may 2015 fiercebiotech biosimilars: getting cheaper...

Biosimilars: Getting Cheaper Biologics to the Market

FierceBiotechAn eBook from the editors ofMay 2015

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Biosimilars: Understanding Your Product & the Essential Steps for Success

Biosimilars: Getting Cheaper Biologics to the Market // May 2015

An eBook from the editors ofshare: FierceBiotech

On March 6, 2015, Janet Woodcock, the director of the FDA’s Center for Drug Evaluation and Research (CDER), sent a memo to her staff congratulating them on a “historic achievement”; 5 years after the Biologics Price Competition and Innovation Act of 2009 (BPCIA) was signed into law, the FDA had finally approved a biosimilar drug, Sandoz’s Zarxio, as similar to Amgen’s Neupogen.

Although the Zarxio approval capped the FDA’s years-long process to establish a pathway for biosimilars, experts question whether much has actually changed for the prospects of getting biosimilars to market in the U.S.

For one thing, says attorney Kurt Karst, an author of the FDA Law Blog and a director at Hyman, Phelps, and McNamara, the U.S.’s largest food and drug law firm, the FDA action is only the beginning of what could be a lengthy legal proceeding after Amgen ($AMGN) filed suit alleging that Sandoz unlawfully failed to follow the BPCIA’s complex patent procedures.

Although a judge has denied Amgen a preliminary injunction, Karst says, “I imagine it’s going to be

appealed, and it will be appealed until there are no more appeals remaining because there is a lot at stake here, not just for the companies but for the entire biosimilars industry. It’s almost a ‘to be continued’ situation because we don’t know yet how the statutory process will play out; no one has gone down that road yet.

Steve Lydeamore, the newly appointed president of Global Specialty Pharma at Apotex, which currently has two 351(k) applications under review, agrees that the situation is far from settled, saying, “The FDA has created the pathway, but the question now is how will payers react to the products being available and what barriers will the branded companies put into place to delay entry or utilization.” He also wonders how the billing and reimbursement system will work with biosimilars and whether biosimilars will be assigned specific reimbursement codes immediately after approval.

For economist Maria Salgado, a principal at Cornerstone Research, the Zarxio approval makes little difference to the aura of uncertainty that surrounds the future of biosimilars in the U.S. While the FDA may have clarified what types of studies it will require–at least for biosimilars

Biosimilars: Getting Cheaper Biologics to the Market By Beth Ellen Roberts










of Neupogen–numerous questions remain not only about how biosimilars will be reimbursed and priced but also regarding pharmacy substitution and how the agency may treat more complex biosimilars such as monoclonal antibodies.

The FDA’s assignment of a “placeholder” nonproprietary name for Zarxio, which it has designated as “filgrastim-sndz” for now, serves as another reminder that numerous questions remain. All of that uncertainty contributes to higher development costs, Salgado points out, which in turn may limit the number of entrants into the U.S. biosimilars market. She argues that a similar scenario has already occurred in Europe, which approved its first biosimilar in 2006, with only 5 or 6 biosimilar entrants per reference product compared to 15 for generics.

Challenges in biosimilars developmentIn a widely cited 2011 article titled “Worldwide Experience with Biosimilar Development,” Mark McCamish, head of global biopharmaceutical development at Sandoz, estimated the cost of developing a biosimilar for the U.S. and/or European markets at $75 million to $250 million. Today, McCamish, says, “Our estimates are more in the range of $100 million to $300 million depending on the molecule.” Much of that

cost, McCamish notes, is related to clinical trials and procurement of the reference drug.

In a draft guidance that offers a Q&A on implementation of the BPCIA, the FDA recommends that sponsors meet with the agency as soon as they have preliminary comparative analytical data with the reference product and a manufacturing plan, since “Comparative analytical data provide the foundation for a biosimilar development program and can influence decisions about the type and amount of animal and clinical data needed.”

