Coherus Biosciences surprised many on its third-quarter earnings call late yesterday. It will rely not on a lower price than its biosimilar competitor to gain marketshare after Coherus’ Udenyca launch, but on its ability to pull through on its patient and provider services and supply chain to gain significant marketshare for its biosimilar version of Neulasta®.
This is not to imply that Coherus will not offer contracts to group purchasing organizations (GPOs), hospitals, and payers. The company intends to do so. However, the wholesale acquisition cost (WAC) for Udenyca® will match that of Mylan’s Fulphila®—$4,175 per vial, or a 33% discount from Amgen’s reference product. Denny Lanfear, CEO of Coherus added that the company’s contracting plans “will deliver additional value to payers.”
AWAITING HCPCS CODING
Unlike other biosimilar manufacturers, this is their first product to reach the market. Not only was manufacturing and production a priority, but company infrastructure had to be ready for launch. Although Coherus pointed out that the sales force for Coherus is fully in place, they are holding back the Udenyca launch until the Center for Medicare and Medicaid Services (CMS) designates a Q code for claims and billing purposes. Therefore, the goal is a Udenyca launch date of January 3, 2019.
Jim Hassard, Vice President for Marketing and Market Access, emphasized that “Our overall launch strategy goes beyond pricing, to reliable supply and services. We’re committed to world-class execution and salesforce effectiveness.” The company’s Coherus Complete, patient and provider service site, is operational, and this will include copay support for eligible patients. Mr. Hassard stated, “This price is attractive to payers without diminishing our value proposition. We can deliver significant savings to the health system versus Neulasta.”
CAN UDENYCA GRAB SOME ONPRO MARKETSHARE?
One interesting statement made during the call was the expectation that Coherus will go after some of Neulasta Onpro’s share of the market. Amgen’s on-body injector accounts for about 60% of all Neulasta utilization today, “but this growth has flattened out,” Chris Thompson, Vice President of Sales, emphasized. “We’re looking at the whole market, not just prefilled syringe market,” he said. “We think we’ll be able to sell through the Onpro market,” meaning that their pricing and services will attract some of this marketshare. In fact, Coherus executives believe that biosimilars may eventually garner nearly 70% of the pegfilgrastim market.
Coherus believes that there is pent-up demand for the biosimilar in the hospital segment today, which is why GPOs may represent promising contracting opportunities. They are seeking parity positioning at the payer and pharmacy benefit manager level.
This sounds fairly reasonable. Yet the vast majority of biosimilar consultants and payers with whom I had communicated had anticipated that Coherus would launch with at least a modest WAC discount relative to Mylan’s Fulphila. On the conference call, the investment banking participants wanting information on the Udenyca launch seemed caught off guard as well.
UDENYCA REVENUE TO SUPPORT COHERUS FOR NOW
Perhaps this strategy gives Coherus ample room for contracting while retaining a respectable net cost. Mr. Thompson said, “We’ll roll out a comprehensive contracting strategy for GPOs in the next week or two. It will be competitive and designed to win.”
It may need to be. Relying on better services and perhaps even a better supply chain (albeit one that is brand new) may not be sufficiently persuasive to hospital and payer P&T Committees. And Coherus needs to generate revenue from its sole product to feed its new sales team, new product development, and hungry investors.
We previously reported that Momenta Pharmaceuticals reevaluated its biopharmaceutical strategy going forward, deciding to move forward only with its investigational adalimumab and aflibercept biosimilars. Yesterday, Momenta announced that it has joined the long queue of pharmaceutical manufacturers signing a biosimilar licensing deal with Abbvie, which will allow commercialization of M923, its biosimilar to Humira, should it obtain regulatory approval. Momenta’s licensing deal is the fifth one signed by prospective biosimilar marketers in the US.
This agreement was pretty much a no-brainer for Momenta. The company did not have the stomach for attempting either an extended patent fight or an at-risk launch. However, the biosimilar licensing agreement only allows Momenta to market its adalimumab biosimilar in the US after December 2023, which will make it the fifth Humira biosimilar that will launch under the licensing agreements (Table). The main patents for Humira have expired in Europe, and these agreements have generally allowed the European launches to occur as of October 16 of this year.
