Although big biosimilar news has been lacking in the last couple of weeks, there are several newsbytes that are of interest to industry followers. Here are a few of the more notable biosimilar news items.
The COVID pandemic hadn’t had significant implications for biosimilar developers, but news of a deferred FDA approval decision for an investigational bevacizumab biosimilar may have broken the streak. The approval of product MYL-1402O from partners Biocon and Mylan (now Viatris) will be delayed because the FDA has not yet inspected Biocon’s manufacturing facility. According to a regulatory filing, Biocon does not yet have a schedule as to when the inspection will occur. We originally projected an FDA decision in the first quarter of 2021, based on a 351(k) application in March 2020. Biocon and Mylan are vying to become the third Avastin® biosimilar to be approved and launched in the US.
Coherus has discontinued its aflibercept biosimilar development program (CHS-2020) as it diverts finances to developing a new PD-1 inhibitor with Junshi Biosciences. This leaves Coherus with three biosimilars in their pipeline: adalimumab, ranibizumab, and bevacizumab. The latter two are licensed from other biotech developers; CHS-1420 is a homegrown biosimilar version of Humira®.
Earlier this month, we highlighted Outlook Therapeutics, a company that is seeking to challenge the branded biologic and biosimilar ophthalmology market with a manufactured intravitreous injection of bevacizumab. Outlook recently announced the completion of recruitment of its final safety study, an open-label investigation. The results should be announced in the second quarter of this year, according to the manufacturer. Combined with the upcoming release of its phase 3 trial results, Outlook confirmed that it is on target to submit a 351(a) application to the FDA in the fourth quarter of 2021.Celltrion has begun its phase 3 trial of its aflibercept biosimilar CT-P42. This trial will be recruited through 13 countries and should serve as the pivotal trial for its regulatory applications. In addition, the company received approval in Canada to market its subcutaneous version of etanercept. Considering it was approved in Europe in 2019, the agent Remsima SC seems to be poised for a 351(a) FDA filing perhaps as early as this year. It cannot be considered a biosimilar, because a subcutaneous version of the reference product Remicade® does not exist.
(Note: This article was corrected and updated February 18, 2021).
In researching an update on Oncobiologics, an organization that once had an interest in producing biosimilars (adalimumab and bevacizumab), I found a compelling issue that could seriously affect the likelihood of success for several other biosimilar manufacturers.
It turned out that Oncobiologics was rebranded Outlook Therapeutics in 2018. At the time, the newly rechristened company announced that it would no longer develop biosimilars for the US market. Although it dropped its interest in an Avastin® biosimilar, if successful, Outlook Therapeutics may undermine the expectations of ophthalmologic biosimilar makers.
Compounded Bevacizumab Still Number 1 for Wet Macular Degeneration
According to Outlook’s data, Avastin’s off-label use dominated the age-related wet macular degeneration market in 2016, at roughly half of the patient volume. In a 2018 survey of 740 US retinal specialists, off-label Avastin use for this disorder was even greater, at 70%. This off-label version must be compounded by a pharmacy to create the lower-dose solution required for intravitreal administration.
A study published in 2011 in the New England Journal of Medicine found that the compounded formulation of bevacizumab and the biologic ranibizumab (Lucentis®) were of equivalent efficacy for this indication. This makes sense, because ranibizumab and bevacizumab are derived from the same monoclonocal antibody; ranibizumab is a fragment of the full bevacizumab molecule. Another clinical trial found that compounded bevacizumab was as effective as aflibercept (Eylea®) in treating central retinal vein occlusion–associated macular edema. When compounding pharmacies created the ophthalmic formulation from a single vial of Avastin, the yield was dozens of doses, costing a fraction of that for Lucentis and Eylea. The only issue was whether the compounding pharmacies could ensure a contaminant-free product for patient use.
Outlook Therapeutics’ lead pipeline product is a manufactured ophthalmologic form of bevacizumab (ONS-5010). In commercializing a cGMP-produced ophthalmic formulation of bevacizumab, Outlook seeks to retain the drug’s value and efficacy while ensuring its safety. The drug maker is hoping to file a 351(a) biologic licensing application in the second half of 2021. A phase 3 trial was completed in August 2020 in which 61 Australian patients with choroidal neovascularization secondary to age-related macular degeneration were given either ranibizumab or ONS-5010. A larger phase 3 trial of 227 patients is set to wrap up in July 2021.
Shrinking Market Expectations
This development may certainly affect the sales potential for the developing Lucentis and Eylea biosimilars marketplace. As covered last year, Lucentis’ sales are slipping, mostly due to competition with Eylea. Roche indicated an estimated annualized 2020 US sales of approximately $1.7 billion. Eylea’s 2020 annualized US sales may be about $4.8 billion, based on Regeneron’s third-quarter 2020 net sales figures. A corporate presentation by Outlook indicated that Eylea’s share is more than 30% of the wet macular degeneration market.