Pfizer VP of Operations Matt Walker, who has responsibility for all the internal manufacturing for biologics and vaccines, both innovative drugs and biosimilars, in the company’s Global Supplies Business, explains that the goal is not to replicate a highly complex molecule exactly but to set ranges around critical quality attributes, which may be similar to those of the reference drug or may be tighter, then design a manufacturing process to achieve those targets consistently.

Because the proteins expressed by cells in a biologic manufacturing process vary in structure in response to variations in the cell environment or in the cells themselves, the adage “for biologics, the product is the process” has become a commonplace. Duplicating the innovator company’s process, however, is impossible for both legal and technical reasons.

“As we think about reverse-engineering the product,” Walker says, “we then have to try to replicate the process to come up with that target molecule. How exactly we do that is likely going to be different in some shape or

“One of the barriers in terms of getting into biologic manufacturing is the cost of capital, so it is a significant hurdle from that perspective.”

MATTHEW WALKER, VP OF OPERATIONS, PFIZER










form from the innovator.” To get the desired product, manufacturers adjust a number of “levers” in the process, including the cell itself, the media, the configuration of the bioreactor, temperature, and how the media and dissolved oxygen are fed.

Because any change in scale will change the molecule produced, biosimilars developers may, as Pfizer has, according to Walker, decide to manufacture clinical trial materials at commercial scale, which requires a major investment. “The facilities, quite frankly, are expensive,” Walker acknowledges. “One of the barriers in terms of getting into biologic manufacturing is the cost of capital, so it is a significant hurdle from that perspective.”

On the other hand, says Walker, the industry today has technological advantages that were unavailable to the innovators, including improvements in characterization methods that are speeding up development: “We’re learning more about the analytical characterization of the molecules at a pace that far exceeds what it was at the beginning of the industry.” The industry has also learned to produce higher yields, which has led to a trend toward smaller bioreactors.

The Patent danceAfter the March 19, 2015, ruling against Amgen in the U.S. District Court for the Northern District of California, Karst wrote in a blog post that “the victory scored by Sandoz, if upheld, could forever alter the biosimilars landscape in the US by affirming that the complex patent resolution procedures under the BPCIA (which some might say are a disincentive to seeking

approval of a highly similar biosimilar or interchangeable biosimilar biological product) are not the only game in town.”

Unlike the European biosimilar guidelines, the BPCIA includes a lengthy section regarding patents. Karst remembers shaking his head in disbelief when he first saw the BPCIA’s convoluted procedure for the exchange of information related to intellectual property, a process that Sandoz chose to skip and which the judge in the case has now ruled is optional.

According to the statute, the sponsor of the biosimilar should provide a copy of the 351(k) Biologics License Application (BLA) to the reference product sponsor within 20 days of the FDA’s acceptance of the application. Within 60 days of receipt of the application, the reference sponsor is supposed to provide the biosimilar sponsor a list of patents which might be infringed, noting which patents the reference sponsor would be willing to license to the applicant.

Two more rounds of exchanges follow, after which the parties are directed to “engage in good faith negotiations to agree” on which patents would be subject to

“If thirty years of Hatch-Waxman have shown us anything, it’s that just when you thought that you could see every potential scenario and legal issue that could come up, another one comes up out of the blue.”

KURT KARST, DIRECTOR, HYMAN, PHELPS, & MCNAMARA, P.C.







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The starting point for most projects should usually be straightforward, with the first step being to confirm the amino acid sequence of the innovator product. For most products, reputable information can be located in technical literature or patents. Irrespective of the information available, the amino acid sequence should be confirmed by examination of innovator product in such a manner that any heterogeneity in the amino sequence can be identified. This step is especially important when the innovator protein is made in a multi-copy system such as DHFR amplification. Once this is completed the cDNA sequences can be designed and optimized for expression.

