Celltrion/Hospira’s biosimilar infliximab (Remsima/Inflectra) may become this year the first biosimilar monoclonal antibody to reach a Western market, following European approval, which is expected shortly.
The product will provide an important test of Europe’s appetite for biosimilars – and the extent to which cost constraints are overriding prescribers’ historic caution toward copycat biologics.
Hospira expects the economic crisis, evolved regulatory structures, and doctors’ growing experience with existing biosimilars to provide significant tailwinds for Remsima.
But big risks remain. Remsima may be handicapped by a narrower label than Remicade, innovators may slash prices more aggressively than anticipated or launch authorized generics, and biosimilar-naïve rheumatologists and gastroenterologists may resist.
Indeed, Remsima may be a tougher sell than subsequent complex biosimilars – highlighting once again that copycat biologics may not be as profitable as many hope.

The forthcoming European approval of Hospira Inc./Celltrion Inc.’s biosimilar infliximab – a copy of rheumatoid arthritis drug Remicade – is an important date on the biosimilars calendar. Assuming, as most do, that the European Medicines Agency (EMA) will give it the nod, the drug – which Celltrion will co-market in the EU 27 as Remsima and Hospira will sell as Inflectra – will be the first biosimilar mAb to reach Europe, or any Western developed market. The first of a wave of complex biosimilars, mostly monoclonal antibodies, it could generate far more exciting returns than seen for first-generation copycat biologics such as erythropoietin (EPO) or filgrastim.

The case in favor of biosimilars looks even more compelling in the midst of the deepest and longest economic recession in decades: biologics provide increasingly influential payors with a means of reducing the bills for products worth an estimated $100 billion annually worldwide. But the last seven years since the first biosimilar launch in Europe, along with the tortuously slow progress toward a US regulatory pathway, have shown that hurdles to biosimilars’ uptake – notably, physician skepticism and the lack of automatic substitution by pharmacists – remain considerable. In 2007, IMS Health predicted that biosimilar sales would reach $16 billion by 2011. Actual sales for 2012 were about $720 million, according to Alan Sheppard, Global Head Generics at IMS Health.

If biosimilar infliximab is approved, it will provide an important test of just where the balance lies between payor pressure on one side and clinician skepticism of lesser-tested biosimilars on the other. It will indicate just how far experience and confidence with first-generation drugs can be extrapolated to more complex biosimilars, and regulators’ readiness to extrapolate clinical data across wide-ranging indications.

The higher stakes around biosimilar infliximab and subsequent monoclonal antibodies are driving, and will continue to drive, more aggressive blocking tactics from innovators. In the US, Amgen Inc. and Genentech Inc., a subsidiary of Roche, have already successfully persuaded at least eight state governments to pass bills that will make automatic substitution of a branded biologic with a biosimilar far more cumbersome for pharmacists. (See [A#00130401011].) Innovators will selectively discount across product categories and markets once infliximab and other biosimilars arrive. The revelations of further stealth patents, such as that snuck out by Amgen on Enbrel (etanercept) in 2011, aren’t out of the question. (See Also see "Amgen’s Stealth Enbrel Patent May Block Biosimilars; Scenario May Apply To Other Biologics" - Pink Sheet, 5 December, 2011..) (See Exhibit 1.)

Exhibit 1

Sales Of Top Biologics

The 12 key biologics represent $67 billion in sales risk for originators

*MAT-Moving Annual Total

IMS Health MIDAS, 09/2012; IMS Patent Focus

Biosimilar Infliximab: A Tough First Sell

Remicade generated worldwide sales of roughly $6 billion in 2012, about $2 billion of which went to European licensee Merck & Co. Inc. (Johnson & Johnson holds US rights). [See Deal] Its composition of matter patent expires in most EU countries in 2014; in many Eastern European markets the lack of patent protection means it will be eligible for marketing immediately post-approval in the event it is approved during 2013.

