Legislation to create a pathway for FDA approval of generic biologics should be attached to the reauthorization of the Prescription Drug User Fee Act, Sen. Charles Schumer, D-N.Y., said at a Feb. 14 press conference announcing reintroduction of the bill.

"It is our hope to attach this proposal to must-pass legislation, PDUFA, and move it forward," Schumer said. Senate Health Committee Chairman Ted Kennedy, D-Mass., "is working with us and many others," Schumer noted.

"He may seek a few changes in here but he has told us he will work with us to keep the strength and thrust of this legislation, so that is very important."

Sen. Hillary Clinton, D-N.Y., who serves on the Health, Education, Labor and Pensions Committee, is a co-sponsor of the bill. Rep. Henry Waxman, D-Calif., who is the lead sponsor in the House, said that Clinton "is going to be carrying the burden" in terms of committee activity in the Senate.

In the House, Waxman said it was "premature" to discuss whether the legislation would be attached to PDUFA reauthorization.

A Different Track in The House

Co-sponsor Frank Pallone, D-N.J., who chairs the House Energy and Commerce/Health Subcommittee, said that he plans to have hearings on the bill in "hopefully the early spring." Pallone said he also plans hearings on the reauthorization of the drug and device user fee programs, but "I don't have any specific plan" regarding potential consolidation of the bills.

The reintroduced biogenerics legislation, which creates a pathway for FDA to approve generic biologics on a case-by-case basis, contains two notable changes from last year's bill (¹ Also see "Biogenerics Bill Differs From ANDA System In Exclusivity, Patent Listing" - Pink Sheet, 9 October, 2006., p. 5).

In the new bill, FDA has the discretion to determine whether a product is interchangeable, whereas the previous version allowed firms the option to seek approval solely as a non-interchangeable product. Also, the tax credit for studies on interchangeability, which was never in the previous Senate version, has been dropped from the new House bill.

The change may allow for a more advantageous committee assignment, since without the tax language the new bill avoids the jurisdiction of the Ways and Means Committee, thereby expediting its movement to the House floor. The reintroduced bill, HR 1038, was referred to the Commerce and Judiciary Committees, whereas ² last year's version was also referred to Ways & Means.

The Biotechnology Industry Organization continues to oppose consideration of biogenerics legislation in the context of PDUFA reauthorization. The timeframe in which the user fee bill must be passed is too short to consider an issue of such complexity, the association believes.

BIO's Triangle of Concerns

In an interview with "The Pink Sheet," BIO President Jim Greenwood said that the Waxman bill falls short in each of three criteria that BIO feels are necessary for legislation to create a pathway for follow-on biologics.

Any legislation needs to address patient safety, follow the current science, and provide incentives for the development of innovative biologic products, Greenwood said.

Waxman's legislation needs to include an explicit statement that clinical trials would be required for follow-ons in order to ensure patient safety, Greenwood said. Also, the legislation appears to borrow some language from the Orphan Drug Act regarding peptides, but it should in fact defer to FDA's judgment on all matters of science, the association believes.

Finally, Greenwood said that the legislation needs to establish a minimum period of exclusivity for innovator biologics, probably at least 10 years.

Pallone's panel is not the only Commerce subcommittee which could address biogenerics this year. Oversight and Investigations Subcommittee Chairman Bart Stupak, D-Mich., has sent FDA a letter questioning its "failure" to approve such products (³ Also see "FDA “Failure” To Approve Generic Biologics Questioned By Commerce Cmte." - Pink Sheet, 5 February, 2007., p. 7). Stupak is planning to examine FDA through a number of hearings, which kicked off Feb. 13 with a session on the approval of the antibiotic Ketek .

The Waxman/Schumer legislation has won endorsement from a variety of consumer and business groups, including AARP, General Motors and the AFL-CIO. Generic firms are eying the pathway as a significant new business opportunity.

Pharmacy benefit managers are pushing for passage of the bill by releasing studies demonstrating the potential savings from the pathway. The sponsors are also expected to seek scoring from the Congressional Budget Office.