It is less straightforward to set and meet a target for biosimilarity to the innovator protein. Extensive testing of innovator product can help define key quality attributes ranges. Typically at least five to eight different lots of innovator protein are analyzed and conditions such as date and site of manufacture should be considered to observe how much variation in the product occurs.

This testing plan can be used to characterize protein produced in different host cells, and different clones and by different upstream and downstream processes. The plan can seem overwhelming, but a stage-gate approach can be used to make key decisions such as when to transition from a primary focus on clone selection to upstream process development, and eventually to purification optimization. It is also important to note that the best plan in this area will not succeed unless people who fundamentally understand the relationship between quality attributes, stages of development, and how to tweak the plan based on data obtained are deeply involved in the process to reach biosimilarity and use well-designed methods to organize and understand the data generated.

It is also important to understand the product beyond the quality attributes of the target protein. Contaminant profile, formulation and even closure systems are key parts of the product. Some of these areas might provide opportunities for improvement, but in general, optimization introduces the possibility of transforming the biosimilar molecule into a biobetter molecule.

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infringement. The statute then lays out a process for action depending on whether the parties agree on the final list of patents in contention.

At about the time that Amgen filed suit against Sandoz, it also filed a petition with the FDA asking the agency to require sponsors to certify that they will follow the BPCIA procedures. The FDA rejected the petition, noting that “The BPCI Act generally does not describe any FDA involvement in monitoring or enforcing the information exchange by creating a certification process or otherwise.”

Whatever precedent is set when all the appeals run out in the Zarxio patent litigation, Karst says, new fights over IP will likely continue to arise. “If thirty years of Hatch-Waxman have shown us anything,” he says, “it’s that just when you thought that you could see every potential scenario and legal issue that could come up, another one comes up out of the blue.”

The importance of the U.S. marketDespite the questions surrounding the 351(k) pathway, the FDA received 17 biosimilars investigational new drug applications between January 2013 and January 2015 according to the agency’s website, with five 351(k) BLAs filed through March 2015.

“When it comes to incentives for entry in the U.S.,” Salgado notes, “the first one is the size of the market.” A 2013 IMS Health white paper predicts that by 2020, nonoriginal biologics, including biosimilars, will account for 4% to 10% of the global biologics market, with the

higher end of that range possible only if a robust market for biosimilars emerges in the U.S.

Even 4% of the potential market represents a substantial prize for biopharmaceutical companies. According to IMS Health data, 5 of the top-selling products worldwide in 2013 were biologics–Humira, Enbrel, Lantus, Remicade, and Rituxan (MabThera)–with sales of those products totaling approximately $40 million. All 5 of those drugs will lose patent protection in Europe by 2018; in the U.S., all but Enbrel will lose patent protection by 2018.

U.S. spending on those 5 drugs rose from $12.4 billion in 2008 to $19.3 billion in 2012, a year in which the U.S. accounted for approximately half of all biologics sales and half of all biologics growth worldwide. As a result, many experts regard the introduction of biosimilars as essential to maintaining the affordability and accessibility of biologics in the U.S. as well.

In a 2014 paper from the Rand Corporation titled, “The Cost Savings Potential of Biosimilar Drugs in the United States,” authors Andrew W. Mulcahy, Zachary Predmore, and Soeren Mattke estimate that biosimilars will lead to an approximately 4% reduction in spending on biologic drugs in the U.S. through 2024, though they warn that their estimated savings of $44.2 billion depends on a

“When it comes to incentives for entry in the U.S., the first one is the size of the market.”

MARIA SALGADO, PRINCIPAL, CORNERSTONE RESEARCH










wide range of variables related to FDA regulations and competition and could range from $13 billion to $66 billion.

While researching a 2014 article in Nature Reviews Drug Discovery titled “Biosimilar Competition: Lessons from Europe,” Salgado and her co-authors found that uptake varied widely across 5 major European countries and for different types of biosimilars. While the share for filgrastims in the market with Neupogen ranged from about 40% in Italy to about 85% in the U.K., the share for epoetins topped out at about 40% in Germany, and those biosimilars had gained only about 10% of the market in most of the countries studied.

