Interchangeability: Another Challenging Perspective

Although the FDA has offered a pathway for the interchangeable designation, a recent presentation at the AMCP Nexus meeting shone a new light on some fairly important challenges posed by the interchangeable designation.

Edward Li, PharmD, MPH, Professor of Pharmacy, University of New England, Portland, Maine, raised the Web image 3well-trod issue of manufacturing drift—that over time, the reference product in particular is often subject to slight changes in structure that may be due to manufacturing changes, or other factors. This is an extremely important concept in biosimilars, as it highlights that these biologics can never be exact copies of the biologic drug. In fact, the originator biologic produced today cannot be expected to be exactly the same as the medication that was first approved 15 years ago. Although the structure may have changed subtly in these complex molecules, the clinical effects and outcomes have not materially changed. With interchangeability, Dr. Li said, “There should be no clinically meaningful differences,” in terms of safety, purity, and potency.

Once the FDA assigns the interchangeability designation to a prospective biosimilar or one that has already been marketed (and subsequent studies have provided FDA with the data to conclude that it is interchangeable with the originator), payers expect to be able to freely substitute this biosimilar for the originator at the point of dispensing—an expected boon to health plans and insurers, as well as the biosimilar maker.

However, what of the interchangeable biosimilar in the future? If manufacturing drift continues to occur over the course of time, the variation in the biosimilar and originator product will have introduced new subtle changes compared with that previously used in the approval process. “Differences may accumulate over time,” said Dr. Li, and hypothetically, these can lead to differences in safety and efficacy.” Does the biosimilar manufacturer need to prove interchangeability all over again, five years later? Is there a possibility that the biosimilar can be reduced back to the ranks of ordinary biosimilars?

These are important questions. Only after we have a biosimilar  designated as interchangeable will we be able to broach this question. However, it does perhaps give the reference drug maker a line of defense in sparing loss of marketshare.

Accounting for Lot-to-Lot Variability of Biologics in Biosimilar Development

In creating the 351(k) US biosimilar approval pathway, regulators had laid out a methodology in which the totality of evidence is weighted heavily by proof of structural and pharmacologic comparisons of the biosimilar to the originator product (unlike the most critical role of clinical trials in the conventional 351(a) regulatory pathway). Through the initial approvals by the Food and Drug Administration (FDA), the level of scrutiny given to these physical, pharmacodynamics, and pharmacokinetic evaluations has become clearer.

In its latest draft Lee 2guidance, the FDA has added some more direction, as well as emphasizing one of the key points of the biosimilar and biologic manufacturing process. They spotlight the level of variability of one biologic. Recognizing the potential for variation in one reference biologic, the 351(k) approval criteria include comparisons versus copies of the US-licensed (rather than EU-licensed) originator product. For some approvals, bridging studies, which also test the similarity of the EU- and US-licensed biologics, have been permitted. In the guidance, “Quality Considerations in Demonstrating Biosimilarity of a Therapeutic Protein Product to a Reference Product,” released earlier in September, the FDA further amplifies this requirement.

In the biosimilar development process, a prospective manufacturer must obtain samples of the biologic from the originator drug maker. However, as has been well documented, lot-to-lot differences in the biologic may well occur, though these are not expected to have implications for clinical safety or effectiveness. Proving structural similarity to this agent goes a long way to progressing down the path to approval. In its draft guidance, the FDA seems to expand its test for analytical similarity. The biosimilar manufacturer must obtain “a minimum of 10 reference product lots” and these lots “should represent the variability of the reference product,” against which the biosimilar drug is evaluated to allow for meaningful comparisons. In other words, the biosimilar manufacturer must consider the likelihood of variation in the local source of the biologic. The FDA is accepting public comments on its draft guidance for 60 days.

This has some basic implications for biosimilar manufacturers. To begin the process of engineering a biosimilar drug, they must obtain samples of the originator product from its manufacturer. This has not always been simple, as the drug maker defending its brand can delay the process or otherwise make it difficult to purchase. Some legislative proposals have been introduced to coerce the originator manufacturer to provide, in a timely manner, the samples required by the prospective biosimilar drug company (e.g. Fair Access for Safe and Timely Generics Act of 2017).

Is There Reason for Confidence in Big Pharma for Biosimilar Manufacturing?

A payer market research project we conducted not long after the passage of the Biologics Price Competition and Innovation Act posed the question: What are the characteristics of the biosimilar manufacturer that would give you confidence in the product’s integrity and supply?

Not surprisingly, a majority responded that companies like Amgen, Genentech, Biogen, and others rose to the top. These organizations have decades-long ecropped-web-image-3.pngxperience manufacturing and delivering complex biologic molecules to the market. A significant minority did say that they had no qualms about a biosimilar being made by a manufacturer with less experience (expecting that they must meet stringent standards anyway).

