In my December 2016 Life Science Leader outlook article sharing predictions for 2017, I argued it was going to be the year to watch biosimilars. Having arrived at the tail end of 2017, I stick by my original claim, though with a few exceptions. The U.S. and some European countries still have not seen significant biosimilar uptake or pricing competition. Major U.S. payers have been slow to offer up their prized primary formulary positions to biosimilars, while patients and physicians remain uncertain of or in the dark about biosimilars in general. But that doesn’t mean there hasn’t been any progress.
Over the past year, the industry has seen continued revision of the U.S. biosimilar regulatory pathway, additional biosimilar approvals, and competition-inducing launches. There also have been intensifying legal battles (and some significant settlements) and revisions to CMS’ contentious reimbursement policies. We reached out to eight experts from biosimilar companies and consulting firms to see which topics they’ve been watching closely throughout 2017 and how they expect these trends will evolve and challenge the industry in 2018.
THE EARLY STAGES OF COMPETITION: NEW AND ONGOING HURDLES
Though there’s still a long way to go, 2017 gave the U.S. a taste of a multi-competitor biosimilar market. In July, Samsung Bioepis and Merck launched the U.S.’s second infliximab biosimilar, Renflexis, to compete against Pfizer’s Inflectra. But it wasn’t the launch of two biosimilars for the same drug that was the most exciting part — it was the fact Samsung Bioepis chose to do so with a 35 percent discount (compared to Pfizer’s 15 percent discount). So far, this has been the steepest discount to hit the U.S. market.
Next year glimmers with the promise of increased competition. As Adello Biologics’ CEO Peter Moesta described, “If you take into account pending and anticipated biosimilar applications, we start to see the potential for multi-competitor markets in the U.S. for some of these targets near term.”
But Moesta raised a few concerns about the challenges to market entry we’ve observed within the past year. Perhaps one of the most notable events in 2017 was Pfizer’s lawsuit against J&J alleging anticompetitive practices, which, in turn, kept Pfizer’s biosimilar from payer formularies and patients.
I’ve often found the biosimilar space to be one of the most exciting markets to write about because of the number of stakeholders involved. But Moesta’s example touches upon one big downfall of such a wide base of stakeholders: They all have different goals and expectations for the fledgling biosimilar industry. “There is an additional layer of complexity in the U.S. market because the stakeholders who exert influence over which pharmaceuticals are used change depending on where and how the drug is dispensed,” Moesta said.
So far, the biosimilar industry has been no stranger to practices that stand in the way of a competitive industry. We’re all familiar with the “whisper campaigns” emphasizing the quality and long-term reputation of the innovator drug while touting the perceived (and currently unfounded) risks of biosimilars in quality and immunogenicity. As Carlos Sattler, VP of clinical development and medical affairs for Sandoz, described, these campaigns have continued to grow increasingly aggressive as biosimilar uptake has increased. But as he pointed out, we cannot forget about the 11 years of successful real-world experience with biosimilars in the EU.
“Sandoz has 340 million patient days of experience across 86 countries,” Sattler said. In fact, since Zarxio was approved in 2015 and launched in the U.S. in 2016, there have been over 85,000 patients treated with the biosimilar. “Real-world experience affirms the FDA’s statement that patients and healthcare professionals can expect the same safety and efficacy from an FDA-approved biosimilar as they do from the reference product,” he added.
WHAT TO EXPECT FROM INTERCHANGEABILITY & BSUFA II IN 2018
We didn’t have to wait long in 2017 for the FDA to release its long-promised interchangeability guidance. However, the agency’s suggestions raised a few eyebrows. PA Consulting Group Life Sciences experts Chris Isler and Magnus Franzen said the interchangeability designation potentially could offer a “huge competitive advantage” since the biosimilar could be substituted at the pharmacy without the physician’s permission. However, there are still a number of questions that need answered before these guidelines are solidified, they explained. Many of these questions concern the requirements for switching studies, the use of real-world data in determining interchangeability, and whether interchangeability should be sought on an indication-to-indication basis.
Molly Burich, Boehringer Ingelheim’s associate director of public policy, biosimilars, pipeline, and reimbursement, said her company has expressed concern that some requirements may be “arbitrarily defined and burdensome.” Much like Isler and Franzen, Burich expects biosimilar makers will face challenges determining how high the bar will be to prove interchangeability between the reference product and biosimilar.
