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Opening a path for biotech generics
Such drugs have been blocked by the lack of an approval system. Some lawmakers hope to change the regulations.
By Linda Loyd
Inquirer Staff Writer
Sept. 19, 2006
A debate has raged for years within the pharmaceutical industry, among generic-drug-makers, and on Capitol Hill about whether to allow lower-cost generic or "follow-on" versions of biotech drugs.
With some biologic drugs costing up to $100,000 a year for rare disorders, generics offer the promise of lower costs.
The stakes are huge: Biotech drug sales are expected to exceed $60 billion by 2010.
Now several developments in Washington could help to break the deadlock.
U.S. Rep. Henry A. Waxman (D., Calif.) plans to introduce legislation in the current session of Congress this fall to create a regulatory framework to approve "biosimilar," or generic biologic drugs.
Waxman is scheduled to speak today at that generic-drug-makers' fall policy meeting in Washington. In the past, Waxman has told the group, the Generic Pharmaceutical Association, that with the rapid spread and rise in prices of biologic medicines "it simply will not be possible for Congress to stand by and do nothing." A bipartisan effort will be needed to "pass meaningful reform."
U.S. Sen. Orrin Hatch (R., Utah) is working on similar draft legislation in the Senate to create a system for testing and approving generic biologic products, although a timetable has not been set, his office said.
In 1984, Hatch and Waxman wrote the law that created an approval system for generic forms of traditional pharmaceuticals.
Currently, no regulatory system exists in the United States to approve substitute versions of biotechnology drugs.
That's no small matter, because biotech drugs - also called biopharmaceuticals or biologics - are made using living materials, such as proteins and enzymes, rather than chemicals. They are sometimes infused or injected, unlike traditional pharmaceutical pills.
Since the first genetically engineered insulin came on the market in 1982, patents have expired on some biologic drugs. By 2010, analysts predict that more than $10 billion worth of biologic drugs will lose patent protection.
The Food and Drug Administration has been working since 1999 on guidelines for approving generic insulin to treat diabetes and human growth hormone, prescribed for growth deficiencies.
But in March, the agency announced it would not release those guidelines. Instead it said it eventually would issue broader guidance applicable to all generic biologic products.
Skeptics of biogenerics, including the Biotechnology Industry Organization, say biologics, which are often genetically engineered and grown in living cell cultures, are extremely difficult to replicate exactly, and no two protein cultures are identical.
Jim Greenwood, president of the national BIO trade group and a former Bucks County congressman, plans to begin visiting members of Congress this week to explain the complexities of biotech drugs compared to traditional small-molecule pharmaceuticals.
Greenwood said he expected Waxman to "drop a bill before this Congress is over. One way or another, we are a month, or two months, or six months away from this being a real issue in Congress."
Advocates of generic biologics agree they are more complex and expensive to make, but say they are already being manufactured and sold in other countries. Europe has regulatory guidelines for allowing generic biologics.
Bruce Downey, chief executive of Barr Pharmaceuticals Inc. and chairman of the Generic Pharmaceutical Association board, said, "We want to eliminate the perpetual nature of the monopoly. As it stands now, patents aren't the impediment. The impediment is the regulatory impasse."
Barr, the No. 3 maker of generic drugs, has made a $2.5 billion bid for a Croatian generic-drug-maker, Pliva, to get access to its biogenerics drug line, including Epogen, Amgen's blockbuster anemia drug.
Teva Pharmaceutical Industries Ltd., the world's largest maker of generic drugs, with North American headquarters in North Wales, outside Philadelphia, makes and sells human growth hormone through its Sicor subsidiary, in Lithuania and Mexico, said analyst Andrew Forman at W.R. Hambrecht & Co.
"Of course, they can make" these drugs, said Forman. "Is it hard, difficult, expensive? Yes. Are there going to be 20 different generic companies making generic Epogen? No. There will be two, or three, or four, and the prices will come down eventually between 50 and 80 percent."
The cost savings for biologics will not be as high as traditional drugs because generic firms will have to do some clinical testing, and the manufacturing is more complicated, analysts said. Sandoz International's Omnitrope was offered in Germany in April about 20 percent cheaper than Pfizer Inc.'s branded human growth hormone, Genotropin, they said.
In May, the FDA approved Omnitrope, made by Sandoz, the generic subsidiary of Novartis AG. The agency said, however, the approval did not set a precedent for other biotech medicines, and Congress would need to pass legislation to give the agency such authority.
Omnitrope was approved in the United States only as a "follow-on" protein product, rather than a generic substitute. Pharmacists cannot directly substitute Omnitrope; doctors must write Omnitrope prescriptions.
Since August, governors of seven states - Kansas, Minnesota, Vermont, Wisconsin, New Mexico, Virginia and West Virginia - have petitioned the FDA to release the long-delayed guidelines for generic insulin and human growth hormone.
The documents, which have existed in draft form since at least 2002, the governors said, would help to spur competition and lower costs. States, which pay prescription-drug costs under state Medicaid and other drug-benefit programs, would save "hundreds of millions of dollars annually."
While the United States "unnecessarily languishes" on establishing standards for generic biologics, European regulators adopted such standards last September, the governors said.
Spending on biotech and specialty medicines grew 16.9 percent in 2005, much faster than the 5.4 percent average for traditional prescription drugs, said Medco Health Solutions, one of the largest pharmacy-benefits managers.
Steven Russek, Medco's vice president of clinical product development for specialty pharmaceuticals, said, "We know there are companies making some of these biologics that are available in India and China, for example."
"It all starts with the regulatory process," he said. "If we don't have the regulatory process, even if we are able to solve all these other issues, we can't get a generic to market in the United States."
Kaiser Permanente, the nation's largest health insurer, said biotech-drug costs soared 505 percent in the last eight years, and biotech drugs accounted for 18 percent of the West Coast insurer's drug expenditures in 2005.
"There is a desperate need to bring generic biologics to market as soon as possible," said Anthony Barrueta, vice president of government relations for Kaiser Permanente, which is based in Oakland, Calif.
"Something has to happen because the financial trend simply won't be sustainable," he said. "Employers won't continue to pay, and ultimately the Medicare program is not going to be able to afford it either."
Cost of Some Biotech Drugs
The following costs are for the drug only (not including administration supplies or infusion costs) and were calculated by one of the biggest pharmacy benefits managers at the average wholesale price. Costs to individual patients may vary based on a person's weight, dosing regimen, and indication for which the drug was prescribed.
Drug (indication) Monthly cost
Avastin (colorectal cancer) $5,500
Iressa (lung cancer) $2,000
Tarceva (lung cancer) $2,500
Drug (indication) Annual cost
Enbrel $17,000-$25,000
(rheumatoid arthritis, other inflammatory disorders)
Gleevec (leukemia) $28,500-$58,000
Remicade $35,000-$66,000
(rheumatoid arthritis, other inflammatory disorders)
SOURCE: Medco Health Solutions.
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