Yet, if biosimilar firms had had the luxury of choosing which mAb to launch first into a still-skeptical prescriber community, their preference wouldn’t necessarily have been infliximab. Sure, it’s a big-selling drug and, since it’s given intravenously, it’s distributed via well-defined hospital channels. But several of the drug’s characteristics present hurdles for biosimilar manufacturers.

Remicade is approved across eight indications in Europe, which range from rheumatoid arthritis to Crohn’s disease. Most of these are chronic, non-life threatening conditions requiring long-term treatment. And they’re conditions in which it takes a while to determine whether the drug is working – unlike many cancer drugs and unlike some existing biosimilars such as EPO, where doctors can quickly switch patients if they feel a particular drug is less effective. Prescribers may be less willing to use a biosimilar for such chronic conditions than in the case of, say, a terminal cancer patient.

And multiple indications mean at least some specialists won’t have any relevant clinical data: Hospira/Celltrion has generated clinical trial data only in ankylosing spondylitis and RA, none in gastrointestinal (GI) conditions. (See “Celltrion’s Clinical Trials.”) The partners are hoping that preclinical data, including binding and activity assays, will convince the regulator to allow it to extrapolate, but that’s unclear: GI diseases are mediated by membrane-bound TNF-alpha, as opposed to soluble TNF-alpha for the inflammatory diseases. “There’s a risk that Celltrion has to conduct an additional trial in Crohn’s disease to obtain the full Remicade label,” notes Mark Purcell, analyst at Barclays Capital. He, like others, is highly confident of approval, but puts the chances of a full label at 70%.

Celltrion’s Clinical Trials

Celltrion Inc. conducted two pivotal clinical trials of Remsima: PLANETRA in RA, designed to show equivalence in combination with methotrexate, based on pharmaco-kinetic (PK) and efficacy parameters. But since the combination with methotrexate can reduce trial sensitivity, a second trial, PLANETAS, was performed using Remsima as a monotherapy in ankylosing spondylitis. This was designed to provide a more sensitive assessment of PK comparability.

SOURCE: Barclays Research; clinicaltrials.gov

A limited label would sorely handicap Remsima, since it would effectively shut the drug out of many hospital tenders, prevalent in markets including the Nordic countries, Germany, and the UK. Tendering hospitals or payors would still have to buy the originator drug for the remaining indications, which “gives the innovator plenty of leverage to lure buyers with a lower price, so long as they don’t split their tender with the biosimilar,” Sanford Bernstein analyst Ronny Gal explains.

Still, even with a full label – and a 30% price discount, which is what Hospira management has indicated it will offer – the going may be tough for Remsima. That’s especially true in southern Europe, where a cultural reticence even toward small-molecule generics still reigns. “I wouldn’t be comfortable prescribing biosimilar infliximab,” notes Marc Bardou, a professor of clinical pharmacology and gastroenterologist at the University of Dijon, and previously a member of the French drug reimbursement authority, the Transparency Commission. “Its clinical efficacy is only being tested in one indication, and it’s not the one that interests me.” Hence Bardou reckons among French gastroenterologists at least penetration “will be more or less non-existent”. Rheumatologists are likely to be somewhat more open to usage – Gal of Sanford Bernstein estimates the drug will ultimately take a 30% share at a 30% discount.

The only surefire way to promote biosimilar use in France (and other generic-resistant markets) would be via automatic substitution, and/or stricter usage mandates, whether directly via quotas or through tighter budgetary control over hospitals.

EMA can’t mandate automatic substitution, though, and so far no national European authority has done so for retail pharmacists either. Substitution does occur in hospital pharmacies in several markets, however – and that’s where most of the next-generation biosimilars will be dispensed.

Biosimilars: A Northern European Opportunity?

Indeed, one of the several important lessons from the first-generation biosimilars is that uptake patterns differ widely across markets and indications.