Of the manufacturers signing biosimilar licensing deals with Abbvie , only Amgen and Sandoz have earned FDA approval for Amjevita® and Hyrimoz®, respectively. And Boehringer Ingelheim is still duking out patent litigation with Abbvie in the courts over its approved biosimilar agent Cytelzo®, for which it hopes to receive an interchangeability designation. The second through fifth agents entering the fight will be likely pounding away at subsequently smaller slices of revenue.
Perhaps the most frustrating part is that Abbvie is running a lucrative game; it will collect royalties from all of these manufacturers in 2023 and beyond, which will help offset declining marketshare from its biggest revenue contributor.
In Abbvie’s Web: Who Has Signed Licensing Agreements for Biosimilar Adalimumab?
Mylan/Fujifilm Kyowa Kirin Biologics
*Received FDA Approval.
Note: This post was revised and corrected, November 8, 2018.
The Food and Drug Administration (FDA) announced yesterday the approval of adalimumab-adaz from Sandoz. The new agent, dubbed Hyrimoz™, will not be launched in the US until 2023. The approval of Hyrimoz is the third for Sandoz (but only one, Zarxio®, is available for prescription in the US).
The FDA approval of adalimumab-adaz covered several indications, including adult Crohn’s disease, ankylosing spondylitis, juvenile idiopathic arthritis, plaque psoriasis, psoriatic arthritis, rheumatoid arthritis, and ulcerative colitis. The drug’s approval was based partly on the findings of a phase 3 clinical trial in patients with chronic plaque psoriasis, in which the biosimilar was found to be noninferior to the originator product Humira® in terms of efficacy (i.e., PASI 75 score) and safety.
Hyrimoz is the third approved adalimumab biosimilar, none of which have been marketed due to patent litigation. Abbvie has signed licensing agreements with Amgen and Samsung Bioepis to delay US launches.
HUMIRA PRICE DISCOUNT IN THE EU
This biosimilar is being marketed in the EU, competing with several others for the Humira marketshare overseas. However, signs of real competition are heating up in Europe, as Abbvie has offered a Humira price discount of as much as 80%.
According to an article published in Fierce Pharma, Abbvie is hoping to squash the biosimilar competition and prevent it from gaining valuable European experience ahead of US launches in 2023. The article cited a report by Bernstein analyst Ronny Gal, indicating that even at an 80% discount, Humira will still be profitable for Abbvie. “The objective is to defend the US market by denying the biosimilars in-market experience [in Europe] and then arguing the Europeans ‘chose’ Humira over the biosimilars for quality reasons beyond price,” according to Gal’s report.
On the other hand, this puts the biosimilar makers in a tight spot on the continent. They need to earn back their R&D costs and may be unwilling to face an immediate low-profit reality. Revenues within the EU for Humira are $4 billion. Even if it offered tenders of 80% for every member country (and they were accepted), revenues would still be in the range of $800 million. This would drastically reduce the size of the revenue slices for the European biosimilar competitors. It could be possible that some may drop out of the market, at least until the time of the US launches.
When Pfizer first announced its lawsuit against Janssen’s parent Johnson & Johnson in September 2017, it pointed to exclusionary contracting, “anticompetitive” behavior of Remicade®’s maker as the reason for its very limited market access.
The lawsuit claimed that Janssen has withheld or threatened to withhold rebates if payers do not keep Remicade in an exclusive preferred position. The degree to which health plans knuckled under to these demands may only be inferred from the 3% marketshare Pfizer’s Inflectra® now holds. For these drugs, which are still typically covered under the medical benefit, “nonpreferred positioning” usually means no coverage. For drugs covered under the pharmacy benefit, this is not the case.
In August, the Eastern Court of Pennsylvania ruled against J&J in its request that the lawsuit be dismissed. While discovery in the case may be ongoing, we could not find mention of a resolution date for the suit.
For the sake of argument, let’s say that the Eastern Court of Pennsylvania rules in favor of Janssen. In other words, exclusionary contracting was not an anticompetitive behavior. That means the status quo is intact, but some factors may affect this situation going forward. These include the Center for Medicare and Medicaid Services’ desire to move part B drugs (the medical benefit) to part D (the pharmacy benefit) for Medicare beneficiaries.