Assuming Outlook Therapeutics is successful in obtaining approval of its 351(a) application with the FDA, this could first occur in late 2022. The earliest any aflibercept biosimilar will come to the market will be around that same time. Two ranibizumab biosimilars may be ready for launch in 2021. If Outlook prices its new ophthalmologic formulation of bevacizumab at a solid discount to the aflibercept and ranibizumab biosimilars, payers would be justified in requiring the reference brands and biosimilars be stepped through ONS-5010. Such a prior authorization requirement or step edit, especially in the Medicare space, could significantly limit the projected revenues of ranibizumab and aflibercept biosimilars.
Since compounded bevacizumab is the dominant treatment in the age-related macular degeneration category, providers have already experienced ramifications on buy-and-bill practices relative to Eylea or Lucentis prescribing. After obtaining FDA approval, payers would need little incentive to utilize specialty pharmacies for product purchase and delivery of ONS-5010 to the physicians’ offices.
This rosy scenario for Outlook Therapeutics may not last, however. Investigational anti-VEGF treatments are being studied for their improved duration of action, requiring less-frequent intravitreal injections. This characteristic alone could make them more attractive than today’s options.
It is possible that developers of ranibizumab and aflibercept biosimilars are solely focused on their smaller reference targets with multibillion-dollar sales. Yet, the manufacturer of ONS-5010 may gain additional, significant marketshare at the expense of the biosimilar makers, if they play their cards right.
A method for government intervention in long-simmering patent disputes on biosimilar medications seems have been hiding in plain sight. And it can be instituted immediately. This is according to a new white paper from New York University School of Law, which highlights a piece of existing legislation that has been on the books for decades but is rarely discussed.
For several years, the biosimilar industry and government has sought ways to utilize the tools at its disposal to deal with patent evergreening and patent thickets contrived by the makers of reference biologics. The Biologics Price Competition and Innovation Act’s (BPCIA) patent dance was insufficient to address the more than 75 patents on individual biologics typically filed by their manufacturers over the course of time.
The Federal Trade Commission (FTC) seemed to be the governmental authority best positioned to tackle anticompetitive patents. However, hope has faded in this respect, with the undercutting of a 2019 Senate bill that would have pushed the FTC to do just that. In a private E-mail discussion with a highly placed lawyer with the FTC, BR&R was told that the agency did not have the authority to invalidate patents it considered anticompetitive.
Section 1498 and Pharmaceuticals
Part of the Patent and Trademark Amendments Act of 1980, 28 U.S.C. §1498 allows the federal government to use any technology assigned a US patent with immunity from patent claims. This means that a technology or product can be used by the US government without permission by offering the holder of the patent “reasonable and entire compensation,” which in the past has been no more than 10% of sales.
The question over use of Section 1498 was raised in 2016 over the production of hepatitis C virus and more recently regarding methods of increasing COVID-19 vaccine production. However, the authors of the white paper, §1498: A Guide to Government Patent Use: A Path to Licensing and Distributing Generic Drugs, also focused on its application to the biosimilar industry. The Technology Law & Policy Clinic at NYU evaluated different scenarios that might occur, while only one actually would realistically apply: An FDA-approved biosimilar is prevented from being prescribed because of patent issues. This would directly address the situation with Humira® and Enbrel® and their biosimilar competition.
In a 2019 interview with Kevin Nelson, Esq., Partner with Schiff Hardin LLP, Chicago, and our expert on intellectual property issues, we discussed FTC’s past actions in the realm of pharmaceutical patents. We asked Mr. Nelson about the use of Section 1498 as a potential remedy for these long-delayed biosimilars, the exclusivity periods for which have expired years ago. He replied, “Section 1498 operates sort of like eminent domain, but with patent and copyright rights. The government (or an entity at its designation) can make or use something that is protected by patent or copyright without the owner’s consent, but has to pay the owner reasonable compensation.”
To date, the question of negotiating reasonable compensation with patent holder has not yet been tested in the pharmaceutical context. The threat of implementing Section 1498 in the pharmaceutical industry was made by Health and Human Services Secretary Tommy Thompson in 2001. The US sought urgently to create a national stockpile of the antibiotic ciprofloxacin (Cipro®), which was owned by the pharmaceutical maker Bayer, to address the potential menace of anthrax. Secretary Thompson made it known that the government was prepared to utilize Section 1498 to allow generic manufacturers to produce massive quantities of ciprofloxacin. Reacting to the threat, Bayer agreed to reduce its price substantially and fulfill the government’s demand.
“From a technical standpoint,” said Mr. Nelson, “Section 1498 appears to allow the government to assign a manufacturer to produce an FDA-approved biosimilar product, and then the issue would be what would constitute reasonable compensation to the brand.” He continued, “Negotiations could take place before or after launch of the product. I would expect the government would try to work out something beforehand. But none of this has ever been tested. I cannot see that process as a possibility for biosimilars that have not yet been approved as there would be safety/efficacy concerns.”
