5 September 2018

The most significant advances in medical treatments are being made with biological products. As biological medicines are significantly more expensive than traditional small molecule drugs, upward pressure is being placed on health spending. For example, in the United States, biological medicines accounted for 40% of all prescription drugs spending and 70% of the increase in healthcare spending in the five years to 2015.^[1]

The additional cost associated with biological medicines is largely due to the complexity of the products. Unlike small molecules that are chemically synthesised, biological medicines are usually complex proteins produced by living cells, such that differences may exist between different batches of the same biologic. Safety and effectiveness can also be affected by small changes in manufacturing, packaging and storage conditions.

A biosimilar is to a reference biologic as a generic is to an originator

The FDA defines a ‘biosimilar’ as a biological product that is highly similar to the reference biological product notwithstanding minor differences in clinically inactive components, and that has no clinically meaningful differences to the reference biologic in terms of safety, purity or potency. As is the case with generic versions of originator products, biosimilar products that are interchangeable with a reference biological product are usually sold for significantly less than the reference biologic.

As such, governments around the world are increasingly looking at ways to facilitate competition from biosimilars.

Regulation of biosimilar medicines in the United States

The United States Food and Drug Administration (FDA) is responsible for implementing laws that strike a balance between, on the one hand, driving medical innovation and rewarding investment in drug development, and on the other hand, enabling robust competition in the market for pharmaceuticals, including by supporting the introduction of low-cost generic and biosimilar alternatives to innovative products. The FDA recognises that the introduction of generics and biosimilars following expiry of data exclusivity and patent rights results in radical reduction in the cost of treatment for patients and funders (including insurance companies and governments).

Generic competition in the US that was facilitated by the 1984 Hatch Waxman Act resulted in USD 1 trillion in savings to the US health care system over a decade and generated USD 265 billion in savings in 2017.^[2] Currently, 90% of prescriptions in the US are filled with a generic product. However, it has been recognised by regulatory authorities around the world (including in Australia where the Therapeutic Goods Administration has followed the European lead) that the traditional regulatory regime for approving cheaper generic versions of originator pharmaceutical products is not adequate for regulatory assessment of biosimilar versions of reference biological medicines. This is due to the fact that biosimilars are not bioequivalent to the reference biologic in the way that a generic small molecule drug is bioequivalent to an innovator drug. The difficulty associated with biological medicines and regulatory assessment of their follow on biosimilars stems from the complexity of biological products.

In 2010, the US Biologics Price Competition and Innovation Act 2009 (Biologics Act) established an abbreviated pathway for the registration of biologics that was intended to strike the right balance between promoting innovation and rewarding investment in new therapies^[3] by providing a period of exclusivity for manufacturers of reference biologics (12 years from the date on which a reference product is first approved) while at the same time introducing a pathway that enabled the efficient launch of competitive biosimilar products in the same way the Hatch Waxman Act sought to establish a balance between investment in new small molecule drugs and generic competition.

The pathway introduced under the Biologics Act allows manufacturers of biosimilar products to rely on the established safety and effectiveness of a biological reference product to obtain approval for a biosimilar at a fraction of the cost associated with registration of a new biological product, if it can be shown that the biosimilar meets the requirements for approval as a ‘biosimilar’. That is, rather than needing to demonstrate safety and effectiveness by carrying out extensive studies and clinical trials, a manufacturer of a biosimilar need only demonstrate that the product is biosimilar to, or interchangeable with, the reference product. The sponsor must demonstrate that the biosimilar will produce the same clinical result as the reference product in any given patient and not represent a risk if a patient is switched between the biosimilar and the reference product. This usually requires clinical studies.

In the US, where biosimilarity is established, the biosimilar may be substituted for the reference product without the supervision of the doctor who prescribed the treatment.

11 biosimilar products have been approved in the US and it has been estimated biosimilar competition will reduce spending on biological products by $54 billion in the period 2017 to 2026.^[4]

‘Biosimilars Action Plan’

The Biosimilars Action Plan (Action Plan) which has just been released suggests that the FDA intends to focus on promoting the efficient introduction of cost–saving biosimilar products to compete with their more expensive reference biological medicines.

The Action Plan indicates that the FDA intends to:

modernise regulatory policies to make biosimilar product development and regulatory approval more efficient;
look to new ways of educating clinicians and funders of medical treatment (that is, public funders and insurance companies) about biosimilar products, the interchangeability of biosimilars with reference products and the regulatory process that is undertaken when biosimilar products are evaluated;
introduce new scientific “statistical tools” to enable better comparisons between a biosimilar and a reference product, with a view to reducing the need for clinical studies to demonstrate interchangeability;
develop new review templates to increase the efficiency and standardisation of regulatory review;
increase the availability of public information about the FDA’s evaluation processes for biosimilars so that sponsors better understand how the FDA will evaluate comparative clinical studies that are conducted to demonstrate biosimilarity;
introduce resources to assist with the development of biosimilars including by making models available to simulate pharmacokinetic and pharmacodynamic responses against clinical performance (to make drug development more efficient);
strengthen relationships with other regulatory authorities to increase efficiencies across jurisdictions and explore data sharing agreements that may provide more post marketing safety and efficacy information;
create an Office of Therapeutic Biologics and Biosimilars to coordinate activity and policy development;
provide additional clarity in relation to the FDA’s requirements for demonstrating interchangeability by way of further guidances (for the benefit of biosimilar product developers);
provide additional clarity and flexibility in relation to approaches to evaluating product structure and function to demonstrate biosimilarity, including by publishing revised draft guidance on the use of data analysis methods and statistical approaches; and
introduce a program to provide product-specific advice and assistance to manufacturers of biosimilars to assist with rapid development and regulatory approval of biosimilars.

The FDA has also indicated it intends to investigate whether sponsors of biosimilars are using regulatory requirements inappropriately to defer or preclude the approval and launch of competitive biosimilar products. The FDA has expressed an intention to reduce “gaming” of current regulatory requirements, particularly in relation to refusal to sell samples of biological products that are necessary to develop products that can be substituted for a more expensive reference product.

What does this mean for the future of biologic medicines?

US sales of biosimilar products are significantly lower than in Europe. 36 biosimilars have been approved in Europe where biosimilars penetrate as much as 30% of the market for the reference biologic and where in 2017, the market was valued at USD 2.5 billion, with expected growth to USD 4 billion by the end of 2018.^[5] In contrast, the US market is flat with only 3 of the 11 approved biosimilar products actively marketed (with the balance either waiting for patent expiry or tied up in patent disputes).^[6] Biosimilar market penetration rates are also much lower in the US (6% in the case of infliximab).

Substitution of biosimilars in Australia, where the European approach to regulatory approval of biosimilars has been largely adopted, is likely to more closely approximate the European experience than the US experience. However, as governments, including the Australian government, focus increasingly on reducing the cost of publicly funded medicines, it is likely that policies and plans that promote the efficient development and approval of biosimilar medicines will become increasingly prevalent and may follow the approach foreshadowed in the FDA’s Action Plan.

[2] 2018 Generic Drug Access & Savings Report, Association for Accessible Medicines

[3] Public Law 111-148, s7001(b)

[5] ‘Five things to know about biosimilars right now’, McKinsey & Company, July 2018

[6] ‘Five things to know about biosimilars right now’, McKinsey & Company, July 2018