Pfizer Sues J&J on Anticompetitive Practices on Infliximab in the US

In late May, Merck was named in a UK lawsuit by Pfizer, which has been trying to expand its market for Inflectra®. Merck, which markets Remicade® (infliximab) in the EU, was accused of anticompetitive practices. On September 20, Pfizer brought a similar complaint against Johnson & Johnson (the parent of Janssen and the manufacturer of Remicade®) in the US, according to a lawsuit filed in US District Court (Eastern District of Pennsylvania).

Whereas Pfizer has made some inroads to the US market, since its launch at the end of 2016, Janssen has done a good job of blocking and tackling—playing the contracting game. The lawsuit claims that Janssen has withheld or threatened to withhold rebates if payers do not keep Remicade in an exclusive preferred position. Pfizer may have invited such action to an extent by entering the market at a 15% discount to the originator’s wholesale acquisition cost (WAC). Many experts expected this type of approach by Janssen. Payers were candid in their reluctance to switch to the biosimilar, especially if Janssen would counter the modest discount with rebates that narrow or eliminate the difference in net costs. In other words, a greater discounted price may have opened the market to Pfizer more rapidly, because Janssen may have been less aggressive in its efforts to match the net cost.

In an August earnings call, Pfizer indicated that although Medicare is covering Inflectra, its overall US marketshare was only 2.3%.

According to the press release announcing Pfizer’s lawsuit, “[Johnson & Johnson’s] exclusionary contracts and other anticompetitive practices have denied U.S. patients access to therapeutic options and undermined the benefits of robust price competition in the innovative and growing biologics marketplace for patients… J&J’s systematic efforts to maintain its monopoly in connection with Remicade® (infliximab) by inappropriately excluding biosimilar competitors violates federal antitrust laws and undermines the principal goals of the federal Biologics Price Competition and Innovation Act (BPCIA).”

This may be the first time that routine contracting efforts to defend against generic competition and maintain a monopoly within a drug category have been cited as a violation of antitrust legislation. What may have amplified Pfizer’s ire was its assertion that several insurers originally placed Inflectra at parity coverage with Remicade. These payers changed their position after “J&J threatened to withhold significant rebates unless insurers agreed to effectively block coverage for Inflectra and other infliximab biosimilars.”

Furthermore, the suit claims that clinicians and hospitals were reluctant to purchase Inflectra, with the belief that insurers may not reimburse them for its use. These providers may have been further influenced by an insistence by J&J on their signing contracts that dictated significant discounts on Remicade only if they would not purchase Remicade or other infliximab biosimilars.

At this time, Inflectra is priced at an average 19% discount to Remicade’s wholesale acquisition cost (WAC). Pfizer says that it is offering additional discounts on top of this to persuade payers into covering their biosimilar. Merck’s launch of its own biosimilar infliximab (Renflexis®) comes with a price tag of 35% below that of Remicade, which adds tremendous pressure on payers to reconsider their positions. This also signals the early closing of Pfizer’s window of opportunity as the first biosimilar entrant, on which it gambled an at-risk launch.

Biosimilars and Generics: Are the Drug Companies Using Similar Tactics?

The rebate game seems to be overrunning patient affordability and common sense, according to an article in the New York Times. This has been a problem for biosimilars and other high-cost specialty brands, but now it seems to be extending to generics as well, with patients on the losing end of the deal.

Pharmaceutical manufacturers offer rebates to health plans and pharmacy benefit managerLee 2s to offset a drug’s higher wholesale acquisition costs (WAC) and entice these payers to cover their drug, often at preferred tiers. The result is that new products can be locked out of the formulary or placed on nonpreferred tiers, because the contract requires exclusivity. This has been called the “rebate trap.” The rebate trap was never really a problem for generics in the past, because they were far less expensive than the brands, and with generics made by several companies, the price and rebating competition was too fierce for branded manufacturers to compete.

The New York Times article cited the case of Adderall XR for people with attention deficit hyperactivity disorder (ADHD). The drug has been available as a generic for some time. However, Adderall’s manufacturer, Shire Laboratories, has aggressively rebated their product to compete with the generic, providing a net cost to the health plans and PBMs that is less than the generic. Shire wants to retain some revenues on their products rather than leave the battle to the generic manufacturers. There is nothing wrong with that, and it results in lower net costs—but not for many patients.