The scrutiny on rebate contracting coming from several sectors, and lack of transparency, may also independently influence future use of these pharmaceutical company tactics. I helped conduct a market research project recently on a nonspecialty drug. As part of these interviews, we were asked by the client to inquire about the range of rebates they were receiving from competitor manufacturers. Their responses were requested as a range (e.g., 20% to 30%), not specific contract details, and we had no intention of providing reports of individual payer deals, only anonymous, aggregate information. We expected little to no response to that query, and that is exactly what we received.
Let’s discuss the other potential outcome, in which the Court rules in favor of Pfizer. That implies that this exclusionary contracting practice is indeed anticompetitive. If this is the case, we may be on a very slippery slope. What is the difference between payers and pharma companies engaging in a “1 of 1” contract when there are multiple potential products and a “1 of 2” contract? In both cases, drug makers are committing payers to anticompetitive behavior (as perhaps defined by the Court’s new precedent).
The preferred drug tier (whether preferred generics, preferred brands or whatever) is supposed to be for products with proven clinical, patient care, or economic advantages. Truthfully, payers rarely place medications in the preferred tier for reasons other than net costs or rebate contracting, which is based on marketshare.
Now add in the potential effects of the Administration’s desired shift to part D, where pharmacy benefit rules can be applied. That exposes injectable products that were shielded under Medicare part B to commonly applied formulary placement practices.
To be complete, Janssen’s strategy was not solely based on Remicade. It may be found to have bundled Remicade with other agents in deals to exclude Pfizer’s products. The Court may also react specifically to Janssen’s contract stipulation that threatens to withhold rebates connected to future use of the product, to increase its leverage.
However, if the Court determines that 1 of 1 or exclusionary contracting with rebates are the root of the anticompetitive behavior, why should 1 of 2 or even 1 of 3 contracts in a drug category with 5 similar agents be less so? This is the slippery slope that could undo rebate contracting, and push us towards a system that more resembles a competitive bidding process like in Europe. Alternatively, it could accelerate the move towards outcomes- and value-based contracting. The result could be a system-wide revamping of the drug formulary and the pharmacy–drug maker relationship.
In other biosimilar news…Sandoz has signed a licensing agreement with Abbvie, allowing it to market its biosimilar version of Humira in 2023. The agreement, as with Abbvie’s settlements with other biosimilar makers, halts all patent litigation with Sandoz in exchange for a licensing royalty paid to Abbvie.
At the September 5–7, 2018 GRx+Biosims meeting, I had the opportunity to moderate a session with three highly experienced biosimilar industry executives. They included Gary Deeb, Senior Vice President, Global Licensing and Business Development, Lupin Pharmaceuticals; Chrys Kokino, MBA, Head Global Biologics— Commercial, Mylan; and Mike Woolcock, MBA, Senior Vice President, Commercial Operations, Apobiologix. In the hour-long session, we covered a range of sticky topics. This post sums up some of the information gained on one aspect—the question of price transparency, recent FDA action to address drug rebates, and whether deemphasizing drug rebates will help biosimilars gain access.
One issue that is getting an awful lot of attention lately is the question of price transparency. This has been highlighted by the difficulties that Pfizer has had in gaining traction for its infliximab biosimilar, resulting in claims of exclusionary contracting by Janssen to protect the latter’s marketshare. One of the principal tools used by the reference biologic manufacturer is its power to rebate. When a drug has the lion’s share of utilization, rebates become very potent inducements to payers to provide or maintain preferred or exclusionary status on formulary. Therefore, the issue of biosimilars and reference drug rebates can be an important one for the industry.
In response to the challenges of biosimilars gaining uptake in the US, Health and Human Services Secretary Alex Azar has been investigating whether safe harbor laws that currently protect drug rebates from anticompetitive lawsuits can be changed. This move can affect revenues for both pharmacy benefit managers (PBMs) and payers who share in the rebate monies. It raises a related question, however: Would biosimilar manufacturers be better off competing on list pricing (i.e., wholesale acquisition cost) alone? And does the issue of biosimlars and rebates really matter?
In the backstage green room, this topic generated much discussion among our panelists. And quite frankly, the answer to this question is not yet in.