Importantly, by invoking Section 1498, government patent use would be limited to use in federal healthcare populations (e.g., Medicare, Medicaid, Department of Defense, Veterans Affairs). In other words, private health plans and their members would not benefit from this move. Granted, once large quantities of a drug has been produced beyond the factories of the reference manufacturer, it might be hard to “put the genie back in the bottle.” In any case, the reference manufacturer would have to be compensated, at least through the expiration of any remaining, significant patent.
The osteoporosis drug market has evolved markedly since the introduction of the bisphosphonates in 1995. Developed to help prevent bone loss and the complications of bone fracture, and to increase bone mass overall, the market grew to include the selective estrogen receptor modulators in the 2000s, and then biologics in 2010.
Amgen’s denosumab (Prolia®), a RANKL monoclonal antibody, is indicated for the treatment of osteoporosis in postmenopausal women. At Amgen’s November 2020 investor conference, the company stated that its net US sales of Prolia reached $478 million for the third quarter of 2020 (or an annualized figure of about $1.9 billion). Global third-quarter sales were $701 million, which was an increase of 11% from the third quarter of 2019. Sales of Prolia are expected to increase significantly until 2025, when biosimilar competition may arrive in the US.
Xgeva® is the same compound as Prolia, but Amgen branded it separately for its different dosage schedules and indications. Xgeva is specifically indicated for (1) the prevention of skeletal-related events in patients with multiple myeloma and in patients with bone metastases from solid tumors and (2) the treatment of adults and skeletally mature adolescents with giant cell tumor of bone that is unresectable or where surgical resection is likely to result in severe morbidity. Amgen cited third-quarter net sales of Xgeva separately, with a total of $363 million, or annualized sales of more than $1.4 billion.
It is an open question as to whether a biosimilar manufacturer will seek the indications of both Prolia and Xgeva; the principal patents for both products expire in 2022 in the EU, and in 2025 in the US. According to Drug Patent Watch, Amgen holds more than 100 patents on denosumab; some of these have already expired.
The Likely Denosumab Biosimilar Competition: The Outlook in 2021
A couple of biosimilar makers who are active in the US market and prospective foreign manufacturers have embarked on denosumab development programs. The furthest along seems to be Samsung Bioepis and its partner Biogen.
Samsung Bioepis/Biogen. This prolific South Korean biosimilar maker announced December 14, 2020 that its phase 3 trial for SB16 had begun recruitment. The study is a double-blind, randomized design that will enroll 432 women with postmenopausal osteoporosis, and will compare efficacy, safety, and other outcomes of SB16 with US-licensed Prolia. The study aims to be completed in full by March 2023 (primary completion date September 2022).
Of interest, Samsung Bioepis started their phase 3 trial soon after beginning its phase 1 investigation (which began in October 2020 and is scheduled for completion in August 2021). The latter will test the agents pharmacokinetics and pharmacodynamics in healthy volunteers. Therefore, one may wonder if Samsung Bioepis is taking a considerable risk in initiating the more expensive, late-stage trial. On the other hand, Samsung may simply be extremely confident of its preclinical physiochemical analysis results and wants to gear up for 2022 EU regulatory submission. Based on the phase 3 trial end date, and assuming a successful result, 351(k) filing with the Food and Drug Administration could occur as early as Q2 2023.
Celltrion. Celltrion also has a long history of biosimilar development, and in November 2020, it initiated a phase 1 pilot study of its agent CT-P41. The phase 1 test will comprise 30 healthy volunteers and conclude in April 2021.
Other Potential US Competitors
Four companies from China and one from Taiwan have begun clinical trials of their denosumab biosimilars. It is unclear whether any of the companies listed below intend to seek US Food and Drug Administration approval. If they do, these manufacturers will likely need to acquire a partner for commercialization. Another company, Neuclone, which we profiled in 2020, is in the preclinical development for its denosumab biosimilar.
Qilu Pharmaceutical. A phase 1 study of this company’s denosumab biosimilar, QL1206, was completed in October 2020 with 144 healthy volunteers. A phase 3 trial was reported to have begun in November 2019 and been completed in July 2021 in 216 patients with postmenopausal osteoporosis.
Another interesting aspect of Qilu Pharmaceutical’s efforts is that it reported a phase 3 trial testing QL1206 against Xgeva’s indications. This double-blind study of 700 patients with bone metastases from solid tumors is due to complete in June 2022, with preliminary results available in March 2021.
Shanghai Biomabs Pharmaceutical Co, Ltd. Shanghai Biomabs Pharmaceutical began its phase 3 trial of CMAB807 this month. The study includes 278 Chinese participants, and is scheduled to be completed in June 2023. A phase 1 investigation of CMSB807 wrapped up in June 2020.
Kunming Pharmaceuticals, Inc. This company’s denosumab biosimilar, MV088, is in the midst of a phase 1 trial, the estimated completion date of which is October 18, 2021.
