Sunday, January 17, 2010

Biosimilars - Part II, High Entry Barriers

Following up on Biosimilars - Part I, where I blogged about what's in the legislation, lets now look at a crucial difference of Biosimilars relative to Generic Drugs. Even with the FDA's streamlined regulation, Biosimilar entry barriers to market are much hgiher than that of their generic, small molecule, counterparts. Here's a list comparing entry barriers faced by Biosimilars in comparison to generics:

  • Product Development Costs are Orders of Magnitude Higher. Development costs for Biosimilar's can be $100 to $200 million taking 8 to 10 years for completion while small molecule generics can cost $1 to $5 million and take 3 to 5 years. (source FTC). Unlike generics which can rely on simple, specific, pharmacodynamic studies, many Biosimilar's will need to conduct at least small clinical trials in humans, and for ethical reasons many will need to have a comparison arm to the originator rather than placebo.
  • Higher Regulatory Risk. Biologics are far more complex and far more complex to manufacture. Issues include developing appropriate cell lines, arriving at efficient and effective manufacturing process, batch to batch variability, downstream clean up of end product and formulation approach. These issues in turn can cause differences in the Biosimilar which impact efficacy, safety and immungenicity. Indeed Biosimilars are BioDifferent. At the end of the development process, there is far less of a guarantee that the FDA will approve of a Biosimilar let alone grant interchangeability compared to small molecule generics. Biosimilar's therefore face a ton more approval uncertainty relative to small molecule generics.  The EU streamlined Biosimilar legislation several years back (2004) and have turned away at least one insulin product and a interferon alpha product. Finally, the regulatory process itself is fraught with uncertainty. Each Biosimilar will likely require a different burden of proof. This reality will be compounded by every changing rules and regulations due to the newness of a regulatory approach (EU has already experienced this). This will add up to even more regulatory risk for the would be Biosimilar market entrant who must decipher exactly what studies the FDA is interested in reviewing to grant approval.
  • Higher Manufacturing Costs and Challenges - Biotech product manufacturing, in general, costs a great deal more than that for small molecule generics.  Further manufacturing is more complex and harder to scale up and to be able to produce a consistent product many biotech products are produced in a batch process.
  • Higher Market Risk - Lastly many Biosimilar products approved by the FDA will not likely be granted "Interchangeability" (for all the reasons discussed above). This will mean pharmacists will not be able to substitute the Biosimilar for the originator product without practitioner approval. Approval will not automatically mean market acceptance and widespread usage. Patients, MDs and even payors may not view a Biosimilar as offering the same efficacy and safety as the originator. In fact, Biosimilar uptake in the EU has been far slower that that of a small molecule generic. For example IMS reported in June of 08 that "The introduction of Biosimilar epoeitin alfa in European markets in 2007 has had a negligible impact in the market and biosimilar omnetrop introduced in 2006 has captured less than 1 percent of the somatropic human growth hormome market."
So the path to commercial success for a Biosimilar will be far more costly, difficult and risky than that experienced by the small molecule generic.

Check back often....In the Third Part of my Biosimilar series I will look at what the presence of entry barriers means in terms of the Biosimilar market dynamic, impact upon Biotech product originators and would be Biosimilar competitors.

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