Last year the FDA finally issued draft guidelines for biosimilar approval in the US. In light of the coming 2016 patent cliff for many branded biologic therapies that was previously discussed in a post by Gary Sing, progress on these guidelines is happening just in time. In the past week there has been a lot of talk about state legislatures moving ahead with regulations regarding substitutions of branded agents with biosimilars. However, the key rate-limiting step still rests with the FDA. How attainable the interchangeable designation is will have a dramatic impact on the profitability and rate of market erosion of biosimilars.
Illinois, Virginia, Pennsylvania, Texas, North Dakota, Indiana and most recently Massachusetts are all proposing or moving to vote on amendments to their generic-equivalent laws to include guidance on biosimilars. In Virginia last week, the Committee on Health, Welfare and Institutions in the House of Delegates passed such a bill 6-2. These amendments intend to establish that pharmacies can only substitute if the FDA licenses a biosimilar as interchangeable and then only if the physician does not specify brand medically necessary.
However, while states are pushing to establish guidelines for that hypothetical scenario, the crux of the issue is whether interchangeability would even be an FDA option. Canada has dubbed biosimilars not interchangeable, instead filing them as subsequent-entry biologics (SEB). While the European Medicines Agency has approved several biosimilars, the law makes no mention of interchangeability. That issue instead has been left to individual countries to decide, on which fifteen nations have prohibited automatic substitution.
So far the FDA has established a theoretical opening for approval of an interchangeable biosimilar without specific guidance on the requirements. Since biologics are defined more by their unique production processes rather than a well-defined chemical structure, potential differences in immunogenicity, half-life and clearance time stemming from the manufacturing process would need to be tested in costly switching studies. In all likelihood, interchangeability requirements would vary by class: recombinant proteins versus monoclonal antibodies, for example. On top of these complications, competing demands from all the interested parties in addition to the typically slow process of FDA guideline issuance will likely even further delay matters. In light of this, the agency itself doesn't expect an interchangeability designation to be achievable for the first wave of biosimilars approved.
For all the recent hype about automatic substitution of biosimilars at the state level, the key market shaper is still the FDA. In its forecasts, the DRG Biosimilar Advisory Service (BAS) does not currently assume automatic substitution will occur. If biosimilars are unable to prove interchangeability with the branded product, the rate at which physicians switch patients would likely be lowered initially due to the lack of usage history. BAS forecasts that biosimilar erosion will be lower than small-molecule generic erosion rates, but will depend on the biologic type: while insulin therapies will erode very slowly, oncology biologics will see relatively faster erosion. In short, a lack of automatic substitution would likely initially limit biosimilar profits and help to ameliorate sales erosion of blockbuster biologics.
Joseph Martinez is an Associate with the DRG Consulting group.
Regulatory Focus: Biosimilar Interchangeability Problems Pose Complex Challenge for Regulators
FDA Law Blog: Biosimilar Substitution: Battles are Brewing at the State Level
BioTrends Biosimilar Advisory Service: Biosimilars 2007-2017: Shifting Payer and Physician Opinion Increases the Hurdles to Uptake