In retrospect, payers’ confidence in some of these companies seem to be based on a simple misconception. If we’re talking about partnerships like Pfizer/Celltrion, Merck/Samsung Bioepis, Mylan/Biocon, and several others, the latter partner (less well-known, but not necessarily less able) is responsible for the manufacturing. Their partners may help to fund, run clinical trials, and then market the agent in certain geographic regions, but in those cases, the big pharma partner is not involved in the down-and-dirty work of creating complicated biosimilar supply. In other cases, neither partner produces the biosimilar; rather, contract manufacturing organizations (CMOs) are responsible for supplying the agent.

The perception that arises, which may be true, is it takes a CMO with excellent experience in biologics manufacturing to be able to meet the standards necessary for biosimilar production. Therefore, it is not surprising that some major biologics manufacturers are also in the CMO business for biosimilars.

As noted in the 2016 article in BioPharma-Reporter.com, Samsung Bioepis relies on joint venture partner Biogen for its manufacturing expertise, but it also signed a deal with Samsung’s own South Korean affiliate, Samsung Biologics, to be a partner CMO. Samsung Biologics already produces biologics for Bristol-Myers Squibb and Roche.

The fact is that drugs are not necessarily manufactured by the company that owns and/or markets them. For payers and end users of the products, their faith in the big pharma partner as manufacturer may be misplaced.

Can Biosimilars Be Protected By Patent?

In going through my files, I came across an article from last year that asks a very basic but critical intellectual property (IP) question: “Are biosimilars patentable?” Sounds like a simple question, right? Well, the answer may not be straightforward, and relate to another question: “Exactly how different are they?”

In developing generic drugs, drug makers don’t seek to change the manufacturing process—they are attempting to provide an exact duplicate of the branded agent. This helps ensure that their product receives bioequivalency to the branded drug and an AB rating. Biosimilar agents are known to be inexact copies of the innovator product, and this can be the result of using a different cell line to produce the compound, or different processes to create a similar batch of biologic proteins or fragments. It would then make sense that biosimilar manufacturers would want to patent their proprietary process for manufacturing the drug, if it is in fact different than that used to create the originator biologic.

The authors, from a Toronto, Canada law firm, the University of Toronto, and an investment organization that promotes health innovation, point out that “the possibility that a biosimilar product could have meaningful patent protection arises from specific requirements for biosimilarity under the BPCIA, which account for the fact that manufacturing processes of biologics are inherently imprecise.”

They state, “The requirements for biosimilar approval may provide sufficient leeway to a biosimilar applicant to patent structural or formulation differences that provide non-clinical but business-relevant advantages over the reference molecule, such as improved shelf-life or ease of manufacture, without compromising clinical biosimilarity.”

Based on this analysis, it seems logical that a biosimilar manufacturing process should be patentable in its own right. This could pose a defense against other biosimilar developers. However, with so much patent litigation between originator and biosimilar manufacturers, could this add even more to lawsuits in defense of IP?

A Reason to Worry About the Nascent Biosimilar Industry

I’m sensing a good deal of cynicism among payers today. Maybe the current specialty pharmacy trend makes them doubt that, in reality, biosimilars will not bend the cost curve significantly. After all, with multiple, frequent price increases in the originator drugs, what will an initial 15% discount on a new biosimilar actually accomplish (e.g., by Inflectra® or Zarxio®), other than turning back the clock 12 months on pricing?

The consensus seems to be, at least with multiple stakeholders attending the Biosimilar Multistakeholder Summit in San Diego on December 1–2, 2016, that the biosimilar industry could be stunted or certainly harmed by the nature of the products’ value proposition and by the economics of payers themselves.

Consider the following: the principal benefit of biosimilars relates to their value—specifically, an economic value. Since they are essentially inexact copies of the originators, biosimilars are not expected to have clinical or safety advantages over the originators. In fact, comparative clinical investigations of biosimilars are designed only to prove noninferiority, not superiority in any way to the originator. That restricts their possible proof of value to lower cost (and thus, hopefully, improved patient access—but this is also not certain).

Under this mindset, if the biosimilar is introduced at a minor discount to the current net price of the originator, the health plan, insurer, or pharmacy benefit manager could simply go back to the originator’s manufacturer and say, “Beat this price if you want to maintain your marketshare.” And the manufacturer can, because the vast majority of all revenues at this juncture of the lifecycle are profit. Their initial investment in clinical product development being paid off in the first years after approval, and their early more-expensive efforts resulting in today’s status with extensive marketshare. In addition, their most recent, frequent price increases have created even more room to negotiate their prices or rebates.

In this case, the biosimilar manufacturer is pressured to offer more aggressive contracts, at a time soon after they are trying to recoup the costs of product development ($100 million to $600 million) and the inevitable patent litigation. According to participants at the meeting, even purchasing samples of the originator product from its manufacturer for analytical and comparability studies required by the US Food and Drug Administration (FDA) could amount to sums more associated with “ransom.”

In the other case, assume that at least 2 biosimilars for the same originator product have entered the market. The net pricing and rebates should drive sales revenues down much faster. With adalimumab, it would not be surprising to see 3 FDA-approved biosimilars entering the market the day after the fight over Humira® patents are settled. Assuming no collusion is involved, free competition should cut the pricing of these agents by far more than 30%. For smaller players, this could be extremely difficult to bear, considering the patent fight has resulted in the loss of hundreds of millions of dollars in lost revenue by the need to delay launch. As an additional note, the extended delays in launch resulting from ongoing patent litigation may render the controversial 180-day notification period moot.