PBMs See Big Potential For Savings

According to a study released by Express Scripts Feb. 15, the development of a pathway for the approval of follow-on biologics could save the U.S. health care system $3.5 billion in the first year and, assuming a 15 percent upward trend in biotech medicine costs, a potential $71 billion over 10 years.

The ⁴ Express Scripts report compiles data from the company's 2005 Drug Trend Report and IMS to model potential savings in four therapeutic categories currently treated with biologics: interferons for multiple sclerosis, erythropoietin for anemia, growth hormone for growth failure and insulin for diabetes.

The categories were selected because they represent common uses for biologic medicines, and a sizable portion of their use is attributable to biologics that will face patent expiry in the near term.

Generic versions of erythropoietins would account for the largest savings: $2 billion in the first year and $40.69 billion over 10 years, the report estimates. Savings from insulin, interferon and growth hormone over the 10-year period under the analysis would be $16.18 billion, $13.77 billion and $561.5 million, respectively.

The report also includes an analysis of savings for each state and the District of Columbia, with 26 states expected to save more than $1 billion over 10 years.

Savings in each therapeutic area were modeled on assumptions about the percentage of patients that could be treated with a biosimilar product versus a brand-name biologic, the percentage of savings or discount associated with each use, and expected volume of patients expected to use the medication times the number of prescription claims per patient, Express Scripts notes.

The report assumed that 83.4 percent of users would move to a chemically equivalent generic form of the medication (for drugs off patent by 2007), a percentage selected based on Express Scripts' actual generic fill rate. For products without a chemically equivalent version, but with a potential therapeutically equivalent version, a more conservative assumption of 49 percent market shift was used.

The Power of Omnitrope

A 25 percent price discount was applied to biogenerics, based on experience seen with Sandoz's launch of Omnitrope (somatropin) in Germany, Express Scripts said.

Onmitrope has also been approved in the U.S. through the 505(b)(2) pathway, although the product is not substitutable for Pfizer's Genotropin (⁵ Also see "Pfizer’s Omnitrope Options Include Approval Challenge, Substitutability Fight" - Pink Sheet, 12 June, 2006., p. 9).

Another product that could be a measure of PBMs' enthusiasm for use of therapeutically equivalent biologics is Roche's pending continuous erythropoietin receptor activator Mircera (⁶ Also see "2007 NME Prospects Plentiful For Wyeth, Novartis – Other Firms Fall Short" - Pink Sheet, 15 January, 2007., p. 26). If approved, Mircera would compete with Amgen's Epogen (epoetin alfa) and Aranesp (darbepoetin alfa).

Express Scripts' savings estimates for the U.S. health care system expand on the findings released by the Pharmaceutical Care Management Association that predicted follow-on biologics could save Medicare Part B $14 billion over the next 10 years (⁷ Also see "Follow-On Biologics Could Save Medicare $14 Bil. Over 10 Years – PCMA" - Pink Sheet, 8 January, 2007., p. 5).

That estimate was calculated based on actual Medicare expenditure data over fiscal years 2003-2005, combined with projections from the Congressional Budget Office and the Supplemental Medical Insurance Trustees.

BIO called the Express Scripts study "irresponsible" and "fundamentally flawed."

In an interview with "The Pink Sheet," BIO Executive VP-Health Section Amit Sachdev said, "It's based on a series of compounded flawed assumptions," resulting in an overestimate of the potential cost savings, the most significant being that the report assumes there will be interchangeable generic versions of biologics available immediately.

Another flaw is the assumption that follow-on biologics are going to have a market penetration similar to that of Omnitrope in Germany, Sachdev said. In addition, the report does not account for the future launch of next-generation biologics that will take market share from generic versions.

BIO plans to develop a talk paper outlining the flaws in the Express Scripts report, but has not initiated a separate analysis.

- M. Nielsen Hobbs (n.hobbs@elsevier.com) & Jessica Merrill (j.merrill@elsevier.com)

Generic Biologics Bill’s Key Battleground May Be Senate Health Committee

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