So a lack of enthusiasm for biosimilars among French gastroenterologists isn’t representative; indeed, that group is probably one of the hardest sells of all. In markets where generic penetration is high, such as the UK, Sweden, and Germany, Remsima’s chances of a decent uptake are far higher. Here, regulatory structures encourage generic (and biosimilar) uptake. Payors have a stronger influence on prescribing and can therefore override any physician bias towards branded drugs.

Thus, Germany has quotas for biosimilar EPO, which regulators have effectively declared to be equivalent to the originators. In at least one region, Westfalen-Lippe, those volume quotas are as high as 60%. Overall volume penetration of biosimilar EPO and filgrastim in Germany is close to 60%, according to IMS Health. “As long as a biosimilar is approved by EMA, it is fully regarded as equal to branded biologicals,” confirms Detlev Parow, head of supply management at DAK Gesundheit, Germany’s third-largest payor. “So the use of biosimilars is very common, and they are widely accepted. It will be the same with anti-TNFs” such as infliximab, he asserts. Indeed, Gal cites a poll of German rheumatologists that reports nearly 90% were open to using biosimilars. In Norway, annual hospital tenders will simply favor the cheapest product, biosimilar or not – meaning Remsima or Inflectra could dominate the entire market.

The UK situation is less clear-cut: on the one hand, cost is a huge consideration for the various regional commissioners. Yet “we’re conservative by training and tradition,” notes Dr. Richard Rees, MBBCh, a consultant rheumatologist and clinical lead for rheumatology at Imperial College Healthcare National Health Service Trust, a group of hospital and specialist services with its own budgetary control. “We’re taught to be suspicious of anything new [biosimilars included], and prefer to stick with what we know and understand.”

Rees isn’t convinced that even a green light from EMA would provide the reassurance that UK rheumatologists would like over Remsima’s efficacy and safety. But the country’s cost-effectiveness watchdog the National Institute of Health and Care Excellence (NICE), whose output drives most prescribing decisions, says it has no plans to review biosimilar infliximab in any indication. Indeed, it’s unclear whether NICE will review individual biosimilar drugs at all, since so far it has done so only for Omnitrope (biosimilar growth hormone), even though many more are approved. All that’s available on the institute’s web site is the following: “Biosimilars are different to generic drugs. Any guidance on biosimilars will use brand names as substitutability and interchangeability cannot be assumed, and ultimate decision making on biosimilars versus originator biologic must rest with the responsible clinician.”

Still, Rees admits that in the end, even at Imperial College Healthcare, which has more budgetary flexibility than most other UK health authorities, “what will swing it is just how big the price difference is.” For chronic use treatments like infliximab, a 30% price cut is significant. (See Exhibit 2.)

Exhibit 2

The Anti-TNF Market Is A Hotspot For Biosimilars Players

Several core brands going off patent in the next five years offers a major opportunity for aspiring players

Source: IMS Health Midas, MAT 12/2012

UK specialists working in areas where there has been direct experience of biosimilars are more bullish. UK oncologist Karol Sikora, MD, PhD, medical director at private cancer treatment network Cancer Partners UK, reckons “there will be no resistance to [complex] biosimilars from the medical community” in the UK. Whether doctors assume that the regulators and the pharmacists know what they’re doing (and he claims most do), payors – hospital or regional health trusts – often don’t allow hospital pharmacies to store branded drugs if generics are available, and doctors aren’t allowed to prescribe them. “Medical students are taught never to use trade names,” Sikora continues. Indeed, biosimilar filgrastim, for example, has captured over 80% of the UK market in volume terms, and vastly expanded the market as well, according to Ken Walsh, manager, global biopharmaceutical pricing at Sandoz International GMBH, a subsidiary of Novartis AG. And, presenting the flip side argument to that of chronic usage deterring biosimilar uptake, Sikora argues that RA may be an even easier space than oncology for biosimilars since “you can always go back to the originator if it doesn’t work as well,” whereas in cancer patients, “there’s often no second chance.”

