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Mari Edlin is a frequent contributor to Managed Healthcare Executive. She is based in Sonoma, California.
Generic drugs have certainly made their mark, but don't count on the same savings in the specialty market.
GENERIC DRUGS have certainly made their mark, saving money while still delivering quality. A regulatory pathway for follow-on biologics (FOBs), or biosimilars as they are also called, still has not been established.
What's challenging is that FOBs are not considered identical to their innovator drugs, and in the United States they require a different approval pathway than the FDA applies to generics. Biologic drugs are manufactured using living organisms and cannot be scientifically characterized in the same way as small-molecule chemical drugs. Biosimilars resemble their innovator products, but are not therapeutically interchangeable.
With a wider portfolio of products becoming available, the Congressional Budget Office estimates the United States could save $25 billion from the use of biosimilars over 10 years. The Federal Trade Commission predicts that the costs to obtain FDA approval, plus the substantial fixed costs to develop manufacturing capacity, will likely limit the number of competitors that make FOB products. These biologics can take 10 years to develop and cost between $100 million and $200 million, while small-molecule generic development typically takes three to five years and costs between $1 million and $5 million.
Brand-name drug manufacturers argue that without a sufficient period of patent protection for their intellectual property, they would have little incentive to invest in the costly development of biologics.
"We believe that companies should have sufficient time to benefit from their innovative products, but not have an indefinite monopoly," says Ameet Mallick, head of biopharmaceuticals for Sandoz, a Novartis company based in Holzkirchen, Germany. "But then there should be room for biosimilars, which will be more affordable and accessible. That's the balance we need for patients."
No wonder companies like Sandoz and other generic manufacturers are interested in grabbing part of this niche business. Sandoz already has three biosimilars approved in the European marketplace: Binocrit/epoetin alfa (reference product is Eprex/Erypo) for anemia; Zarzio/filgrastim (reference product is Neupogen) to stimulate white blood cell production; and Omnitrope/somatropin, a human growth hormone (reference product is Genotropin).
Omnitrope, available in Australia, Canada and Japan, is the first follow-on version in the United States for a previously approved recombinant biotech drug, receiving approval using the so-called 505(b)(2) pathway of the Hatch-Waxman Act. The pathway is a hybrid between a new drug application (NDA) and an abbreviated new drug application (ANDA), proposing a limited change to a previously approved product, but demonstrating the required safety and efficacy.