It appears that no matter who wins the presidential election this November, both Barack Obama and John McCain back expanded use of generic drugs as a way to lower drug costs,  According to their advisers, both campaigns have pledged their support to help create a market for generic biotech drugs or biosimilars.obama.jpg

As a part of their respective strategies to contain healthcare costs, both candidates want shorter exclusivity periods for branded biologics.  When generic biologic treatments (biogenerics) find a pathway in the U.S., the introduction of a biogenerics will put a serious damper on biopharmaceutical revenues.  I say when and not if since the government is the largest consumer of medical care via medicare and medicaid and given the fact that sales of biotech drugs were $40.3 billion last year.

The sticking point is (in general) that the brand name drugmakers and generics are unable to agree over just how long a biotech drug should be on the market before a generic drugmaker can market a generic. The Biotech Industry Organization has called for 14 years of market exclusivity, while  generic makers want the period limited to no more than five years of protection.

Not to be confused with patents, data exclusivity is the period after the FDA approves a product during which an imitator can’t rely on the innovator’s clinical data for safety and effectiveness. It can run during and longer than the period of patent protection.

mccain.jpgThe generic and biotech drug industries have spent a lot of cash lobbying Congress over how generic biotech drugs should be approved although McCain has not been the the sector’s favorite in terms of donations.  This is probably because McCain has also argued for re-importation to save money and he voted against the expansion of Medicare to include a drug benefit because it didn’t allow direct price negotiations by the government and because the program covers too many people.  You can see a complete side-by-side comparison of healthcare policy positions here.

The Center for Responsive Politics reports that McCain has received $39,797 in donations from pharmaceutical manufacturers. That puts him behind Obama ($154,710), Clinton ($140,544), Mitt Romney ($103,825), Rudy Giuliani ($91,550) and even Chris Dodd ($68,200)

Unlike traditional chemical drugs, biotech companies currently face no generic competition in the U.S. because the Food and Drug Administration lacks authority to approve copies of biotech medicines. Generally, biotech drugs are more complicated than regular drugs because they are made from living cells or bacteria.

For a generic drug manufacturer to win approval of a generic version of a traditional prescription drug, the product must have the same active ingredient, strength, dosage form and route of administration as the original drug. This means that generic drugs are the exact same chemically as their brand name counterparts and they act the same way in the body.

Such a process is not possible with biologics. Biologics manufacturers must ensure that the manufacturing process remains the same over time by controlling the source and nature of starting materials and controlling the manufacturing process. When a follow-on biologic is created, it requires a new manufacturing process with new starting materials. As a result, it will produce a product that is different from and not therapeutically equivalent with that of the brand name biologic.

In an earlier proposed update in the regulatory pathway for FDA approval of follow-on biologics, the Senate’s Senate Health, Education, Labor and Pensions HELP Committee gave the thumbs up to the Biologics Price Competition and Innovation Act of 2007 (S. 1695), which would address the scientific, regulatory and legal issues involved in bringing generic biologics to the marketplace.  See also H.R. 5629: Pathway for Biosimilars Act.

The legislation includes standards for the FDA to approve follow-on biologics as well as a period of exclusivity for the brand name drug company. The Act amends section 351 of the Public Health Service Act to provide for an approval pathway for safe biosimilar and interchangeable biological products (relying in part on the previous approval of a brand product):

  • A biosimilar applicant is required to demonstrate that there are no clinically meaningful differences in safety, purity and potency between its product and the brand product. A demonstration of biosimilarity includes analytical data, animal testing and one or more clinical studies, unless such a requirement is determined by the FDA to be unnecessary.
  • The Act provides incentives for the development of both new life-saving biological products and interchangeable biosimilar products: 12 years of data exclusivity for the brand company during which a biosimilar product may not be approved, and 1 year of exclusivity for the first interchangeable biological product.
  • The biosimilar applicant must provide its application and information about its manufacturing process to the brand company. A series of informational exchanges then occur in which the biosimilar applicant and the brand company identify patents in question and explain their views as to their validity or infringement.

