Thursday, January 7, 2010

Biosimilars - Part I

 Update - January 15th

The New York Times Reports that Obama is pressuring legislators to shorten the originator exclusivity period from the 12 years earlier settled upon by both the House and the Senate legislation.  Obama has been on the record in the past favoring a 7 year exclusivity period.

Update - January 16th

Pharma is threatening to withdraw it's support of Healthcare Reform upset over possible shortening of Biotech product market exclusivity period. The question is... Does the Hill still need Pharma's support? Answer... probably not.  The favorable PR impact for the Obama administration of the stunning early deal has already been fully capitalized upon.  Further, with all the bad press regarding recent Pharma price hikes, the voting Public will cheer loudly for politicians who have the industry within their gun sight.
Original Blog

Healthcare Reform legislation will streamline FDA approval of follow on biologics in an attempt to lower entry barriers to the market. The goal of legislation is to increase competition in order to lower prices of Biotechnology drugs in a manner analogous to what Waxman Hatch did for small molecule generic drugs. 

Rather than to attempt to cover this meaty topic in a single blog I will cover it in a series. Part I, here, will cover what's in the legislation leaving the economic and market dynamic ramifications to subsequent posts.

So let's take a look at what exactly is in the healthcare reform legislation.
I culled this from the Senate version of the bill perhaps ironically titled "The Biologics Price Competition and Innovation Act of 2009".
  1. Provides legislation to streamline the approval process for "Biosimilar or Interchangable follow on Biotechnology products.  Yes, there are two classes which will emerge.  Biosimilars will not be allowed to be substituted by pharmacists without the Rx Writer's approval.  However, where the FDA deems the follow on biotech drug as identical, these will be deemed interchangeable and a pharmacist can substitute the follow on product without approval from the Rx writer of physician.
  2. The Biosimilar will need to have "analytic studies showing a high degree of similarity to the reference drug", animal toxicity studies and some clinical studys (only 1 indication necessary) to demonstrate safety and potency.  Submission of the biosimilar dossier to the FDA requires a 4 year waiting period from approval of the first or reference drug. Route of administration, dosing must be identical to the reference biotech product.
  3. The first biosimilar to market, following the reference drug, will enjoy 1 year of exclusivity from the date of  marketing in essence protecting it from other biosimilar competition for the first year of launch.
  4. Grants 12 years of market exclusivity to the originating or reference biotech drug from the date of approval.  Companies will not be able to gain additional exclusivity, except for 6 months on a pediatric claim, by manipulating drug formulation, dosage strengths or supplemental indications.  However, if the company can show improved safety, purity or efficacy to the original drug the exclusivity clock can be reset.
  5. Copious amounts of legalize appear within the legislation to help biosimilar competitors avoid costly and time delaying suits from biotech originator companies.
So there you have it...the biosimilar legislation in a nutshell.

Now the big questions are... How large will the biosimilar market be and how soon?  Will providers and the rest of the market decision makers accept biosimilar drugs?   Will biosimilars follow the same market dynamic as small molecules when loss of market exclusivity means that 80% to 90% of the originator's business is very quickly substituted away by generic entrants?  What will be a biosimilar's price point relative to the originator or reference biotech drug?  What is the economic opportunity for biosimilars?

Keep your eye on my blog for Part II where I will start to "peel the onion" and provide my thoughts on the questions above.

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