Shanghai Henlius Biotech. A phase 1 investigation of HLX14 appears to have just gotten underway, and the final completion date is listed as August 2021. In this very small trial (24 healthy volunteers), the pharmacokinetics and safety of the biosimilar will be compared with EU-licensed Prolia.
JHL Biotech.This Taiwan-based company announced a three-arm, phase 1 trial of JHL1266 in healthy Australian subjects in May 2020. This study is not listed on http://www.clinicaltrials.gov and thus could not be verified. No further information was available.
Based on IQVIA’s data on prescription marketshare of biosimilar trastuzumab, bevacizumab, and rituximab, it seems that oncologists are showing little hesitation in adopting these biosimilar products for the active treatment of different cancers.
The oncology professional societies, such as the American Society of Clinical Oncology (ASCO) and the European Society for Medical Oncology, have taken the stance that biosimilars should be considered valid options for the supportive treatment of cancer. Unfortunately, ASCO has not updated its policy statement on biosimilars since April 2018, before the three categories of oncology biosimilar therapies were approved. However, in October 2020, ASCO published an update to its guideline on treating early-stage breast cancer, in which it endorsed the use of biosimilar trastuzumab among the other trastuzumab-based options.
Unsurprisingly, oncologists may still be hesitant to prescribe a biosimilar to a patient who has already received the reference product (i.e., mid-cycle or between cycles). This parallels the reluctance of specialist prescribers to switch patients with other chronic disorders to biosimilars if their conditions are stable after months or years of reference drug use. Several payers, like Kaiser Permanente, have not been hesitant about encouraging switching patients to biosimilars.
A Question of Drug Combinations
Earlier this month, at the Academy of Managed Care Pharmacy’s Partnership Forum on Biosimilars, a perfectly plausible objection to biosimilar use was raised by an oncologist. This concern is reasonable: Biosimilars like infliximab and filgrastim are not prescribed as part of multiple drug combinations. One the other hand, biosimilars like trastuzumab and bevacizumab are only rarely used as singular agents; more often, they are prescribed in combination with other chemotherapies. Furthermore, these oncolytics may be tried as part of off-label combinations, where little experience or evidence is available for use.
For example, consider Amgen’s Kanjinti®phase 3 clinical trial. Prior to FDA approval, it was tested only in combination with paclitaxel in patients with early-stage breast tumors expressing the HER2+-receptor mutation. Current guidelines from the National Comprehensive Cancer Network (NCCN) specify the use of trastuzumab with pertuzumab, taxanes, and/or anthracyclines, or with a slate of adjuvant chemotherapies, depending on hormone-receptor status, clinical stage, and metastases. Furthermore, patients with HER2+ status and bone disease will likely be receiving trastuzumab along with denosumab or zoledronic acid. In other words, many real-world patients with cancer being seen in oncology practices don’t reflect the populations enrolled in clinical trials. “How does the biosimilar work with pembrolizumab and other drug combinations?” asked the oncologist. “We don’t know the answer to those questions.”
This issue may be more concerning if not for the fact that Herceptin®, the reference product, has been produced for 20 years and has been subject to its share of lot-to-lot variation and manufacturing drift. This undercuts the argument: The same concern would have to be raised over Herceptin produced in 2005 versus Herceptin manufactured in 2011 or 2019.
Safety-Profile Differences With Bevacizumab Biosimilar?
She mentioned that in her institution, the use of bevacizumab biosimilars are specifically resisted, because the physicians reported the appearance of different (though not more toxic) side-effect profiles than seen in the investigational trials.
Their trepidation does involve the issue of extrapolation; yet, it goes beyond, into the question of confidence in prescribing. It is about obtaining a level of comfort in utilizing a biosimilar that has been proven to be sufficiently physiochemically alike to be approved by the FDA in other real-world patients with cancer. And this concern may extend beyond the question of and timing of a biosimilar switch: If a treatment-naïve patient requires bevacizumab for lung cancer, how does one convince the thoracic physician to use the biosimilar? In that case, it may well come down to coverage, if the payer or health system excludes reimbursement for the reference agent, there will be little choice.
One cannot effectively argue the marketshare figures from IQVIA. It is derived from actual overall prescriptions, and the types of specialists who prescribe hese agents is very limited. If the biosimilars have already captured 40% of the bevacizumab and trastuzumab markets as of the fourth quarter 2020, the oncologists have seemingly voted their acceptance with their pens.
Amgen added another notch on its biosimilar belt last week, receiving approval from the Food and Drug Administration (FDA) to market ABP798, its biosimilar version of Rituxan®. The drug, dubbed Riabni™ (rituximab-arrx), is the third biosimilar rituximab available in the US.
