As Expected: the Debate Over Follow-on Biologics Legislation Hinges on Data Exclusivity
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The rancorous debate over a regulatory approval pathway for follow-on biologics (aka biosimilars) continues to rage on in the US Congress. Despite recommendations from the Federal Trade Commission that a data exclusivity period for follow-on biologics isn't necessary and a seven year compromise offered by President Obama,the pharmaceutical and biotechnology lobbies continue to press Congress for a 12 to 14 year period of data exclusivity in any legislation for follow-on biologics.
In a well-balanced article in today’s New York Times, Andrew Pollack diligently put forth the arguments against follow-on biologics that innovator companies have been espousing for the past decade. These include: complexity of the manufacturing processes for biotechnology drugs, potential tolerability and safety issues and perhaps, most importantly, an anticipated loss of profits that innovator companies claim “would stifle American innovation” in the life sciences. Until recently, these arguments were successfully used to hinder any substantive debates on follow-on biologics legislation. However, it has become increasingly apparent that the American healthcare system can no longer sustain the high costs and lack of access to potentially life-saving branded biotechnology drugs. For those of you who may not know, a regulatory approval pathway for biosimilars already exists in Europe and it has been used to approve eight products since its inception in 2004. Biosimilars are also available in Australia and have been sold for many years in less-regulated markets including India, China and elsewhere. Japan recently approved legislation for approval of biosimilars and Canada is close to finalizing its regulatory guidelines for these products.
American innovator companies recognizing the inevitability of follow-on biologics, no longer oppose legislation for approval of these molecules. Instead, these companies and their supporters have tenaciously latched on to the data exclusivity argument, presumably in a last ditch effort to preserve their profits from multibillion dollar biotechnology drug franchises that may be lost when follow-on biologics legislation is enacted. And, for the most part, their uncompromising insistence on an excessively long data exclusivity period appears to be taking hold with members of Congress. At last count, there were more Congressional sponsors of legislation favoring a 12 to 14 year data exclusivity period than there was for those who support a 5 year data exclusively period. The five year data exclusivity period was proposed by follow-on biologics proponents because it is identical to the period required for generic versions of small molecule drugs enacted in the Hatch Waxman Act.
I have been following the follow-on biologic debate for the past eight years and, to date, I know of no scientific claims or relevant safety concerns which argue that 12 to 14 years of data exclusivity is warranted for follow-on products. For example, no untoward safety or tolerability problems have been reported for any of the eight biosimilar products that were approved and sold in Europe for the past three years. Further, European healthcare agencies and physicians haven’t readily embraced biosimilars despite an almost 25%-30% reduction in price. The one exception is Germany (the largest generic market in Europe), where biosimilar versions of erythropoietin (Eprex) have captured 30% of the anemia market. This, in turn, has forced some innovator companies to lower prices on their branded products.
Based on the European experience, it is likely that follow-on biologics won’t catch on quickly in the US and it may take years for them to erode the market share garnered by innovator brands. Also, contrary to earlier assertions, it is becoming increasingly apparent that only large, well capitalized companies with sophisticated regulatory, marketing and distribution capabilities will be able to compete in the US follow-on biologics market. To that end, companies like Sandoz (Novartis) and Merck—one of the companies that originally opposed follow-on biologics legislation—will likely dominant the US follow-on biologics market.
Ironically, the biggest losers in the follow-on biologics debate will likely be the innovator companies—but not for the reasons they once cited to prevent regulatory approval of these molecules. By spending hundreds of millions of dollars lobbying against follow-on biologics legislation—rather than investing to develop their own lower cost, generic versions of blockbuster biotechnology products—innovator companies have unwittingly provided foreign follow-on biologics manufacturers with a competitive advantage when follow-on biologics are finally approved for sale in the US. Companies like Sandoz, Teva and several Indian biosimilar companies— with products already on the market in Europe, India and China—have been developing biosimilar molecules for the past fiver years or more. Their scientific and regulatory experiences with these products suggests that they will be poised to dominate the US market after legislation permitting approval and sale of follow-on biologics is finally completed. Surprisingly, Merck is the only major pharmaceutical company to publicly announce its intention to compete in the follow-on biologics market. The Merck announcement was made last fall—almost three years after Sandoz won European approval for Omnitrope, its first biosimilar product!
Until next time...
Good Luck and Good Job Hunting!!!!!!!!
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