“Until now, biosimilars have been predominantly a northern European opportunity,” sums up Bernstein’s Gal. And it’s mostly these northern markets that are helping analysts arrive at reasonable, if unexceptional, revenue and penetration estimates for biosimilar infliximab: Bernstein predicts it could capture 40% of the EU market after just three or four years, assuming a broad label and a 40% discount, capturing over $500 million (and triggering a 58% EU revenue drop for Merck). Barclays estimates $780m in sales by 2020, a 30% volume share, and potential 11% boost to Hospira earnings.

Hospira and Celltrion may be helped by the fact that it’s unlikely to see other biosimilar competitors for infliximab, at least for the first couple of years post-expiry – unlike in the case of other antibody drugs such as Humira (adalimumab), Rituxan (rituximab) or Herceptin (trastuzumab). (Analysts say the partners may compete against each other in some tender markets.) [See sidebar, Rituximab: A Popular But ProblematicBiosimilar.] But considering infliximab’s inherent challenges, and that Remicade itself isn’t the most popular marketed anti-TNF as its usage has declined in favor of other anti-TNFs, because of the cost, space, and resource required for infusion, these forecasts give reason for optimism.

[Sidebar#2013800082]

Cost-Crunch Is Driving Payors’ Biosimilar Appetite, Even In Southern Europe

Another reason for optimism is that Southern Europe is changing. Payors in even the most traditionally generic-averse markets are starting to feel the effects of the economic crisis. The last 12 months have seen “a real interest from all of the southern European countries in using more biosimilars,” notes Paul Greenland, head of EMEA at Hospira. He even declares the north-south divide as “a myth”, pointing out that, for Hospira’s current portfolio of first-generation biosimilars, “Our biggest volume markets are now Spain and Italy.”

Regional payors in Spain, in the context of wider health care reforms, are “trying to encourage the use of biosimilars, and also competition more generally, so they don’t end up with monopolistic situations,” claims Greenland. Regional authorities incentivize hospital administrators to stay within budget, although individual prescribers aren’t currently penalized for over-prescribing.

Elsewhere, outdated legal and regulatory structures that have inadvertently blocked biosimilars are being revised. Prior to 2012, in Italy product tenders couldn’t include biosimilars – payors had to tender separately for biosimilar EPO, for example. After five years in the pipeline, new laws now allow cross-tendering, though they may be challenged. A subset of Italian regional payors now force a biosimilar-first approach in treatment-naïve patients, but the delay by the Italian medicines agency, Agenzia Italiana del Farmaco (AIFA) in issuing a white paper on biosimilar usage “is making some [regional] payors suspicious” of the products, asserted Sandoz’ Walsh at the European Generic Medicines Association’s annual biosimilar meeting in London in April 2013.

Still, payors across Europe are pushing for further structural reforms that could ease biosimilar uptake. Sweden’s drug reimbursement agency, Tandvårds- och läkemedelsförmånsverket (TLV), holds monthly ‘reverse auctions’ for small-molecule generics, granting the lowest-price winner a month of exclusivity. This has led to some of the lowest generic prices in Europe, so it’s easy to see why “we’d like to introduce similarly competitive dynamics” for biological (including biosimilars), notes TLV health economist Gustaf Befrits.

TLV itself can’t declare any drug to be substitutable, but is seeking ways to incentivize doctors to initiate patients on biosimilars. Several of Sweden’s autonomous regions are actively promoting biosimilars, especially areas where drug budgets are decentralized down to the hospital level. The arrival of anti-TNFs biosimilars – with their huge budgetary impact – “will trigger all sorts of [further] activities, both at regional and national levels,” predicts Befrits.