In previous market research and access projects performed for pharma and their agencies, it has been clear that health plan medical directors and pharmacy directors would prefer competition based on discounted WAC, whereas PBMs prefer to retain their rebate revenue. However, the plans do share in drug rebate revenue to varying extents, which they are quick to point out are helpful in holding down premium increases or funding other projects beneficial to members and patient care. Hence, they are stuck in the rebate trap as well. They are not generally eager to add a new preferred drug even if the manufacturer is offering powerful discount WAC plus competitive rebate; they realize that the rebate revenue is based mostly on how much marketshare the drug maker can gain (and how quickly it can amass marketshare).
The biosimilar industry representatives at our panel discussion were similarly reticent. Does it represent an opportunity to break the exclusionary contracting hold of companies like Janssen? Without high rebates to cement a reference drug’s place as a preferred or the only covered biologic, other manufacturers can get their foot in the door and compete for marketshare based on price alone. This does not mean that prices would necessarily be more transparent, however. One would expect that discounted prices negotiated (from one plan to another or one PBM to another) would differ and remain confidential in nature. In other words, Kaiser Permanente Southern California could still only guess what Blue Shield of California was paying for infliximab and vice versa.
If the average sales price (ASP) methodology were unchanged, one would expect the ASP, which reflects discounts and rebates, to be closer to the WAC price by the amount no longer rebated. But the wild card in this scenario would be the pharmaceutical and PBM industries’ reaction. Is there a way to reclassify rebates as some other payment, like “administrative fees”? Our panelists believe that the PBMs, for example, will not easily forfeit a revenue line representing pure profit, regardless of its size. One would need to anticipate some attempt to retain this revenue.
The issue of biosimilars and drug rebates may only be shifted, in the end. Payers would still want to see the lowest net cost for any product. In 2018, they don’t care too greatly about how this is achieved, through rebates, discounts, portfolio contracts, or other means. If pharmaceutical rebates were deemphasized, my own guess is that at least biosimilar manufacturers would not be disadvantaged once approved, simply because they don’t have any existing marketshare. And it would also test a payer’s fortitude in foregoing its own drug rebate revenue.
One of the persistent themes at the Association for Accessible Medicines’ first GRx+Biosims meeting was an existential one. Authorities such as Gillian Woollett, PhD; Hillel Cohen, PhD; and several industry experts worried that without a change in mindset and intervention by government, payers, and the industry itself, the US biosimilar industry may not survive its infancy. And failure to attain US biosimilar market success would have grave consequences for the global biosimilars industry.
In her session, Avalere Health’s Senior Vice President Gillian Woollett, discussed the three mountains that biosimilar manufacturers had to climb in order to be successful. These were, in sequence, Mount FDA Approval, Mount Exclusivity and Intellectual Property, and Mount Commercialization. Indeed, it seems that FDA approval in many ways may be the easiest hill to summit.
Twelve biosimilars have been approved by FDA, but this is a far cry from attaining biosimilar market success. The eight drugs that are approved but have not yet reached the market are testament to this problem. Most have fallen victim to the lengthy delays associated with the exclusivity and intellectual property difficulties, none more so than the adalimumab biosimilars. For US biosimilar makers, each year that Humira® (and etanercept [Enbrel®] which will likely be introduced before 2020) face no market competition represents billions of dollars in unrecoverable revenue, as well as tens of billions of lost savings to the health system. Of course, it also means billions of additional revenues to the reference drug makers and their shareholders, which is substantially why these delays occur in the first place.
Don’t Look to the US, not Yet
Dr. Woollett asked, “Can there be a sustainable multisource specialty market in the US? I don’t think this is a foregone conclusion in the US.” She explained that the US is 50% of the market by dollar volume, yet it is home to only 5% of the world’s population. With aggressive tenders in many EU member countries, manufacturers are looking toward the US market to ensure long-term profitability. “Can the US carry the return on investment for biosimilars for the rest of world? I’m not convinced,” asserted Dr. Woollett.