It was approved for adult patients with the following indications:
Chronic lymphocytic leukemia
Granulomatosis with polyangiitis (Wegner’s granulomatosis)
Riabni’s slate of indications is very similar to those approved for its biosimilar competitors Truxima® and Ruxience®. Unlike its biosimilar competitors, the reference product is also approved for use in patients with rheumatoid arthritis.
Amgen announced that it will begin marketing Riabni in January 2021, at nearly a 24% discount to the wholesale acquisition cost (WAC) of the reference product Rituxan ($716.80 per 100-mg vial or $3,584 per 500-mg vial). It is also approximately 17% below the current average selling price (ASP) of the originator. Amgen noted that the WAC for Riabni is equal to that for Ruxience and 15% lower than that for its Truxima, the two biosimilar competitors in the market. Average selling prices for the two previously launched biosimilars are not yet available.
Riabni is the fifth biosimilar approval for Amgen in the US, with three marketed (its biosimilar version of infliximab [Avasola®] adalimumab [Amjevita®] have not yet launched). The company noted in its press release that it has 10 approved and investigational biosimilars in its portfolio at the present time.
Pharmaceuticals companies love direct-to-consumer (DTC) advertising; most television viewers hate it. Advertisements for biologics and small-molecule drugs to treat inflammatory bowel disease, rheumatoid arthritis, cancer, diabetes, HIV, and a host of other disorders come in clusters, targeting news hour and primetime viewers alike. I have nothing against the golfer Phil Mickelson, and I assume he has received real benefit from his anti-TNF therapy. However, my patience was worn thin a long time ago. Yet, the old adage must be true: Pharma wouldn’t run DTC ads if they didn’t work. Because they work is probably one reason why the US and New Zealand are the only countries that allow their use. And within the US, its use is ubiquitous: on television, radio, print newspapers and magazines, digital services, you name it.
As effective as they are, one wonders why DTC advertising has not been utilized by biosimilar companies to state their own case to the American public. Social media plays host to a tremendous amount of positive information on biosimilars, produced by biosimilar makers like Amgen, Coherus, Samsung Bioepis, Pfizer, among others. To reach the wider public, DTC ads may give American viewers more accurate information about biosimilars in general and their medications in particular.
Payers dislike traditional DTC advertising, because they are geared towards increasing prescriptions of the product in question. The pharma industry will argue that DTC ads are used for patient education and to encourage appropriate use of their product. In general, payers don’t believe it, and who can blame them? There have not been any independent studies that have shown that DTC improves patient care—only more product sold.
If DTC advertising is so effective, why don’t biosimilar manufacturers take to the satellite, cable, and airwaves? Perhaps the reason is that their consumer message will be difficult to determine. Unless the 60-second ad addresses something specifically said by a reference drug maker, the biosimilar company would have to work within the following frames of reference:
”Our biosimilar is just as safe and effective as …” First, you don’t want to violate the cardinal rule of advertising and mention your competitor by name. Second, the consumer is expecting to hear “safer and more effective,” which biosimilars, of course, don’t claim to be.
”Our biosimilar can help alleviate your symptoms and improve your quality of life” In other words, if a biosimilar manufacturer took the same DTC approach as other drug makers do today, they would not mention the competition. They would focus their message on their drug’s ability to effectively treat a disease, like any other brand. One problem with this approach is that it loses the opportunity to advance the agent as a potentially lower-cost biosimilar. There is another issue as well: Like any branded ad, it would need to state all the disclosures associated with the agent. That could raise a question in the mind of the viewer: “Are these new possible side effects, only associated with the biosimilar, and not experienced with the reference brand?” This approach may serve the biosimilar manufacturer’s revenue motive, but it fails to improve the perception of biosimilars in general. .
”Our biosimilar costs less than the reference drug” Although this may be the case from the health system or payer perspective, this is not always the case from the consumer’s standpoint. Unless each health plan maintains a policy that cost sharing under the medical benefit is lower with biosimilars, this would not be true. Which it isn’t at the present time.
Elizabeth Sampsel, PharmD, MBA, Clinical Program Manager at MedImpact Healthcare Systems, pointed out to me recently that we can only make the argument that costs to consumers will decrease through lower premiums only if a critical mass of biosimilars are adopted by payers. That will entail that the payer perceives a lower net cost for the biosimilar relative to the reference product.
The reasonable expectation is that consumers will pay the most attention if biosimilars directly cost them less than the reference biologic. In some cases, patient biosimilar use may be incentivized by lower cost sharing, but without widespread use of a biosimilar-only tier or co-insurance, we cannot say broadly that biosimilars cost patients less.
*We need biosimilars, because…” This is a different message, and opportunity. The message is not necessarily aimed at current patients. It is targeted to everyone watching. We need biosimilars, because their lower costs to the US health care system allows more people to access these valuable but expensive medications.
We need biosimilars, because they create competition where none existed before.
We need biosimilars, because they are extremely similar to the biologics people see in other DTC advertising and are expected to provide effectiveness and safety that is not clinically different than these medications, and lower overall health costs.