Precisely what they’ll be and how fast they’ll arrive is unclear. What is certain is the direction things are moving. Even in France, biosimilar filgrastim penetration has reached 75% of the market for daily administration filgrastim by volume, according to Sandoz’s French country head Frederic Collet, and senior executives within the Haute Autorite de Sante (HAS) are “having discussions” about whether and how to formally encourage biosimilar uptake, according to Bardou, even if these are unlikely to lead to anything near-term.

“We expect future biosimilar uptake to be much easier, since the structures have evolved,” sums up Greenland.

Infliximab: No Revolution, Just A Building Block

It’s all relative, though. First-generation biosimilars left a trail of failed or acquired companies, and overall sales remain unimpressive, at well under $1 billion in Europe despite price drops of 30%-40% or higher. Seven years of biosimilar sales in Europe may indeed mean a tailwind for infliximab, but still, “It will be a couple of years before [prescribers] are comfortable” with biosimilar infliximab, acknowledges Greenland.

It’s not just the molecule’s complexity. Unlike oncologists, nephrologists, and hematologists, the rheumatologists and gastroenterologists that prescribe infliximab haven’t yet been exposed to biosimilars. These factors together explain why Kate Keeping, Director at Decision Resources, warns that infliximab’s fate will be “not entirely indicative” of those of forthcoming monoclonal antibody biosimilars.

“Infliximab won’t trigger a revolution,” concurs Gal. But in introducing new groups of physicians to the idea of a biosimilar, and payors and regulators to a new kind of biosimilar, infliximab will nevertheless be an important building block toward more widespread biosimilar usage. “With each [biosimilar product], you have more data at your fingertips to argue whether the products should be adopted,” says Gal.

Indeed, the slow uptake of first-generation products showed that lower prices aren’t enough. Thus, this time too, “a lot will come down to what Hospira/Celltrion do on the marketing side,” asserts Decision Resources’ Keeping. Celltrion, with no commercial track record in Europe (and whose pending sale, announced recently by its founder-CEO, depends on Remsima’s approval), wouldn’t comment ahead of approval. (See [A#28130417007].) Hospira has significant experience, though, having started from scratch and established relationships with payors through marketing its first-generation biosimilars.

To support infliximab, Hospira will double down on physician education, says Greenland. “We’ll be providing a greater level of education than we were able to provide for EPO or GSCF,” he revealed, though declining to detail the size of the investment. Materials will go into more detail and be distributed across a wide range of stakeholders, primarily prescribers, but also payors and patient groups. And despite different national attitudes to biosimilars, the quantity and type of information will be the same across borders, Greenland indicates. Indeed, he’s part of a project, within the European Commission Working Group on Market Access and Uptake of Biosimilars, seeking to develop sources of unbiased information on biosimilars, agreed by all major stakeholders, including innovators, for use across all EU states.

Hospira may also have to reassure payors and prescribers over the quality and consistency of manufacturing and supply, given that Remsima and Inflectra will be manufactured by Celltrion in South Korea – an unfamiliar company in an unfamiliar market. That said, Celltrion’s production facility is FDA-approved – the first, and only, such plant outside the US, according to JP Morgan. Also, the facility is large and expandable. “We wouldn’t expect any issues with supply or manufacturing,” says Greenland.

Overall, Hospira expects volume uptake of infliximab and other monoclonal antibodies to fall somewhere in between the sluggish uptake curve the company experienced for Retacrit, its biosimilar EPO, at the lower end (hampered by a lack of sub-cutaneous administration in renal patients and some structural issues) and, at the upper end, uptake of Nivestim, its biosimilar filgrastim, where volume uptake was almost double that of EPO.

In value terms, though, infliximab will likely be a whole lot more significant than either of its predecessors.

Innovators Will Respond: Price, Propaganda, And New Drugs

Which is why innovators will respond: there are too many billions of sales dollars at stake. (See Exhibit 3.) “We expect that there will continue to be a lot of misinformation” from the innovator lobby, opines Greenland, notably on product safety.