Dr. Woollett pointed to another potential limiting factor in the commercialization of biosimilars. No interchangeable version of a biosimilar has yet been approved by FDA. However, switching matters greatly to the anti-inflammatory biosimilar drug maker, because it determines the size of the initial market opportunity. She explained, “If it applies to entire anti-TNF market, that’s $30.4 billion for infliximab. If you consider only treatment-naïve patients, that market is much, much smaller. If it is restricted to treatment-naïve patients, then no, these biosimilars will not be viable.” Switching is not a formidable issue for cancer biosimilars, as these are used as chronic treatments; nearly all patients are new to treatment.
She also noted a decline in the number of biosimilar development programs registered with FDA, which may be a signal of problems in the perception of manufacturers regarding their market opportunity.
Limited Reference Biologics Targeted
“Interest in biosimilar development only occurs for successful originator biologics,” Dr. Woollett pointed out. When filtering out biologics that are also not nearing patent expiration, it leaves a limited set of very expensive reference medications.
In making the business decision whether to develop a biosimilar, drug makers consider a number of questions, including the ease and cost of obtaining samples for evaluation, potential need for expensive clinical studies, and finally, what expense and time may be required for commercialization (including patent litigation). If a company plans on making the biosimilar available in a number of countries, it may be required to prove its molecule is adequately similar to samples obtained from each country or region. This could mean the need to purchase over 100 lots from the manufacturer, which is often not willing to sell to potential competitors. This is the reason for legislation like CREATES Act, which attempt to make this easier for potential biosimilar manufacturers.
Lowering Costs Through Harmonization of Comparators
However, Dr. Woollett and her colleagues in the biosimilars industry threw their support behind a different approach in 2017. Theirs is an initiative to establish “global reference comparators.” Under this approach, a manufacturer would only have to prove biosimilarity with a single licensed version of the reference product. “If the reference product is the same worldwide, then oughtn’t the biosimilar be able to be, too?” she asked. “Requirements for different datasets cannot be justified,” said Dr. Woollett. “Biologics been around for a very long time.
Once approved, complexity is no longer a relevant argument.” This would eliminate the need for biosimilar makers to confirm equivalence in bridging studies between their molecule and the licensed standard approved by each jurisdiction.
This approach reflects a growing understanding that the lot-to-lot variations seen in usual manufacturing of biologics (and over time) do not generally represent a risk to patients in terms of clinical effectiveness or safety. This, Hillel Cohen, PhD, Executive Director, Scientific Affairs, Sandoz, has just not shown to be an issue over 20-odd years of biologic production (outside of the Eprex® incident in 1998). In essence, today’s biologics are biosimilars to the original product approved by the FDA or EMA decades ago, without adverse effect on efficacy or safety. He pointed out that bridging studies that have been required add time and complexity to biosimilar development. Global comparators would help resolve this, and it can be applied to both biosimilarity and interchangeability comparisons as well. Dr. Cohen noted that “the FDA’s draft interchangeability guidelines still require comparison with US-licensed reference products only.”
Interchangeability not a Guarantee of Biosimilar Market Success
Dr. Cohen said that when a biosimilar product is so extensively studied as to its comparability with the reference product, “I cannot imagine scientifically why we thought switching would be a problem. In the opinion of the EU, these agents are substitutable, under proper supervision, with clinical monitoring. Indeed, the concept of interchangeability is unique to US regulations. However, even this designation may not hold the key to biosimilar market success.
Leah Christl, PhD, FDA, agrees with EMA that biosimilars in theory are interchangeable with their reference for the purpose of MD prescribing (meaning they are substitutable). This helps address the question of whether a noninterchangeable biosimilar is somehow a lower quality or less equivalent to a reference product than an interchangeable biosimilar might be. In fact, Dr. Cohen pointed out, “There is no definition of a ‘noninterchangeable biosimilar’ in the BPCIA.”
The cost of development of biosimilars, which may be in the hundreds of millions of dollars, is very high, considering that only four have been launched in the US. Dr. Woollett thinks that something will have to change in order for biosimilar manufacturers to maintain their interest in this sector. Yet, in view of the limited options available in the US to remedy the situation, Dr. Woollett remains pessimistic. “These investments in biosimlars of up to $500 million will be reconsidered,” she concluded.
At the GRx+Biosims meeting, Secretary Azar’s assistant Daniel Best restated the administration’s desire to preserve the biosimilar industry for the benefit of lowering prices and greater competition. He said, “We absolutely have to find a market for biosimilars. We can’t allow it be be eradicated through the perverse incentives in the marketplace.”