In addition to interchangeability, the industry saw the successful reauthorization of the Biosimilar User Fee Act (BsUFA II), which authorizes the FDA to collect fees from drug companies for the review of biosimilar applications. Bruce Leicher, SVP and general counsel of Momenta Pharmaceuticals and chair of The Biosimilars Council, shared that he’s “cautiously optimistic” the innovative reforms included in this legislation and the FDA commitment letter will accelerate biosimilar reviews and approvals. For instance, the FDA has promised to hire additional review staff, implement a longer review period to eliminate the need for extensions and increase the likelihood of first-cycle approvals, and provide additional communication opportunities between the agency and biosimilar companies.
In the past, the industry expressed concerns over the FDA’s ability to ensure a timely review and approval process. As Gillian Woollett, the SVP of Avalere Health, pointed out, “Of the seven biosimilars approved by the FDA, the action dates were missed the majority of the time, and the performance is even lower if one counts the applications upon which no decision has been made.” Now that BsUFA II has been implemented, she expressed hope the adjustment to the FDA’s review period will help the agency better meet the action dates set for each biosimilar.
REIMBURSEMENT: NEW CMS POLICY A WIN FOR BIOSIMILARS
CMS sparked much criticism from the biosimilar industry with its original reimbursement policy for biosimilars in Medicare Part B and Part D. In Medicare Part B, for instance, CMS’ original policy grouped all biosimilars for a single reference product under one J-code or billing and payment code. Momenta’s Leicher said that this original policy “distorted the marketplace for providers,” because it essentially treated non-interchangeable biosimilars as though they were interchangeable with each other.
Burich also pointed out some inconsistencies between CMS’ previous Medicare Part B policy, which treated biosimilars as if they’re generics, and Medicaid. For instance, under Medicaid, biosimilars are considered branded products and, as such, biosimilar manufacturers are required to pay the 23.1 percent rebate required of all branded products as per the Affordable Care Act (ACA). “These conflicting views are challenging for manufacturers, who — with the support of advocacy and patient organizations — will need to ensure reimbursement incentives for biosimilars are adequate to ensure their uptake and long-term utilization,” Burich stated.
One of the ways Leicher and organizations like The Biosimilars Council argued CMS could alter the Medicare Part B policy was by adopting a unique code for each non-interchangeable biosimilar. And luckily, following a comment period on CMS’ CY 2018 Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B, the biosimilar industry got its wish. CMS recently announced its plans to assign individual codes to each biosimilar starting January 1, 2018. For marketed biosimilars that are currently grouped into a common payment code, the agency expects it will take until mid-2018 to implement new payment codes.
WHAT CHALLENGES AWAIT THE BIOSIMILAR INDUSTRY IN 2018?
Depending on the role you play in the biosimilar industry, there are likely a number of specific challenges keeping you up at night. However, we’re reaching a pivotal point when it comes to IP challenges. The biosimilar space may have triumphed in the Supreme Court case, Amgen vs. Sandoz, eliminating the extra six-month waiting period stalling market launches post-approval. But the industry should also note the recent settlement between Amgen and AbbVie barring Amgen’s biosimilar Humira from the U.S. market until 2023. As such, I’d argue patent challenges and their settlements should be stepping closer to the front of your list of concerns.
As Adello’s Moesta argued, market entry is going to be one of the biggest challenges facing companies in 2018 and beyond. Because the biosimilar market is still new to the U.S., there is much uncertainty about how patent battles will play out. “This uncertainty, combined with long development timelines and high investment, could further deter companies from entering the biosimilar market,” Moesta explained. “We remain very concerned about how these IP battles will play out, particularly regarding the delay of market entry.”
In fact, Isler and Franzen expressed concern over the potential “domino effect” that could occur because of delays from patents. For instance, some executives argue there is a one-month window for getting a biosimilar on the market, and this brief window is enough to set you on the right or wrong side of a successful biosimilar business case. As they describe, the longer a biosimilar is held off the market because of patent challenges — whether it be just a few months or even years — the higher the cost of market entry will be. This, in turn, impacts the margins for setting a price, which is the vehicle for determining how competitive a biosimilar will be, how quickly it will gain a foothold on the market, and how great its market share will be.
