with prevention and resolution of disputes and advises on best strategies for IP and regulatory compliance.