In fact, the only biosimilar market success story to date, Zarxio®, may be as much the result of a certain set of preconditions as that of Sandoz’s marketing efforts. First, another branded product, tbo-filgrastim (Granix®), was already available and was eroding the share of Amgen’s reference product. Second, this agent, though not technically a biosimilar by the regulatory approval pathway, cleared away some of the patent issues for Sandoz in its development of Zarxio. Third, Amgen eventually yielded the top position to Sandoz (at around 40% of marketshare). This set of circumstances is a bit unlikely for the introduction of other biosimilar drugs. Many will be looking to Mylan and its commercialization of pegfilgrastim as the next test of biosimilar market success.
Under the BPCIA, the FDA Purple Book is the published agency reference on biosimilars. It lists very specific information with regard to both the reference biologics and biosimilars: (1) biologic licensing application number, (2) nonproprietary name, (3) proprietary name (brand name), (4) date of licensure, (4) reference product exclusivity expiration, and (5) whether the product is a biosimilar or interchangeable product.
However, the number of patents existing on a specific reference product and the complex nature of the web of exclusivities, has compelled several speakers at a September 4, 2018 public hearing on biosimilars to question the value of the current Purple Book information.
At the FDA-sponsored hearing, Mariana Socal, MD, PhD, MS, MPP, from the Johns Hopkins Bloomberg School of Public Health, stated that the FDA Purple Book should focus more on competition, “providing both proprietary and nonproprietary information.” She believes that “the drug identification information should be expanded,” to include administration, dosage form, strength, pediatric use, and orphan drug status. She would rather the FDA Purple Book publish much more information regarding the active ingredient, “and all unexpired exclusivity periods should be published in the Purple Book.” For those patents found to be eliglible, the 12-year reference exclusivity under BPCIA should be determined and published definitively in the Purple Book.
“The Purple Book should include information on all unexpired patents that the reference manufacturers reasonably believe protects their biologic product,” said Dr. Socal. Otherwise, it forces prospective biosimilar drug makers to sift through hundreds of complex pharmaceutical patents, “making it easy to miss a key patent.”
“The FDA is authorized to do this under the Public Health Service Act,” she stated. Increasing transparency and reducing uncertainty are building blocks of the effort to improve timeliness of access to biosimilars.
According to Dr. Socal and other speakers like Michelle Cope at the National Association of Chain Drug Stores and Christine Simmon at The Biosimilar Council, the implication is that the FDA Purple Book needs to be more of an assistive tool to improving access to biosimilars rather than simply a reference on what has been approved.
In reporting lower earnings on its second-quarter revenues, Mylan may have surprised industry observers by offering the possibility of some changes in strategic direction. Although Mylan executives sounded hopeful notes on the company’s biosimilar portfolio, the hints CEO Heather Bresch provided may affect the marketing of the biosimilars as well as its other pharmaceutical business.
Chief Executive Officer Heather Bresch said that Mylan’s generic drug business was the main reason for the declines in overall revenues, with adjusted gross profit from US business down 6% from the previous quarter last year. Sales revenues from North America as a whole were down 22% compared with an increase of 10% for the rest of the world.
On a conference call to announce the earnings, she noted that “our efforts to serve patients in the U.S. have been shaped by the industry’s transformation there, and our results and guidance for 2018 are directly correlated with the ongoing rebasing of the US healthcare environment.”
According to Rajiv Malik, President of Mylan, “This past quarter, Mylan continued to execute on its commitment to expand access to medicine through the advancement of our complex product portfolio across our global diversified platform. For example, we launched Fulphila™, our pegfilgrastim biosimilar, in the US, and CHMP issued a positive opinion for our biosimilar of Humira in Europe.”
The Board of Directors released its own statement, however, indicating that it may take a number of actions that could dramatically change the picture (though not specified, these could include selling off assets, seeking a merger, or restructuring the organization). In a press release, the Board said, “we believe that the US public markets continue to underappreciate and undervalue the durability, differentiation and strengths of Mylan’s global diversified business, especially when compared to our peers around the globe. Therefore, while we will continue to execute on our best-in-class, long-term focused sustainable strategy, the Board has formed a strategic review committee and is actively evaluating a wide range of alternatives to unlock the true value of our one-of-a-kind platform. The Board has not set a timetable for its evaluation of alternatives and there can be no assurance that any alternative will be implemented.”
