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Wednesday, 01/07/2015 3:51:17 PM

Wednesday, January 07, 2015 3:51:17 PM

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FT's take.

FDA paves way for biosimilar drug approval

David Crow in New YorkAuthor alerts

The US pharmaceuticals watchdog has published a bullish assessment of a copycat biotech drug, paving the way for it to approve its first ever “biosimilar” — a novel category of medicine that looks set to cut America’s ballooning healthcare costs.

Reviewers at the Food and Drug Administration said a generic version of Neupogen, which counters some of the harmful side effects of chemotherapy, was “highly similar” to the original drug and had “no clinically meaningful differences?.?.?.?in terms of safety, purity and potency”.

The FDA’s opinion of the medicine is a boost for its developer Sandoz, a generic drugmaker owned by Switzerland-based Novartis. Last year it applied for US approval of the drug, known as Zarzio, which seeks to copy the original medicine made by US biotech group Amgen.

Aaron Gal, an analyst at Bernstein, said the FDA’s opinion meant it was now likely that Zarzio would be approved at some point this year, making it the first ever generic version of a biological drug — or “biosimilar” — to be given the green light in the US.

In recent years pharma groups have invested huge sums in biological drugs, which are made using living cells, in part because they have been virtually immune to the threat from generic alternatives. They have tried to recoup the cost of developing the drugs by charging high prices, which have strained healthcare systems.

Although many of the patents on these biological drugs are set to expire soon, it had been impossible for generic copycat versions to win regulatory approval in the US, the world’s largest healthcare market. That started to change in 2009, when the Biologics Price Competition and Innovation Act was passed as part of the “Obamacare” reforms, bringing the US in line with Europe, where biosimilars have been allowed for a decade.

Analysts at Credit Suisse predict biologics will account for 36 per cent of worldwide spending on drugs in 2018, against 31 per cent last year and 24 per cent in 2008.

The dominance of these drugs is even more pronounced among the most popular medicines, such as Humira, AbbVie’s arthritis treatment, and Herceptin, the breast cancer drug made by Roche. Credit Suisse expects biologics to account for almost 80 per cent of spending on top 10 drugs this year.

US policy makers hope the introduction of a new wave of biosimilars will help bring down the country’s rising healthcare costs. Rand, a non-profit research organisation, predicts that biosimilars will reduce spending on biological drugs by $44bn over the next decade, resulting in big savings for patients and their healthcare providers.

The FDA’s new regulatory regime allows for biosimilar drugmakers to win quick approval by proving there are no clinical differences between their medicines and the ones they are trying to copy, meaning there is no need for them to to invest in lengthy and expensive trials. Sandoz is the first company to apply for approval using this pathway, making its version of Neupogen a closely watched test-case.

The FDA published its opinion on the generic version Neupogen in a report ahead of a meeting of its oncology advisory committee on Wednesday.

Amgen is trying to delay the approval of Sandoz’s drug in the courts and has filed a lawsuit claiming that Sandoz is not following the correct rules in seeking the go-ahead from the FDA. The US accounted for nearly 84 per cent of Neupogen’s $1.4bn in sales in 2013.

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