First, if the plan has a substantial copayment difference for generics and preferred products, this can mean the average patient will have to pay the higher amount (unless the plan makes adjustments and allows the patient to purchase the brand at the generic copayment level). Second, the rising number of people with high deductible plans (including pharmacy deductibles) will have to pay the higher full price of the branded drug than the generic (according to the Times’ sources, this is about $50/mo). Thus, until they have paid their deductible, these patients are disadvantaged by this rebate arrangement. Consider also that the rebate savings to the payer are rarely, if ever, passed on to the patient.

Here’s the kicker: The pharmacist may be required by the plan to go back to the doctor to ask that they redo their prescription, by checking off the box that requires it be dispensed as written (for the branded product only). This is after generations of pharmacists have been trained on automatic substitution of generics for brands and patients have been persuaded to accept it.

Although the problem is very evident with ADHD, the lack of multisource generics means less competition for other drug classes as well. This is not limited to one payer either. The article mentioned Humana specifically, but it is likely that other payers (national and regional) are also party to these contracts.

This scenario can also hurt competition for biosimilars. Before the entry of Merck’s Renflexis®, Janssen had only contended in the infliximab marketplace with Pfizer’s Inflectra®. Janssen has been willing to cut deals with payers to keep Inflectra off the formulary. However, this could also affect some patients, even though infliximab, an infusible product given in the doctor’s office is usually paid through the medical not pharmacy benefit. If these drugs were covered with a fixed copayment (e.g., $100), patients would not be harmed economically by using any particular product. However, if the patient pays a fixed coinsurance (e.g., 10%), that person may then pay more for the originator drug, because the co-insurance is often calculated according to the WAC (which does not include the rebate) instead of the average sales price ASP (which does).

The problem of rebate traps and the lack of transparency of the system is not new. It may be a different situation if the manufacturer–payer transaction was based solely on simple WAC discounts. There is simply too much rebate money up for grabs for plans and PBMs that the system can be changed easily.

Inflectra Sales Lagging for Pfizer in Second Quarter

Pfizer announced some disappointing results for the second quarter in its quest to advance a foothold in the biosimilar market. The second-quarter results hinted at more difficulties to come for the Inflectra® brand, with the most recent launch of Merck’s Renflexis®.

Amid somewhat positive signs with group purchasing organizations, which supply hospitals and health systems, commercial health plans have lagged in covering the product. On the earnings call, John Young, Pfizer’s Group President for Pfizer Essential Health, said that in the second quarter, “our Inflectra share was 2.3% of the overall infliximab volume,” including both patients who had not used infliximab before and those who switched to Inflectra. The total US revenue for the quarter was only $23 million. In Europe, sales were $94 million—better but not yet gaining the penetration of other biosimilars in the EU.

The 15% discounting strategy may have limited uptake by US health plans and insurers to date, but Janssen’s actions to defend marketshare have no doubt been effective. Pfizer’s most recent price drop, coinciding roughly with the launch of Merck’s (and Samsung Bioepis’) infliximab biosimilar, will likely muddy this picture in the near term.

Overall, Pfizer’s revenue decreased by 2% (to $12.9 billion) compared with the second quarter of 2016. This is not terrible, considering that its European revenues from Enbrel® (etanercept) continue to be under siege from biosimilars, dropping 20% compared with Q2 2016.

Pfizer’s pipeline remains robust, however, with 8 biosimilars in the works, including 4 in phase 3 trials. Its epoetin alfa product Retacrit® had been rejected by the Food and Drug Administration (FDA) because of potential manufacturing concerns. The second-quarter financial report did not update its progress in discussions with FDA.

Merck Sharply Discounts Its Infliximab Biosimilar

In news that will likely be cheered by payers, Renflexis™, Merck and Samsung Bioepis’ entry into the infliximab marketplace, will launch at a significant discount, according to Merck.

Approved by the US Food and Drug Administration on April 21, 2017, Merck’s second-to-market biosimilar will be available immediately. What was truly noteworthy was the pricing: $753.39 per dose, which represents a 35% savings over the current list price of the originator product Remicade® (Janssen Biotech), and about 13% less than the list price of Inflectra®, the first biosimilar infliximab to be launched.

It appears that Merck is gambling that this pricing will help jumpstart marketshare, and perhaps gain serious consideration to payer coverage. It is, in fact, the first biosimilar of the 3 now available that has broken through the 15% discount (relative to the originator product) floor.