Observers will be greatly interested in how Fulphila performs in the third quarter and beyond, particularly around the deep discount offered by Mylan. This could be a considerable shot in the arm to Mylan’s US revenues or simply a ratification of its opinion that the US health system is incentivized by higher prices.
The first pegfilgrastim biosimilar lgrastim (Fulphila™) in the US has begun marketing, and Mylan/Biocon are offering a 33% discount to the wholesale acquisition cost (WAC) of the originator product Neulasta®. The Center for Biosimilars reported a communication from Mylan confirming the action. This is a watershed moment for the pegfilgrastim category and could signal the beginning of large savings opportunities for payers and patients.
At a WAC of $4,175 per syringe, the pegfilgrastim biosimilar may be very attractive to health plans and insurers. It is also assumed that this will effectively drive down the average sales price (ASP) of the category over time. The ASP includes the WAC as well as any rebates or discounts given by the manufacturers.
The pegfilgrastim biosimilar, like the reference drug, Amgen’s Neulasta, is approved to decrease the incidence of infection as manifested by febrile neutropenia in patients receiving myelosuppressive chemotherapy.
Although patent litigation between the partners and the maker of the originator product (Amgen), Mylan/Biocon have decided to launch at risk. This means that if the District Court sides with Amgen, Mylan’s could face large financial penalties, including profits on the sales of the biosimilar.
Over the next couple of weeks, I’ll be issuing a series of posts to further analyze some of the Food and Drug Administration’s (FDA’s) new Biosimilars Action Plan.
The Biosimilars Action Plan contains several important components. One of the more interesting items FDA Commissioner Scott Gottlieb mentioned in his remarks at the Brookings Institution webinar on Wednesday, July 18, involved modifying the intellectual property (IP) discussion with biosimilar approval for limited indications.
Originator drug makers have erected a so-called patent maze or patent wall over time to protect their IP and thus their marketing exclusivity as far into the future as possible. Patents can be filed for product composition, manufacturing techniques, new formulations, delivery systems, and indications. Often, the biologic products facing potential biosimilar competition have several indications. Adalimumab, for instance, is approved for use in nine unique conditions (I’ve included Crohn’s disease and pediatric Crohn’s as one disease state).
Dr. Gottlieb said that the FDA will be “updating guidance to provide additional clarity on how biosimilar manufacturers can carve out indications from their labels where a branded drug maker might still maintain some IP.” He continued, “And we’re going to describe how these indications can be efficiently added into a biosimilar label once that IP on the branded alternative has lapsed.”
This component was not spelled out in the Biosimilars Action Plan. Limited indications may indeed be an avenue to work with originator manufacturers to help reduce patent litigation that is barring patient access to biosimilars. One would assume that it would take some level of negotiation with the manufacturer of the originator. However, biosimilars with limited indications may be a hornets’ nest for reference manufacturers like AbbVie.
This gets back to the entire issue of extrapolation. From the outset, patients and providers recoiled at the notion of approving a biosimilar product for use in a disease state in which no clinical studies were done. The FDA has been pretty liberal in granting extrapolation to several or all indications for the 11 approved biosimilars. If FDA explored this option as a mechanism for getting biosimilars to the market sooner, it would be sending a new message. That is, the biosimilar drug may be expected to yield similar outcomes compared with the reference drug based on the totality of the evidence, but we’re unwilling for other reasons to give it our approval for those other indications.
Laws or regulations do not exit to prevent doctors from prescribing a biosimilar for a nonapproved indication. Furthermore, health plans and insurers have consistently reported in our own market research that they would not discourage use of a biosimilar for other indications for which only the originator biologic was approved. This assumes the biosimilar is sufficiently less expensive than the originator. As a result, drug makers like AbbVie may be very wary of the limited-indication approach to improve biosimilar access.
Still, some way must be found to break the logjam of litigation on IP. This is a specific target of Commissioner Gottlieb’s. He may take even more creative approaches.