The problem with this messaging is that it will also require an explanation to the lay public of what a biosimilar is and is not. That’s a lot for the average person to digest (and not in 60 seconds). That means a biosimilar DTC campaign with multiple messages to gain widespread awareness. A 30-second advertisement during the Super Bowl costs only $5 million. Well, we have to start somewhere…
By the time 2020 ends in a couple of short weeks, the US Food and Drug Administration (FDA) will have made decisions on the fate of at least two proposed biosimilars. In addition, a few manufacturers have announced plans to complete the 351(k) application process by the end of the year. Based on our current database of publicly announced biosimilar approvals and applications, the turn of 2020, here are some of the latest updates.
On November 22, Tanvex BioPharma resubmitted to the FDA its biosimilar application for TX-01, referencing Neupogen®. As reported earlier, Tanvex had received a complete response letter in September 2019, which did not require additional clinical data. Tanvex hopes to hear a decision on the resubmitted application by May 2021. The company also announced its intention to submit its bevacizumab biosimilar application (TX-05) to the FDA in mid-2021.
Bio-Thera Solutions of Gangzhou, China, announced in late November that it had submitted a marketing authorization application to the European Medicines Agency for its bevacizumab biosimilar BAT-1706. In its press release, Bio-Thera reiterated its intention to file a 351(k) application with the US Food and Drug Administration before the end of 2020.
Coherus Biosciences has had reiterated its intention to file for FDA approval of CHS-1420, its adalimumab biosimilar, before the end of 2020. Therefore, we expect to see an update on this shortly. On another Coherus note, the FDA had requested more data in Bioeq and Formycon AG’s original application for FYB201 (a ranibizumab biosimilar). This request was related to a change in equipment used in manufacturing. As a result, the application was withdrawn, and Coherus, in its latest earnings report, indicated that it intended to resubmit the 351(k) application in 2021.
The FDA had given Amgen a December 19th decision date for its biosimilar version of rituximab (ABP 798). Hopefully, we will be reporting on this in the next few days. An approval would provide Amgen and its partner Allergan the third rituximab biosimilar on the market. Samsung Bioepis is also awaiting word on SB8, its biosimilar version of bevacizumab, which it filed in November 2019. An approval would also give Samsung the third biosimilar in the Avastin® market.
This week, veteran employer benefit consultant F. Randy Vogenberg, PhD, RPh, writes about how the Supreme Court’s upcoming decision in State of Texas v. USA can affect self-funded and fully funded employers and how they need to prepare for its ramifications.
There seems to be a common interest in lowering the high costs of pharmaceuticals these days. The specifics of what emerges through legislation, regulation, or litigation is part of the sausage making in Washington, DC. The Trump administration’s removal of drug rebate safe harbors for part D drugs, its most-favored nations rule for part B drug pricing, and its continued attack on the Affordability Care Act (ACA) present all types of potential outcomes that can pharmaceutical access, pricing, and competition.
Which scenarios need to be planned for? Clearly, all of them. Each stakeholder will have to spend time adjusting potential strategies and scenario planning for the 2021–2022 plan years. For the rebate rule and potential fall-out from a nonseverability decision by the Supreme Court in State of Texas v. USA, a transition period of two to three years may allow for existing pharmaceutical contracts to expire or be modified. This will avoid problems in patients being able to access their medications. Whereas an abrupt shift could happen, a catastrophe-like this hasn’t occurred in the past. It is unlikely in the future as programs typically adjust or unwind.
However, ending the ACA altogether could create chaos in other parts of the health care system that were directly or indirectly changed under the law’s multitude of provisions. But let’s specifically address the biosimilars approval pathway as collateral damage if the Supreme Court’s decision results in the worst-case scenario.
Questions addressed against ACA tend to be narrowly written, avoiding the direct question about ACA constitutionality. A mixed decision will result in winners and losers short-term, and reopen an opportunity for the incoming administration to take presidential license to issue executive orders in the absence of Congressional action.
Should the court strike down the ACA entirely, biosimilars on the U.S. market or in the FDA approval pipeline would have to either be grandfathered in or face a regulatory wind-down. The more likely scenario is that some vestige of a biosimilar pathway will continue without much disruption. One possibility is that manufacturers will be able to continue selling biosimilars while they reapply for approval through either the 351(k) or the 351(a) pathway. The need for additional clinical trials would be unnecessary, given the availability of post-approval real-world evidence for marketed biosimilars. Approved but not marketed biosimilars in the US would have to cobble EU-based real-world data for use with an applied model (e.g., the Employer Value Assessment Tool®). Another distinct possibility is that Congress could step in and pass legislation essentially reauthorizing the Biologics Price Competition and Innovation Act as a free-standing piece of legislation.
