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FDA issues key generic-drug guidelines

by Ben Fidler | Published February 13, 2012 at 9:16 AM

At long last, the Food and Drug Administration has released its draft guidelines for the approval process of biosimilars, or generic biologic drugs.

While no one disputes the significance of the development, observers and industry executives were divided on whether winning the distinction of interchangeability, which permits a biosimilar to be substituted for a branded product without involving a prescribing physician, will be a key factor in winning an edge in the burgeoning, multibillion-dollar market.

The guidelines, released Thursday, Feb. 9, highlight two things: Approval will likely require trials and evidence including in vitro analyses and preclincial animal data; and there will be a strong distinction between what is biosimilar and what is deemed interchangeable.

The FDA draft states that biosimilarity is achieved if the drug is "highly similar" to the reference product "notwithstanding minor differences in clinically inactive components" and doesn't have any "clinically meaningful differences" from the reference product.

The higher standard of interchangeability, or substitutability, meanwhile, is achieved if the drug demonstrates biosimilarity as well as evidence that the product will achieve the same clinical result as the reference product in any patient. Winning that distinction would appear to give a company a clear edge in the war for market share, because its product can be substituted for a branded biologic drug without involving the prescribing physician.

"The key thing folks are going to have to figure out is if there is going to be substitutability without the doctor's consent," said Morningstar Inc. healthcare analyst Damien Conover.

While that distinction will not necessarily enable a drugmaker to avoid all trials on its proposed biosimilar, it could speed the approval process, thus giving a company a better chance of obtaining some sort of market exclusivity, and cut into the prohibitive cost of bringing a generic biologic to market.

"The difference [between biosimilarity and substitutability] is, you're going to be able to launch a product with significantly less commercial expense," said Craig Wheeler, the president and CEO of Momenta Pharmaceuticals Inc., which is teaming with Baxter International Inc. to develop and commercialize biosimilars. "It will give you a chance to have more rapid penetration in the marketplace. It takes a long while to be able to penetrate these things if you don't have substitutability."

Not everyone feels that way, however. Mike Kamarck, president of Merck BioVentures, the biologics manufacturing division of Merck & Co., said that his company has "never had interchangeability as core to our strategy."

"We feel the products are hard enough to market and important enough to physicians and to patients that we will [simply] make the products and move them forward," he said. "As far as Merck is concerned, it's really irrelevant to our business model."

Interchangeability will be "quite difficult to demonstrate," Kamarck added.

Momenta-Baxter and Merck are just a few players in what will be a big-dollar battle between mostly big-name companies. It will take an estimated $150 million to $200 million to develop a biosimilar, compared to between $1 million and $2 million to launch a generic drug, according to a report from Morningstar, so creating and marketing one will take a large bankroll and significant scientific and manufacturing capabilities.

As such, it's no surprise that partnerships are forming all across the sector with the hope of getting in on the action and sharing the costs. Biogen Idec Inc. and Samsung Corp. announced Dec. 5 that they are investing $300 million to establish a joint venture to create biosimilars. Amgen Inc. and Watson Pharmaceuticals Inc. on Dec. 19 also formed a joint venture with the aim of developing biosimilar versions of several biologic cancer drugs. Momenta and Baxter announced their deal three days later. Several other large-cap drugmakers are preparing for the market with in-house divisions, including Merck, Novartis AG (through its generics arm, Sandoz) and Boehringer Ingelheim Corp.

The payoff could be massive. The market is currently small -- worth some $380 million, as biosimilars are only approved in Europe now. But it is expected to expand significantly, hitting between $2 billion and $3 billion in 2015 and potentially $20 billion by 2020.

Indeed, a number of key biologic drugs will see their patents expire by the end of the decade, among them cancer drugs Avastin, which produced $6.2 billion in sales in 2010 and whose patent expires in 2019. Others include Herceptin, which produced $5.2 billion in 2010 sales and faces a 2019 patent expiration, and rheumatoid arthritis treatments Humira, Enbrel and Remicade, which all produced more than $6 billion in 2010 sales and whose patents will expire in 2017, 2012 and 2018, respectively.

Conover said Roche Holding AG and Amgen have significant biologic exposure, with Amgen having the "less patent strength of the two." Roche counts both Avastin and Herceptin in its portfolio, while Amgen has anemia drugs Epogen and Aranesp and neutropenia (low white-blood-cell count due to cancer chemotherapy) treatments Neulasta and Neupogen. Patents for three of those four products, which brought in $9.9 billion in 2010, expire by 2015.

"It's going to be expensive, but there are going to be opportunities here," Wheeler said.

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