Exhibit 3

Top Biologic Therapeutic Areas

Along with insulins, mABs and anti-TNFs account for almost 40% of the overall biologic market

*% of global sales based on MAT

IMS Health Midas, MAT 9/2012

In two identical statements, issued separately in response to a request for comment, Merck and J&J warned that it was important for physicians to “fully understand challenges in demonstrating similarity. Given the complexity of biologics, a biosimilar will never be identical to the original product and it is unknown how differences will affect the safety (e.g., immunogenicity) or efficacy of a biosimilar.”

Merck wasn’t about to divulge its marketing strategy in the event of a Remicade copy. But the company won’t need to play an aggressive price game if Remsima doesn’t achieve a full label. If it does obtain a full label, the innovator may respond with moderate price cuts – just as many did for first-generation biosimilars. All the more so, since opaque pricing structures and systems in many European markets already allow innovators to strike deals with individual hospitals and providers without triggering a downward price spiral across Europe as a result of reference pricing.

Indeed, in Germany – which has increased price transparency, but only for new innovative drugs that undergo early-benefit assessment – Remicade is already discounted in most hospitals by an average of 30%. Gal estimates three-way competition with Merck, Celltrion, and Hospira generating a 50% price cut, and a 60% market share for the biosimilar. He has a similar forecast for the UK, where, likewise, “it makes sense for Merck to compete on price, otherwise they would likely lose the entire market.” In Spain, Gal suggests Remsima may take a 30% share at a 30% discount; Italy may only achieve 20% share at the same discount, according to Bernstein estimates.

Launching an authorized biosimilar is another tool in innovators’ armamentarium. It’s one that Roche used highly effectively in India with a biosimilar of rituximab, MabThera, in response to the launch of Dr. Reddy's Laboratories Ltd.’s Reditux. Pricing fell by 60%, while volumes increased eight-fold.

India, of course, isn’t Europe: price sensitivities and volume growth potential are widely different. But innovators may enjoy approval shortcuts from EMA in the case of authorized generics: although innovator-applicants “should in principle fulfill the same [comparability] criteria as for any biosimilar application … if they can provide sufficient reassurance that the manufacturing process is identical to the reference product, this obligation may be waived,” indicates an EMA spokesperson. That said, executives from both EMA and FDA questioned by IN VIVO at the EGA meeting in London were unclear as to what an approval pathway for authorized biosimilars would look like. Christian Schneider, MD, chairman of EMA’s Biosimilar Medicinal Products Working Party (BMWP), said he’d “have to look into it.” Steven Kozlowski, director, Office of Biotechnology Products at the FDA’s Center for Drug Evaluation and Research (CDER), said, “I don’t have an answer, but it’s something the regulator needs to think about.”

Some biosimilar proponents fear that a slew of authorized biosimilars could undermine the sector’s sustainability. But according to Gal they’re likely only for products where there are just one or two competitors, and thus where significant price cuts can be avoided. The tactic will likely be employed on a market-by-market basis, adds Barclays’ Purcell, according to the speed and likelihood of biosimilar uptake. By and large, Gal concludes, “innovators will not fall on their swords” and risk cannibalizing their own brands (as Merck found to its cost when it launched an authorized generic to Zocor (simvastatin) in the US, in response to Teva Pharmaceutical Industries Ltd.’s generic).

Innovators may use other defense tactics such as last-minute manufacturing changes to the reference drug (any change of the process outside the typical 80%-125% confidence range may set a new target product profile for biosimilars). If they do, they might have to gather more data, but it would be easier for them than for a de novo competitor. Or, in rare cases, they could reveal new patents along the lines of the submarine patent uncovered by Amgen for rheumatoid arthritis drug Enbrel in late 2011. This scuppered a handful of biosimilar programs, including one at Merck. (See (Also see "Is Merck Less Bullish on Biosimilars?" - Pink Sheet, 25 May, 2012..) Remicade has a number of known secondary patents that expire later than 2014. So far, there are no signs that these may block biosimilar entry, but it would be unwise to draw firm conclusions given the complexity – and opacity – of biological product IP.