Some industry observers believe that this could be the start of a “race to the bottom,” similar to that seen in the multisource generics industry, but the biologics manufacturers may be more reluctant to engage in pricing wars that could result in 70% discounts. The key question will be how Janssen and Pfizer reacts to the introduction of infliximab-abda. According to our sources, Janssen has matched the net price of Inflectra by increasing its rebates to payer customers, retaining its preferred positioning.  [ERRATUM (7/31): In the original published version of the article, we indicated that Pfizer had preferred positioning deals for Inflectra with UnitedHealthCare and CVS Health. This is incorrect. UHC and CVS have given preferred positioning to Zarxio and Basaglar, not at present to Inflectra. We regret this error and hope it does not cause our readers any inconvenience.]

In a quirk that can only be imagined in the biosimilar arena, Merck owns the marketing rights for Janssen’s Remicade in Europe, so it is dedicated to defending an originator brand overseas while cutting this brand’s marketshare in US.

Our database on biosimilar filings indicates that no other infliximab 351(k) applications have been submitted (at least publicly announced), so it is reasonable to expect that no new market entrants will change the competitive dynamic before 2019.

UPDATE (7/26): An article in Bio-Pharm Reporter by Dan Stanton quoted Pfizer executives who say that Inflectra’s allowable ASP level to $753.40–the pricing level of Renflexis, essentially equaling the 35% discount relative to Remicade. However, the WAC price of Inflectra currently stands at 19% (not 15%) below that of Remicade.

 

Patent Litigation Delays Release of Second Follow-on Insulin Glargine

The US Food and Drug Administration gave its approval on July 20 to Merck’s version of insulin glargine. Although not technically a biosimilar, it is suffering a fate like that of multiple biosimilars—approved but in launch limbo owing to patent litigation issues.

Merck applied for approval of its insulin product under the 505(b)(2) pathway (not the 351[k] biosimilar pathway), which essentially makes it another biologic brand, not a biosimilar. The first insulin glargine follow-on product, Basaglar® (Lilly), utilized the same abbreviated pathway to approval; however, Lilly agreed to a patent settlement with the originator manufacturer, Sanofi, allowing Lilly to launch Basaglar in December 2016. Merck performed separate clinical studies to prove its product’s noninferiority to Lantus®, as well as relying on Lantus data in its application.Image result for Lusduna

Under Hatch-Waxman Act rules, Merck will have to either wait for the final positive ruling by the US District Court in Delaware on the patent litigation or 30 months after the initial filing of Sanofi’s lawsuit (in September 2016), whichever is earlier. This could potentially result in a launch in 2019, providing a compelling incentive for Merck to come to a licensing agreement with Sanofi.

In another connection with biosimilars, Merck developed the drug along with its biosimilar partner Samsung Bioepis.

Whenever the launch takes place, Merck will brand their insulin glargine drug Lusduna Nexvue, which will be available as a prefilled syringe.

Savvy Move or Illegal Anticompetitive Action?

Merck, which markets Remicade® in Europe, may have stepped over an anticompetitive line when Pfizer’s Inflectra® biosimilar was first made available, according to the U.K.’s Competition and Markets Authority. In the US, however, this activity would be considered routine. Certainly, nothing prevents this action and it would be fully expected, in terms of net costs.

According the UK’s Competition and Markets Authority, Merck took unfair advantage of “dominant position through a discount scheme for Remicade that was likely to restrict competition” from the biosimilar infliximab when it was launched in 2015. In this scheme, the drugmaker “unfairly” discounted the product to customers who remained loyal to the product.

Is this really different than offering rebates for preferred positioning? Anecdotal reports in the US indicate that Janssen Biotech, which markets the originator agent in North America, has taken similar action with rebates against Inflectra® (infliximab-dyyb). In fact, Amgen did the same to ward off competition from Zarxio® (filgrastim-sndz). In their cases, they did not discount the wholesale acquisition cost (WAC) to meet the biosimilars’ but simply increased the rebate to yield an equivalent net cost.

This action may be more attractive because it may have fewer implications for “best pricing” discounts required by Medicaid and other payers. Certainly, the maker of the originator product can cut their WAC costs if they desired; at the biosimilars’ modest 15% discounts, this would simply roll pricing back to 2015 levels.

In other news…A case report has been published from New York City, in which a patient switching from the reference infliximab agent to the biosimilar version experienced papulosquamous lesions a few days after the change in medication. Skin biopsy revealed the existence of a lichenoid eruption. This adverse event has not been cited previously in the literature with the reference agent Inflectra®. The direct cause of the drug reaction is unknown but further monitoring is warranted, according to the authors.

On June 2, the European Medicines Agency accepted Sandoz’s application for biosimilar infliximab and adalimumab. Sandoz has not filed a 351(k) application with the US Food and Drug Administration for either product.

