VaccineRobert Shapiro, chairman of Sonecon, LLC, and former advisor to U.S. President Bill Clinton and British Prime Minister Tony Blair, has published a study on the potential savings when generic biologic treatments (biogenerics) find a pathway in the U.S.   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.

With such enormous amounts of money involved, Congress is seriously interested in creating a new regulatory pathway for the approval and marketing of generic or follow-on versions of biological treatments that no longer have patent protection. This is purely an economic (and political) issue, not one of health and safety.  Today, more than 150 biopharmaceuticals are available in the United States, including therapeutic serums, antitoxins, vaccines and biological therapeutics that induce immunity in infectious diseases, and the number of new biologics is growing at twice the rate of new small molecule pharmaceuticals.

Under the Hatch-Waxman Act, a pharmaceutical producer can secure FDA approval to market a generic version of an original drug no longer under patent protection without having to conduct lengthy and expensive safety and effectiveness studies and clinical trials, by demonstrating that the generic is the bioequivalent of the original drug. The process involves the approval of an Abbreviated New Drug Application (ANDA), which rests on a certification that the original patent has expired or is invalid, and that the dosage and active ingredients of a generic are identical to those in the original treatment.

However, the law covers only traditional, small-molecule pharmaceuticals. There is no mechanism for generic-drug makers to gain approval for generic biotech drugs or so-called follow-on biologics, sometimes called biosimilars or biogenerics.  The FDA evaluates and approves biologics mainly under the Public Health Safety Act, although a small number have been approved under the Food, Drugs and Cosmetic Act. The Center for Biologics Evaluation and Research (CBER) regulates biological products for safety. For the FDA to approve follow-on biologics, many difficult issues have to first be addressed such as safety, effectiveness and intellectual property rights have to be resolved.

The reason for the lack of a regulatory pathway for approval of biogenerics lies in the complexity of the biological products themselves. Biologics are large, complex, heterogeneous molecules for which the manufacturing process can be a determinant of the end product. Demonstrating that a generic version of the product is as safe and effective as the brand name product would be a difficult at best since, for example, establishing that immunogenicity had not been altered and that any undetected differences in the product would not impact safety and efficacy would be problematic without conducting extensive clinical trials.

Currently, the cost of conducting clinical studies from scratch keeps competitors out of the market. Biogeneric companies need an abbreviated approval pathway to avoid undertaking the same large scale clinical development process as the originator companies, and thus allow them to market their product at a discount to the brand while maintaining a profit margin.

It is likely that any follow-on biologic applicant would be required to demonstrate that there are no clinically meaningful differences in safety, purity and potency between its product and the brand product. An applicant would need to provide evidence that its product has profound similarity — it is impractical to show identical biological products — and that these will produce the same clinical result as the brand product in any given patient and that it presents no additional safety risks or diminished efficacy if a patient alternates or is switched between products.

During a conference call this morning, Shapiro noted that the conventional wisdom held that the high cost of building the manufacturing infrastructure would be so high as to result in very little savings even if biogenerics are allowed. He argues that this is not the case given that there are plenty of other options in the marketplace. Shapiro pointed out the facilities currently available in Europe and Asia and the potential for partnerships.

According to the present study, the potential savings likely to follow from the introduction of these follow-on biologics over the next 10 and 20 years would be quite large. The study found that generic versions of the top 12 categories of biologic treatments with patent protections that have expired or are due to expire in the near future could save Americans, in net present value, $67 billion to $108 billion over the first 10 years and $236 billion to $378 billion over 20 years. Moreover, these estimates almost certainly understate the savings, because they could not take full account of a number of factors likely to reduce the price of biogenerics and further expand their use in the United States.

Currently, biogenerics are used in the European Union and the major countries of Asia. The study concludes that the United States has led the world in developing biologics, and when the U.S. Congress approves a regulatory pathway for biogenerics, the United States very likely will quickly become the world’s largest market for follow-on biologics.

See the entire report here.

See also:  Why are biogenerics so hard to regulate?

More from the Orange Book Blog and the BioJobBlog.

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  1. Stephen:

    Thank you for your coverage of biogenerics. A complex and beneficial process needs to be successfully navigated to move from branded to generic biomeds, and from the looks of it, we might be on our way to such a result. I linked to your article in my blog entry for the Innovators-Network so that more people might read your well-written piece.


  2. You have probably heard that vurtually every Starbucks was closed on Tuesday from 5 PM to 9 PM so that the baristas would be trained on the new equipment. I was wandering whether the baristas at Patent Baristas get the same deal.

  3. The Baristas are just like Starbucks — only without the pay…and the benefits…and the perky setting.