Another unknown: the impact of novel medicines on biosimilars’ fate. In RA, Pfizer Inc.’s oral tofacitinib, for example, approved in the US as Xeljanz, apparently offers similar efficacy to the TNF inhibitors but is more convenient to administer. It could have had a “moderate, yet material” impact on Remsima, according to Gal. In any event, EMA rejected tofacitinib in late April, in part due to safety concerns. But the effect of already-approved new biologics on the uptake of future complex biosimilars remains uncertain: Roche’s Perjeta (pertuzumab) and antibody-drug-conjugate Kadcyla (ado-trastuzumab emtansine) in breast cancer, both used in close conjunction with Herceptin, may allow a highly effective defense from biosimilar trastuzumab post-2015.

These risks leave Hospira, Celltrion, and other biosimilar manufacturers unable to commit immediate, extensive resources to a biosimilar in case innovator responses remove the audience for their sales force, but knowing that without a major marketing and education campaign, the product likely won’t get off the ground.

A Pro-Biosimilar European Regulator?

On the plus side, regulators appear favorable to biosimilars, especially in Europe. EMA was prompt in creating the biosimilar pathway in the middle of the last decade, and in issuing related guidelines. Ongoing updates to those guidelines include several examples of increased flexibility, for instance in allowing the use of a non-EU approved comparator product “under certain conditions.” They continue to emphasize product-specific judgments as to the extent and nature of studies required to prove biosimilarity, but provide further details on the use of pharmaco-dynamic markers, and of surrogate as opposed to hard efficacy endpoints.

Revisions to the biosimilar heparin guidelines most explicitly illustrate a growing willingness to consider analytical techniques in lieu of some clinical data. (See [A#00130401013].) Meanwhile, the FDA is undergoing what Sandoz’s head of global biopharmaceuticals development Mark McCamish, MD, PhD, calls a “paradigm shift” in its approach to confirming similarity. Indeed, asserted Kozlowski at the EGA conference, “resolution of quality – through structural and functional characterization – is a far more refined tool than clinical trials to establish similarity.” Thus, in theory at least, the agency “is trying to apply a science-based approach to looking at similarity, instead of requiring a 5,000-patient study,” declared McCamish at a London event in February.

Innovators will also exploit the fact that regulators are bound by science: they will produce scientific arguments as to why the various conditions/disease-stages their drug treats are sufficiently different for it to be unwise to extrapolate across indications. EMA and the biosimilar developers “are thereby forced to find a way to counter the [innovators’] arguments,” notes Bernstein’s Gal. But there’s support from within EMA in doing that: EMA’s Schneider, reflecting his personal views, wrote a thinly veiled pro-biosimilar campaign in the March 2013 edition of the British Medical Journal Group’s Annals of the Rheumatic Diseases, attempting to challenge misperceptions around biosimilars. One fundamental point, backed by data, was that natural variability in innovator biologics (due to manufacturing changes, etc.) mean it’s quite feasible for a biosimilar to be as close to, if not even closer to, the original as the original is to itself over time.

FDA has been hampered by innovators’ success in designing a highly innovator-friendly pathway. But it does have a mandate to declare interchangeability, a first in the West. Obama’s proposals for reduced exclusivity for biologics, contained within the 2014 budget, are unlikely to see the light of day. If they do, though, they could provide further fillip to the long term sustainability of sector beset by delays.

Payors Will Win In The End

As economic realities push the balance of power in most health care systems away from prescribers towards payors, so biosimilars will be more widely embraced. Budget-holders will use all the levers at their disposal – quotas, tenders, tiering, financial penalties – to drive doctors’ behavior. Already in the UK, points out Sikora, “NHS doctors aren’t part of decision-making process” as to which drugs are paid for. Without the time, and often without the inclination, to read significant material on how and whether biosimilar Remicade or Herceptin is the same as the originator or not, “they will think of biosimilars as generics,” predicts Sikora.