FDA Approves Second Infliximab Biosimilar

On April 21, 2017, the US Food and Drug Administration (FDA) gave its nod to a new biosimilar version of infliximab, and will compete against the originator product Remicade®. Manufactured by Samsung Bioepis, it will be marketed by Merck in the US as Renflexis™.

The new agent, the first approved from Samsung Bioepis, will have to elbow its way to marketshare alongside Pfizer’s Inflectra®, which was launched late in 2016. The nonproprietary name of the new agent is infliximab-abda, in keeping with FDA’s 4-letter suffix policy.

Renflexis was approved for the full slate of indications of the other infliximab agents, including Crohn’s disease, ulcerative colitis, rheumatoid arthritis, psoriasis, psoriatic arthritis, and ankylosing spondylitis.

This biosimilar approval was the first by FDA without the formal meeting of its advisory committees. The agency had first indicated that it would not require advisory committee meetings for biosimilar products in September 2016, when an FDA official   stated that “the first biosimilar for each reference product will have an advisory committee, but there will not be hearings for any others ‘unless there’s a specific issue to discuss.’”

This version of infliximab was approved in 2016 by the European Medicines Agency as Flixabi, and this agent is marketed by Biogen. Biogen is a partner with Samsung in Samsung Bioepis.

The manufacturing and licensing partners have indicated that they intend to market Renflexis at the end of its 180-day notification period, in November. However, assuming patient litigation is ongoing, the launch may have to be at-risk, as was Pfizer’s launch of Inflectra, to avoid additional delays in commercialization.

Insulin Glargine Biosimilars: Don’t Forget to Consider the Insulin Delivery Device

Competition among insulin makers is intense. In most cases, manufacturers realize that various forms of insulin are well matched in clinical efficacy and safety by competing insulin makers. The only real differentiator among the products may be how the insulin is delivered. In fact, these manufacturers spend a tremendous amount of design research, engineering, testing, and market research resources in producing a delivery device that patients will find relatively comfortable, easy to use, and portable (see example). It brings to mind an executive for a major insulin producer who I had repeatedly seen stabbing himself with a pen-type injection device (without insulin) to demonstrate to others that the delivery system and the narrow-gauge needle was about as pain-free as possible to engineer.

This raises the question of whether a patient with diabetes mellitus whose glycemic levels are under control are actually loyal to the insulin brand or its delivery system. In reality, however, health plans and insurers pay far more attention to the insulin formulation than to the insulin delivery device in making coverage decisinsulin-pensions. In some cases, they may cover only certain types of delivery systems, yet this seems to contradict the precepts of value-based benefits (providing best access to interventions that are proven to improve diabetes control and/or adherence). Health plans and insurers may instead focus on other aspects of the insulin itself, such as whether it has a relatively lower risk of hypoglycemic events.

A few years ago, the question about which basal insulin to cover was straightforward, usually amounting to pricing, rebates, and existing marketshare (e.g., how difficult it might be to switch the majority of patients who were taking Lantus® to Levemir®). This was no different than other competitive drug categories. The introduction of the first follow-on (or let’s face it, biosimilar) insulin glargine (Basaglar®) has added new impetus to this discussion. Lilly, the company licensing Basaglar, won a couple of big coverage victories for 2017 over Sanofi’s Lantus, including CVS Health and UnitedHealthcare. The partnership of Merck and Samsung Bioepis hope to receive a positive FDA decision on their insulin glargine biosimilar in the third quarter of this year. Lilly, a veteran of the insulin wars, promotes the use of its existing KwikPen® system for Basaglar. Should Merck get a positive decision, it will market another pen-delivery system. (For the record, Merck is not a complete stranger to the insulin market. It does have an insulin product marketed to the veterinary sector, with its own pen-delivery system [VetPen®]). This raises the question of whether the biosimilar must be paired with its own, perhaps prefilled pen-delivery device and whether it results in the same or similar patient satisfaction ratings. This could have implications for adherence and thus glycemic control.

The US continues to lag behind Europe in terms of pen-injector use (more than two-thirds of patients in Europe use pen-based systems, whereas only 15% use pens in the US), where needles and syringes still dominate. The reasons for this are likely related to reimbursement or patient cost sharing. For those using needles and syringes, the payer’s preference for insulin glargine is more straightforward.

However, as the patents of this and other insulin analog molecules expire, it is reasonable to expect the availability of biosimilar or follow-on copies to increase, making the drug-delivery system pairing even more important.