Good business practice dictates that employers and health plan sponsors be prepared for the possibility of the ACA, and thus the BPCIA, being struck down. That means being prepared for the best or worst and everything in between. Consider the case of a 10,000-member self-funded employer and how their (1) rebate streams of revenue from their third-party vendor can be disrupted, (2) their policies about biosimilar use will have to be flexible and/or rewritten—in a hurry, (3) the potential effect on C-suite functions (say health care benefit disruption), and (4) the potential effect on company bottom line financials (unknown effect on premiums if ACA is struck down).
If the biosimilar pathway is no longer available, this could affect payer coverage and cause disruptions in patient treatment. Policies should be readied in advance to handle any required shift from biosimilar treatment back to a reference product. This will avoid point-of-care issues and ensure continued optimal access to the biologic. This could also affect marketing as it relates to employer plan coverage policies, out-of-pocket costs to patients, and reimbursement rules in the medical or pharmacy network in-place, missing, or blocking change.
Should that scenario occur, there likely would be a gradual transition process that includes the FDA along with other health care agencies at the federal level, including the Department of Labor, which is responsible for Employee Retirement Income Security Act (ERISA) regulatory oversight. Under ERISA, employers can offer interstate or multistate health insurance plans independent from an individual state’s Insurance Commission’s rules. Plan designs and some coverage policies could run afoul of regulatory requirements of self-funded plans in addition to other related privacy or member coverage provisions by federal or state departments, such ash, finance, or insurance. Coordination of that worst-case scenario would likely play out over years, due to the adverse economic effect of losing a relatively lower-cost product option in the plan sponsor (funded and fully-funded) marketplace. Should the rebate safe harbor also be removed, then economic incentives shift again.
Employers are sometimes slower than others to anticipate or react to fast-paced change in healthcare benefits. They don’t often do enough scenario planning around the healthcare benefits off-cycle. Typical planning cycles take from 12 to 18 months, with most effort occurring in second or fourth quarters of each year. Timing is further complicated by fewer human resources employees on-staff these days due to the pandemic or other efforts to increase business efficiency through outsourcing.
Healthcare remains a complex marketplace with many direct and indirect stakeholders, so change has been glacial. Biosimilars have just gained some momentum, but now face a different adversary to their use, the litigation to strike down the ACA.
Added to the unique clinical or personal behavior aspects of drug taking of biologics is the important economic impacts of any change in healthcare as it remains one of the biggest sectors of our economy. As a result, any coverage decisions are inherently complex, and more politically charged. In trying to make rapid employer change around healthcare during this everchanging economic rollercoaster ride year of 2020, patience and persistence are required along with a strong value proposition that resonates directly with employers as plan sponsors.
F. Randy Vogenberg, PhD, is Principal of the Institute for Integrated Healthcare and Board Chair, Employer-Provider Interface Council Greenville, SC. He focuses on commercial employee benefits, care delivery and outcomes research, education, and strategic benefit consulting on medical-legal, clinical, or economic issues in commercial health care. He currently serves as Co-Leader, National Employer Biologics & Specialty Initiative with the Midwest Business Group on Health.
Last week, the Trump administration issued an interim final rule that would allow Medicare to obtain far lower pricing on a specific list of high-cost part B pharmaceuticals. A reading of the text of the most-favored nation (MFN) rule, which evolved directly from Congress’s 2019 proposal to fix the price of 250 medications to an international pricing index, makes clear that this rule was not considered with the biosimilar industry in mind. Overall, it seems lacking in its consideration of the greater pharmaceutical ecosystem in trying to lower drug costs.
According to the interim final rule, the MFN Model will be tested and phased in over 7 years, starting January 1, 2021. The pilot will be a test only in the sense that 50 single-source part B medications (including biosimilars) will be affected in year 1. The MFN Model requires mandatory participation by all “providers and suppliers that participate in the Medicare program and submit a separately payable claim for an MFN Model drug with limited exceptions, such as providers and suppliers that are paid for separately payable Medicare part B drugs based on reasonable costs.” The target population will be all Medicare beneficiaries enrolled in part B, have Medicare as the primary payer and are not covered under Medicare Advantage or any other group health plan.
The 50 provider-administered medications were identified through HCPCS-code claims paid by Medicare. Several of these medications are of interest to the biosimilar world:
Pegfilgrastim (Neulasta only)
Pegfilgrastim (Udenyca only)
Infliximumab (Remicade only)
Several of these are already available (e.g., pegfilgrastim, bevacizumab, trastuzumab, rituximab), soon to be ready for FDA filing or marketing (ranibizumab, aflibercept), or may be under development (ustekinumab, certolizumab, eculizumab). Additional agents would be added in subsequent years. The original IPI proposal included 250 medications (but not only part B drugs).
From Price Negotiation to Mandated Pricing
The idea of Medicare using its leverage for drug negotiations has been around for some time. Today, CMS can only pay average sales price (ASP) + 6% for part B medications; that is, it is limited to paying the manufacturers’ wholesale average cost minus discounts and rebates, and then tacking on 6% (or 4.3% based on financial sequestration) for the provider’s pocket. On the other hand, Medicare Advantage plans are not limited in their ability to negotiate part B pricing.