Meanwhile, better tracking and tracing systems will build confidence among all stakeholders and remove some of innovators’ anti-biosimilar arguments: Norway expects its information technology system linking doctors’ prescriptions, product database and all pharmacy dispensing activity will be active by 2017, allowing doctors to trace precisely which batch of which product a patient took. Similar systems are in place in Sweden and Denmark, and planned in the UK.

Copycat biologics offer a significant commercial opportunity – and threat. That much is clear from the extent to which even their staunchest opponents are taking a stake in the game. Amgen, whose six-strong biosimilar pipeline includes infliximab (whose US patent expires in 2018) plus four cancer antibodies, says it spies a “robust,” global opportunity. Granted, they and others aren’t betting the farm and are sharing risk: Amgen in December 2011 teamed up with Allergan PLC (then known as Watson), [See Deal] Merck & Co. is holding hands with Samsung Bioepis Co. Ltd. (a division of Samsung Electronics Co. Ltd.’s Samsung BioLogics), [See Deal] and Merck KGAA’s Merck Serono SA, in a 2012 deal, has Dr. Reddy’s doing the early development work. [See Deal] “Companies want to be part of the game, but they’re not making huge investments up front,” summarizes Barclays’ Purcell. Especially given the high manufacturing costs, and challenges, in creating biosimilars, as illustrated by recent setbacks to clinical trial programs of biosimilar rituximab: Teva and contract manufacturing organization Lonza Group Ltd. (which accounts for about a third of all CMO mammalian cell culture capacity) are reviewing their 2009 joint venture – and indeed the business case for biosimilars – following a halt to their Phase III rituximab trial in October 2012. [See Deal] Samsung and partner Quintiles Transnational Holdings Inc. stopped their clinical program of the same product at about the same time “for internal reasons;” [See Deal] most recently Celltrion itself dropped a rituximab Phase III trial, though plans to restart with a new protocol later this year. (See [A#28130424007].)

Indeed, given Gal’s predictions of modest, 50% margins for biosimilars – decent in generic terms, but unenticing for innovators – some of the drivers behind innovators’ moves may be tactical. All firms, innovator or otherwise, want to build broader, better relationships with all-powerful payors, including those in emerging markets. That means being able to offer a range of products, at a range of prices. And then there’s a tit-for-tat, competitive element too: Sanofi, whose diabetes R&D project director Heinz Haenel, PhD, reluctantly declared the company was ”in favor” of biosimilars at a recent meeting in London, may want Eli Lilly & Co. to believe it will create a biosimilar version of Lilly’s insulin drug Humalog if Lilly pursues its biosimilar version of Sanofi’s top-selling Lantus (insulin glargine), which may be filed shortly. (SeeAlso see "Lilly Puts Faith In Late-Stage Assets In Hopes Of Profit Growth In 2014" - Pink Sheet, 29 January, 2013..)

Biosimilars’ patchy uptake pattern – which will vary by product, indication, market, and even by region – means biosimilar firms will win in some markets, and innovators (and/or innovators-doing-biosimilars) in others.

Payors win regardless. Whatever tactics play out in individual segments or tenders, however quickly, the net effect will be lower prices for certain established biologics.

Biosimilar infliximab itself isn’t going to alter the biosimilar landscape overnight. Changing doctors is, like changing laws and regulators, a long process. For now, “we’re still in first quarter of a four-quarter game,” analogizes Amgen’s head of biosimilars Scott Foraker. As for small molecule generics, whose uptake was slow when first launched in the 1980s, “you have to come up with reasonable expectations,” warns Gal.

Sure, “biosimilar infliximab could eventually have 80%-90% of the market,” he adds. “But that could be ten years after it first arrives.”

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