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While five biosimilar products have already been approved in Europe, the US still lacks the legal basis for the approval of biosimilars by the FDA. Although the rising costs of healthcare and expenditure on biologics have spurred US lawmakers into action, difficulties in drafting legislation that is acceptable to both innovators and biosimilar manufacturers is causing long delays.
Cheap biological drugs needed
The expiry of patents on the first biologic drugs has brought with it biosimilars. Biosimilars are generic versions of biotechnology products. However, as biotechnology-derived products (biologics) are made in living organisms and manufacturing processes are kept as a trade secret, generic versions of biologics cannot be identical to their reference products. Therefore, they are not true generics and need to be treated differently from generics of small molecule drugs.
In 2004, the European Commission adopted a new directive laying out the legal ground for the approval of biosimilars. With five biosimilars approved to date, Europe is clearly leading the way in biosimilars. In the US, political issues and the tug of war between innovators and generic companies have delayed the formulation of legislation regarding regulatory approval of biosimilars, and the FDA has been reluctant to issue any guidance. However, increasing expenditure on biologics (both by Medicare and private insurers) has spurred lawmakers into action. In the first half of 2007, three different bills have been proposed formulating a statutory pathway for the approval of biosimilars of biologics approved under the Biologic License Application (BLA).
Legislative progress hindered
The Access to Life-Saving Medicine Act was introduced into Congress by Representative Waxman and into Senate by Senator Schumer in February, and the Patent Protection and Innovative Biologic Medicine Act was introduced in Congress in April by Representative Inslee. Neither bill made any progress, as the Access to Life-Saving Medicine Act is heavily pro-biosimilar while the Patent Protection and Innovative Biologic Medicine Act is heavily pro-innovator and does not provide any incentives for the biosimilar producer.
In June 2007, a compromise was reached by both Republican and Democrat Senators and the Biologics Price Protection and Innovation Act was cleared by Senate on June 27. It proposes 12 years of market exclusivity for the patent holders but also one year of exclusivity to the first biosimilar to be approved as interchangeable with the reference product.
Clearly, this legislation is much more detailed than the EC Directive, as it addresses issues such as market exclusivity and patent litigation. However, it proposes that liberty is given to the FDA as to the requirements for approval of biosimilars, and the FDA is expected to be led by EMEA's approach. Should this bill become law in the US, it will have several important ramifications on the potential for commercial success of biosimilars. The one-year exclusivity the first biosimilar producer can potentially receive will make this market the most lucrative target.
However, this bill also sets the scene for a highly litigious environment as seen with generics of small molecule drugs. The high legal costs and the necessity for expertise in patent litigation will most certainly deter smaller players from entering this market and may result in lower price discounts offered for biosimilars. Furthermore, there is a lack of clarity on issues such as naming of biosimilars and the proposed difference between similar and interchangeable biosimilars. The FDA does not consider the science advanced enough to be able to determine whether any two biological products can be deemed interchangeable.
Uncertain future
Approval of biosimilars is a highly politically charged issue in the US, and the final outcome of the legislative discussion will greatly depend on the power the biosimilar and innovative pharmaceutical industries have over lawmakers. Despite proposing a middle-of-the-road solution trying to balance the interests of the public, innovators and generics companies, this bill has been criticized by all sides. Data exclusivity and interchangeability are proving to be the biggest obstacles to wide acceptance of the proposed legislation. The innovators argue that 12 years of market exclusivity are not sufficient and that 14 years would be more appropriate to achieve the necessary return on investment to support future innovation, while the generics industry finds 12 years of exclusivity excessive.
Furthermore, they claim that a loophole in the wording of the legislation would allow the innovators to gain further 12-year exclusivity periods through minor improvements of the product, resulting in 'evergreening'. However, pro-innovator lawmakers are not willing to reconsider their position. The innovative pharmaceutical companies have enjoyed the lack of generics competition for biologics for many years and are unlikely to relinquish it so easily. They have a great deal of power in both Houses but the Democrat majority is turning the tide against them.
The pro-biosimilar push to pass this bill hinged on the success of the lawmakers in their efforts to pass this bill as a part of the 'must pass' Prescription Drug User Fee Act (PDUFA) reauthorization bill, otherwise known as the FDA Revitalization Act (FDARA). The Senate version of FDARA contained a placeholder for the Biologics Price Competition and Innovation Act, the Congress version did not. FDARA had to be approved before September 21, 2007 in order to ensure the FDA was not forced to lay off a great number of its staff. No legislation on biosimilars was included in the approved FDARA.
The FDA commissioner Dr Andrew von Eschenbach stated that the biosimilars issue needs thorough consideration. The bill now remains to be considered as a stand-alone bill. But the lack of consensus in Congress means it might face even more difficulties and could ruin the hopes of many lawmakers that biosimilars approval legislation would be passed before the end of 2007. This bill is also losing support from the generics industry as the pro-biosimilar faction is pushing for the 12-year exclusivity to be reduced. The generics industry wants to see legislation allowing approval of biosimilars passed, but not before they are satisfied that sufficient incentives are given to biosimilars manufacturers. The prospect of a Democrat President gives them hope that an agreement incorporating better incentives for biosimilar manufacturers could be reached.
Furthermore, no major healthcare bills are planned for 2008 and the biosimilars bill may lack the vehicle that could add to the momentum for approval. Therefore, the law governing approval of biosimilars could possibly be postponed until after the 2008 Presidential elections. In any case, the rising pressure to contain healthcare costs, the prevailing Democrat control of both houses and the approvals of biosimilars in Europe will ensure that biosimilars become a reality in the US before long.
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