Instituting an MFN model does not imply a negotiation. Under the model, CMS would “Calculate the payment amount for MFN Model drugs based on a price that reflects the lowest per capita Gross Domestic Product-adjusted (GDP-adjusted) price of any non-US member country of the Organisation for Economic Co-operation and Development with a GDP per capita that is at least sixty percent of the US.” The agency cited a previous analysis, demonstrating the US pays 80% more for medications than comparable countries. Any way you cut it, the MFN Model means that Medicare would reimburse a much lower amount for the drug itself.
In addition to the new payment for the part B drug, CMS would pay a flat fee to providers for administration. Unlike the current ASP + 6% model, this flat payment would not incentivize the provider’s use of more-expensive agents.
Into the Unknown
This MFN model would be a huge policy shift, should the new Biden administration not delay its implementation or modify it substantially. It raises a host of questions, and rather than try to answer them at this early stage, we thought it might be more useful to outline why it could have important implications.
What Happens to Commercial Payer Pricing? If Medicare pricing drops steeply, that may affect the way commercial payers view their own price negotiations. Hence this will further reduce a drug’s ASP. A yawning gap between what traditional Medicare pays for a part B biologic, what a Medicare Advantage plan pays, and what the commercial plan pays is likely to cause systemic tension and differing expectations.
What Will Pharma Do? It may force a reckoning on the part of the manufacturers. The US is the largest pharmaceutical market in the world and generally produces the greatest revenues for a reference biologic. The argument has long been made that by paying far higher prices, the US subsidizes the lower prices paid by other countries. Normal responses by a manufacturer of existing drugs would be to (1) raise prices worldwide to compensate (to the extent new contracts/tenders can be negotiated), (2) accept lower profitability (which shareholders won’t like at all), (3) license or sell the product to a manufacturer who can accept the lower profitability, or (4) develop the next generation of medication and sell it at a substantial premium while discontinuing production of the original drug.
Pharma companies will very likely revise their predictions of future revenue for investigational products. This could in turn cause a reappraisal of their pipelines.
How Does This Affect Biosimilars? Today, only Udenyca is in Medicare’s top 50 HCPCS code annual spending list. With the success of other oncology biosimilar agents, this may change quickly.
As such, the MFN model could fuel a reconsideration of biosimilar pipelines. The sole basis for biosimilar competition is pricing. If the ceiling price drops dramatically, biosimilar makers will have a smaller window of profitability, and perhaps see a faster downward trend on price. Quickly, a blockbuster reference drug target might not make business sense if several manufacturers are fighting for low double-digit marketshare.
According to Bernstein Research’s analysis, part B biologics and their biosimilar competition are seeing 10% to 15% annual reductions in net prices (based on ASP). The downward effect on ASP pricing can be substantial, even if commercial pricing remains on this trend. In Europe for example, the net price of Remicade® has dropped around 70% (we assume from a lower perch than in the US to begin with) since the introduction of biosimilars, based on 74% biosimilar marketshare (data from Bernstein Research). In the US, the ASP price of Remicade fell around 40%, despite the reference product holding on to the lion’s share of the market. An additional big drop caused by MFN pricing could certainly affect the three biosimilar players (Pfizer/Celltrion, Merck/Samsung, and Amgen) with low marketshares.
The upside is that CMS has included some cost-sharing savings for members who receive biosimilars, which could incentivize their use. Although this increased utilization would be at a less profitable price.
What Is the Effect on a Biobetter? Should Celltrion receive approval by the Food and Drug Administration on its subcutaneous form of infliximab, how will the potential lower price of the reference infusible product Remicade affect this drug’s pricing and prospects for utilization? If the subcutaneous version is subsequently covered under part D, but Remicade and its biosimilars are covered under part B (at a far lower initial price), how does that affect Celltrion’s decision making?
What Happens to Other US-Based Pricing? If the MFN Model is implemented and is mandatory across the country, this would certainly have an impact on other pricing models, like 340B, Department of Defense, Public Health Service, and others, which leverage considerably lower pricing than for Medicare and the commercial markets. It would then create a need to reset these structures.
A Myopic View of a Cloudy Future
This is clearly an exercise in broad speculation. Myriad variables can affect the success or failure of the model, and we shouldn’t get ahead of ourselves in deciding whether biosimilar manufacturers will ultimately view this as an opportunity or a barrier. And the unintended consequences of the MFN Model can only be viewed objectively after it has been fully phased in.
The CMS Office of the Actuary estimates that the MFN Model will result in $64.4 billion savings in Medicare fee-for-service benefits, $49.6 billion in Medicare Advantage (MA) payments, and $9.9 billion in Medicaid spending over the course of the 7-year project. Beneficiaries could save $28.5 billion over that period, according to CMS. But only if the project lasts that long.