According to Salgado, after determining that Germany and Sweden were the most comparable to the U.S., she and her colleagues calculated that the price discount for biosimilars in the U.S. will likely run about 20% to 30%, an estimate that is consistent with those of other economists, she says. That range would be consistent

with the price discounts for biosimilars in Europe and a great deal less than for traditional generic drugs, she adds.

Global approaches to regulationThe European Medicines Agency (then the European Medicines Evaluation Agency) approved Sandoz’s Omnitrope somatropin in 2006. Until 2013, when the EMA approved two mAbs, both biosimilars of Remicade, the agency had approved only three types of drugs: filgrastims, epoetins, and follitropins. As of February 2015, the EMA has approved a total of 21 biosimilars, with 19 of those still on the market.

Nonoriginal biologics, including biosimilars, are currently regulated and marketed in a number of additional countries, including Australia, India, South Korea, Japan, Brazil, and Columbia. In emerging markets, according to IMS Health data, nonoriginal biologics accounted for almost 11% of biologics sales compared to only 0.4% in developed markets. Compared to Europe, where as of the beginning of 2015, only four classes of drugs had been approved, nonoriginal biologics sold in the developing world include a wide range of therapies, such as insulins and a variety of mAbs, many of them marketed by small- to medium-sized companies.

Sandoz’s McCamish credits the EMA for its leadership in regulating biosimilars “by applying science in a risk-based manner that safeguards patient safety without compromising patient access to these important therapies.” He notes that the FDA and EMA both “strongly support the ‘totality of evidence’ approach which recognizes the pivotal role of analytical

“Our position is that biosimilars using the same INN as their reference products have been on the market in Europe since 2006 and there have been no issues with traceability and pharmacovigilance. Furthermore, there are over 40 biologics in different classes that share the same INN and there have been no reported issues as a result of this.”

MARK MCCAMISH, GLOBAL HEAD BIOPHARMACEUTICAL DEVELOPMENT, SANDOZ










characterization in biosimilar development” as well as the use of a global reference product, which means that if sponsors can show comparability between the EU and U.S. reference products, they may be able to avoid the need for separate clinical trials.

“These two points are critical for biosimilar sponsors,” McCamish says, “as it enables them to run cost-effective development programs and bring these affordable biologics to patients.” He points out that “In addition, the FDA, EMA and now PMDA [Japan’s Pharmaceuticals and Medical Devices Agency] have periodic biosimilars teleconference calls to discuss their approaches, and this may lead to further harmonization.”

A biosimilar by any other nameOne key area of disharmony among regulators worldwide is the question of whether biosimilars should have common nonproprietary names or whether the products should have distinct nonproprietary names, which would likely reduce the possibility of substitution. In Europe, biosimilars are assigned common nonproprietary names; Japan and Australia have required the addition of unique identifiers to nonproprietary names to distinguish biosimilars from the reference drug and from each other.

In 2014, with no agreement in sight among regulators, the World Health Organization (WHO) proposed the creation of an optional global Biologic Qualifier code that would help to “avoid proliferation of separate and distinct national qualifier systems.” The Australian Therapeutic Goods Administration initially indicated that it would implement that system; however, the agency

has since backed away from that decision and now says that it will use the Australian biological name without any suffix while it reviews the options.

The FDA has yet to announce a decision about naming, and in its announcement of the Zarxio approval, the agency warned, “The provision of a placeholder nonproprietary name for this product should not be viewed as reflective of the agency’s decision on a comprehensive naming policy for biosimilar and other biological products” and promised to issue guidance on naming “in the near future.”