Though more biosimilars have been approved than launched in the U.S. because of lingering originator patent challenges, Leicher expects to see launch and patent timelines become more streamlined in the future. He noted, “As more products are approved, we should see a convergence of regulatory and launch dates as greater experience with inter partes review at the U.S. Patent and Trademark Office and the biosimilar patent exchange and litigation process enables applicants to estimate regulatory and patent clearance timelines for each product more reliably.”
But Leicher’s point about companies getting better at managing timelines brings up what will continue to be a key challenge facing companies in 2018 and far into the future. Each of the eight experts interviewed for this article touched upon the challenge of establishing a commercial model and ensuring a competitive market. But Woollett said it best when she argued that companies will need to break from tradition in the ways they approach the industry. Companies will need to ensure that all participants understand the importance of a long-term, multisource sustainable marketplace.
“Too much short-termism will irreparably harm this industry and the prospects of real competition before it even starts,” she warned. “This is a very real risk which also carries a liability for originator companies whose actions could be interpreted as overly protectionist or anti-competitive. We’re already seeing experienced biosimilar sponsors trimming their portfolios of biosimilars, and competition is being curtailed before it has even started — especially in the U.S.”
Because biosimilars are not brands, nor are they generics, companies face the daunting task of establishing a new commercial model best suited to these sophisticated new treatment options. Woollett expressed optimism that there can be more than the two primary brand and generic commercial models. But she urged the industry to take a close look at the dominance of these two leading commercial models as the biosimilar industry attempts to forge its own.
Because resources between the innovator and generics and biosimilar industries are so asymmetrically distributed, “We have to be careful not to presume biosimilars can survive and flourish to create a sustainable multisource market in the U.S.,” Woollett argued. “Remember, even Europe struggles with the sustainability question. This may take some serious thinking about the bigger commercial and regulatory environment and the nature of the incentives impacting each decision maker in the chain from manufacturer to patient. Biosimilars should play a significant public health role in the U.S., including in savings for systems/patients, in earlier access during disease progression, as well as in surety of supply. But at this stage, that is still far from assured.”
The experts shared the issues they faced throughout 2017 and spelled out how they expect these will challenge the industry in 2018. They also highlighted the trends they expect to see taking shape over the next year.
"Securing reference product for clinical trials and the extensive comparative analytical work required of biosimilar developers has moved to the forefront as an important issue because failure to do so hinders developers’ abilities to enter the market in a timely and cost-effective manner. Additionally, we hope to see the first biosimilars approved without the requirement of a Phase 3 clinical trial in 2018 and that the industry will continue to rally behind the inherent need to put science and analytical foundations first in a biosimilar development program."
"It is likely we will see more patent licensing agreements, similar to those of Amgen’s and AbbVie’s over adalimumab, in large part because the costs of litigation become prohibitive. It also will become apparent that the 12 years of exclusivity granted to originator biologics is not currently the rate-limiting step to biosimilar availability, but exclusivity will likely continue to be part of the political debate nonetheless."
"We should expect companies to begin to seek interchangeability designations for appropriate products. It is a bit too early to tell, but for some products, interchangeability could offer a competitive advantage due to the opportunity for pharmacy substitution and more favorable reimbursement."
SVP and general counsel
Momenta Pharmaceuticals, Inc., and chair of the board of The Biosimilars Council
"As biosimilars are still new to the U.S. healthcare system, manufacturers will be challenged by several important regulatory issues over the next year, including:
Associate director, public policy, biosimilars, pipeline & reimbursement
"We expect to see more attention paid to biosimilar prices (both in the EU and the U.S.). In some parts of the EU, we see prices coming down a lot, while the U.S. has been a bit more conservative. Given that price will probably play a huge role in the uptake of biosimilars in the payer community, this is a development to keep an eye on in 2018."
Life Science Expert
PA Consulting Group
Life Science Expert
PA Consulting Group
"While not new, one issue is education and increased awareness, primarily directed at patients and healthcare providers. Balanced, accurate biosimilars education is the responsibility of industry, managed care, professional societies, trade associations, patient advocacy groups, and government. We must continue to champion policy and regulation changes that promote patient access to biosimilars."
VP of clinical development & medical affairs, biopharma