Earlier, BIO released a set of principles to guide the development of a pathway for the approval of follow-on biologics. BIO also developed a detailed rationale supporting the need for substantial data exclusivity. Meanwhile, generic manufacturers expressed concern that a 12 year exclusivity for the brand company is too long.

This issue will continue to be hotly debated.

See Primer for Follow-On Biologics.

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    The Cost of Innovation With Questionable Benefit

    Recently, you may have heard or read in mass media sources about the issue of pharmacy benefit managers who have clients that are prescribed biologic medications. These patients are required to pay a great deal of money for such meds due to the placement of these types of medications on their PBMs. This is due to the status on the PBM of biopharmaceutical medications, which is known as Tier 4 status, which requires patients to pay higher co-pays for these meds. Tier 4, which also includes lifestyle meds, is determined by the PBM based on variables such as rebates and discounts from the manufacturer, which are intended to be passed on to the PBM clients, and is similiar as to PBMs requiring prior approval before reimbursement. However, in some cases, the PBMs fail to do this, and have been penalized for their self interest above patient interest as required when this activity is discovered. Regardless, because of the tier 4 status of biopharmaceuticals, very sick patients have to pay a great deal of money for these meds. PBMs, by the way, are pharmacy benefit managers created for the pharmaceutical needs of employees normally and is a benefit along with their insurance through their employer. Typically, PBMs are an element of managed health care plans, yet determined by employers as far as what is paid through negotiations with PBMs, typically.

    First of all, biopharmaceutical meds are specialty meds created differently than other typical meds, and therefore are have a unique molecular complexity that are designed for serious illnesses such as anemia or multiple sclerosis. Because of their uniqueness and exclusivity, they are very expensive- costing thousands a month for the payers. In addition, generics are not authorized to be produced as of yet for these types of meds. The cost of these biological meds is due more to the complex process of their creation, as the material costs are typically less expensive than traditional molecular medications, it is believed.

    Biologic medications began to be used primarily in the 1980s and now presently make over 60 billion a year, with about 20 percent growth in this market annually. With anemia patients, oncology and dialysis clinics are targets for such meds in this category, as anemia is associated with their treatment and conditions for such diseases.

    Yet, some claim that biopharmaceutical meds benefit patients to only a certain degree, as they do in fact extend the life of such patients, such as those on chemotherapy or dialysis, but by only a few months. So the high cost of these meds is questionable and has been analyzed by others, yet no substitutes exist for biopharmaceuticals, which is probably why the producers of these drugs can charge so much for these products. Efficacy of these biologic meds have also been questioned as well in other treatment aspects aside from life extension.

    Then there is the issue of fraud with kickbacks and overuse of some of the biopharmaceutical meds used to treat anemia in dialysis clinics in particular. On a few occasions, doctors and clinics have been penalized for overusing the meds and for kickbacks in the form of discounts of the manufacturers. Ironically, the dialysis process was never patented, yet the many centers that exist have proven to be very profitable, more for some than others. An example is the situations where dialysis doctors, called nephrologists, have been accused of over-dosing patients with biologic meds to increase their income through their discount arrangement through the manufacturer of such meds, such as those biologics for anemia, and this arrangement is being investigated by regulators and encouraged by the representatives of such meds.

    Presently, there are many that approach the FDA to aggressively insist that generic biologics be allowed into the market for the benefit of these critically ill patients, and this would be of great benefit for such patients, and this can be done, as far as the generic creation of these types of medications. And thier efforts have been somewhat successful, as generic equivalents of biopharmaceuticals, called biosimilars, could be manufactured and available within the next few years. However, this situation of delays illustrates one of many flaws in the U.S. Health Care System- when the sickest have to complicate their illnesses by possible financial stress, such as the case with biologic meds. Relief is needed, and should be demanded by the public. After all, why be so sick, and then be financially burdened? One solution or suggestion is to either lower the cost of these types of drugs, or allow generic forms to enter the market faster than what the situation is presently.

    “A little learning is a dangerous thing.” —- Alexander Pope

    Dan Abshear

    Dan Abshear