The BPCIA has nothing to say about requiring different names for biosimilars, the Generic Pharmaceutical Association (GPhA) points out, asserting that naming “regulations must honor this intent of Congress.” If unique nonproprietary names are required, the organization insists, “a finding of interchangeability or biosimilarity will count for very little among healthcare

“Biological products have proven to be highly effective treatments and providing options for these may be more important than trying to be biobetter. The final decision will be up to the providers and their willingness to prescribe and the payers’ enthusiasm to reimburse without better safety and efficacy.”

STEVE LYDEAMORE, PRESIDENT, SPECIALTY PHARMA, APOTEX







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providers,” adding that different names “can compromise patient safety.”

Sandoz parent company Novartis filed a citizen petition with the FDA well before the approval of Zarxio, asking the agency to follow the conventions of the WHO’s international nonproprietary names (INN) system with biosimilars as it does with generic drugs. McCamish adds, “Our position is that biosimilars using the same INN as their reference products have been on the market in Europe since 2006 and there have been no issues with traceability and pharmacovigilance. Furthermore, there are over 40 biologics in different classes that share the same INN and there have been no reported issues as a result of this.”

Interchangeability and substitutionWhatever the FDA decides on the naming issue, under the BPCIA, the agency would still have to approve a biosimilar as “interchangeable” before the product could qualify for substitution, and the FDA has yet to specify what it will require in order to make that determination.

In its Q&A on biosimilars, the agency stated that “At this time, it would be difficult as a scientific matter for a prospective biosimilar applicant to establish interchangeability in an original 351(k) application given the statutory standard for interchangeability and the sequential nature of that assessment. FDA is continuing to consider the type of information sufficient to enable FDA to determine that a biological product is interchangeable with the reference product.”

Once the FDA does approve a biosimilar as interchangeable, the decision as to whether a pharmacist could automatically substitute that product for the reference product will be left to the states. In Europe, where the decision is left entirely to individual countries, France became the first country to allow automatic substitution of biosimilars in 2014.

Without substitution, many industry experts doubt the long-term viability of biosimilars. The GPhA has declared that “Interchangeability or substitution is the engine that drives generic competition. It is the reason why generic drugs have generated savings of $1.06 trillion over the past decade. The way that FDA deals with interchangeability will be directly responsible for the market dynamics generated by the biosimilar pathway.”

Are biobetters a better bet?Absent substitution and in the face of possible reimbursement and competitive barriers, some sponsors may opt to avoid the biosimilar pathway altogether. In a 2014 article titled “Regulatory And Cost Barriers Are Likely To Limit Biosimilar Development And Expected Savings In The Near Future,” Salgado and her co-authors suggest that “the development of cost-saving biosimilars may be delayed or discouraged by the entry into the market of other biosimilars that compete with the reference product in areas other than price.”

Follow-on biologics that demonstrate some sort of clinical improvement over the innovator drug, known as “biobetters,” may require a greater investment up front, Salgado acknowledges, but they also have a number of










strategic advantages, including avoiding competition with multiple biosimilars for a small slice of the market and having the potential to sell at little if any discount. Persuading doctors to prescribe a biobetter may also be easier than asking them to switch patients away from a biologic that is working to a drug that is not identical.

On the other hand, Apotex’s Lydeamore expresses doubts about the value of biobetters: “Biological products have proven to be highly effective treatments and providing options for these may be more important than trying to be biobetter. The final decision will be up to the providers and their willingness to prescribe and the payers’ enthusiasm to reimburse without better safety and efficacy.”

Looking to the futureAccording to IMS Health data, the global market for biosimilars and other nonoriginal biologics totaled $2.4 billion in 2012. By 2020, McCamish says, he expects that the global market will grow to $10 billion to $15 billion, with Europe remaining strong, “especially with a whole wave of monoclonal antibodies coming off patent” and with the U.S. gaining “more regulatory clarity and several biologics coming off patent.” He adds that Sandoz also views other developed markets such as Japan, Canada and Australia, plus the emerging markets as good opportunities as well.

“Obviously,” he qualifies, “this depends on regulatory timelines as well as competitor dynamics.” In other words, only time will tell. n






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