One possible scenario discussed by the participants was the possible sale of their low-profit biosimilar business to foreign companies with the least-expensive manufacturing costs (e.g., India, China, etc) and the exit of North American and Western European drug makers. Another more likely scenario is the short-circuiting of the market, as established companies like Shire (acquirer of Baxalta) or very small biotech firms like Epirus realize that the biosimilar business has far less profit potential than they thought and decide to leave the arena (or are forced financially to do so).

Biosimilars can, of course, improve patient access, right? Well maybe not. We’ll examine that issue in our next post.

Patient Cost Sharing for Biosimilars in Part D Coverage Gap Likely to Cause Headaches

The Medicare part D coverage gap is seemingly an enigma for biosimilar manufacturers. Legislative language that seeks to close the coverage gap by 2020 incorporates a huge slip—pairing biosimilars with generics in how the Medicare eligible’s cost share is lowered over time.

An analysis by the health care consultant Avalere shows that Medicare patients will pay much more for the biosimilar drug in the coverage gap than for the innovator product. This may well result in a parallel prescribing situation: innovator products for the Medicare-eligible populations and biosimilars for everyone else.

The problem lies in the structure of the part D program, particularly, the coverage gap, authors of the Avalere paper point out.Image result for donut hole

The Affordable Care Act seeks to reduce and eventually eliminate the coverage gap (or “donut hole”). For this year, the coverage gap spans $3,310 to $4,860 in drug spending. After exiting the coverage gap, beneficiaries pay 5% of total costs. This seems straightforward, but complicating the matter is a provision to help close the coverage gap by 2020. That refers to the Coverage Gap Discount Program, in which drug makers must provide a 50% discount on brand-name products dispensed to Medicare beneficiaries who are presently in the coverage gap. In 2016, the health plan pays 5% of the costs in the gap (this increases through 2020 to 25%), and the beneficiary pays 45% (which decreases by 2020 to 25%). This manufacturer discount applies only to brands, not to generic and biosimilar drugs.

Avalere’s model assumes that the reference product at issue costs $30,000, and the biosimilar is discounted by 25%, which reflects the average discount seen in Europe. If patients A and B take the reference product and biosimilar, respectively, throughout the year, and this is the only agent he or she is prescribed, payments for either drug product will take the patient through the coverage gap and beyond. However, patient B will pay $1,536 (or 39%) more over the course of the year than his or her counterpart, because of the manufacturer’s required discounts on the branded product in the coverage gap.

There are 2 possible policy or regulatory options to correct the situation: (1) require the biosimilar manufacturer to provide coverage gap discounts as well by changing the legislative language or (2) add flexibility for part D providers to add biosimilar tiers, where biosimilars can be offered at substantially lower cost sharing compared with branded products.

Just after the meeting took place, the Medicare Payment Advisory Commission (MedPAC) met and discussed this issue, favoring the first option. MedPAC is the key resource Congress relies on for advice on Medicare financing and reimbursement issues, so there is hope that their recommendation will prompt a legislative fix.

At the Fall meeting of the Academy of Managed Care Pharmacy, this was a looming concern of several pharmacy and medical executives with whom I spoke. They think that, with rapid Congressional action, parallel prescribing is a possibility, to prevent unnecessary patient pain on reaching coverage gap.

Agreement Reached on Biosimilar Industry User Fees

In early February, Center for Drug Evaluation and Research Director Janet Woodcock testified to Congress that staffing at FDA needed to expand considerably to handle the the workload anticipated from the evaluation of biosimilar drug applications. The resources to pay for roughly double the FTEs from 2014 to 2015 should be derived from the Biosimilar User Fee Act (BsUFA), enacted in 2012. Under the law, FDA would collect its fees from industry but it would be expected to meet performance benchmarks, similar to the Prescription Drug User Fee Act for other drugs.

However, an agreement on what those actual fees should be has been in negotiation between the administration and industry trade associations since December 2015. Involved in the negotiations are Biotechnology Innovation Organization (BIO), Generic Pharmaceutical Association (GPhA) and the Biosimilars Forum, and Pharmaceutical Research and Manufacturers of America (PhRMA).Insulin Syringes

After 14 meetings between the sides, they finally reached agreement on a draft commitment letter at the end of June. This agreement will now be taken to the organizations’ members for their approval and published in the Federal Register for public comment.

The BsUFA is a 5-year agreement, and details of the draft are not yet available. Interestingly, one item at issue is whether FDA should have a separate group whose only function is to review biosimilar drugs.

For more information on these discussions, see the excellent article by Michael Mezher of the Regulatory Affairs Professional Society at http://www.raps.org/Regulatory-Focus/News/2016/06/27/25211/Biosimilar-User-Fees-FDA-and-Industry-Reach-Agreement/.