Biosimilars mean competition, not marketing oblivion, for biologic brands

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When patents expire on brands like Merck's cholesterol pill Zocor, million-dollar ad budgets usually fizzle as cheap generic competition takes over the market. Experts say the situation will be different once biologic brands face competition from follow-on biologics (FOB) in the US. Far from sapping promotional dollars like small-molecule generics, biosimilars could spur marketing by makers of follow-on and original biologic alike.

The historic passage of two healthcare reform bills Sunday, including a Senate bill with an approval pathway for biosimilars, means biologic brands could see rivals replicate and market similar products. The legislation, signed by the president today, lays out a series of requirements for the FDA to consider FOB applications.

But biogenerics will be more like branded products than small-molecule generics, said Gil Bashe, who chaired CBI's 2010 Summit on Biosimilars and Follow-On Biologics last week in Washington, DC. “People look at biosimilars and assume we're looking at a world of generics, and we're not,” he said. Biosimilars will create two realms of competition—the innovator competing to make its product better and the biosimilar itself.

New biologic products are protected by 12 years of data exclusivity under the reform bill—far longer than the usual five years given to small-molecule players. After that, biosimilar competition should prompt innovators to maintain marketing, said Bashe, who is EVP and director of the health practice at PR firm Makovsky + Co.

“Traditionally when a small-molecule product goes generic, a company ceases to support it; that won't happen here,” he said. Competitive forces may drive innovators to invest in more clinical trials, exploring the possibility of new indications.

Like the originator, biosimilars will involve a lot of infrastructure—regulatory, manufacturing, marketing and sales support. Advertising and medical education companies will need to help show physicians how these products are similar, but not bioequivalent to the original, a distinction that will take time to sink in.

“Biogenerics will require more marketing support than generics in general because it's a new concept,” said Islah Ahmed, MD, global medical director for specialty pharma firm Hospira, the only US company currently marketing a biosimilar.

Hospira's Retacrit was approved in Europe in 2007 as an epoetin biosimilar to Janssen-Cilag's Eprex anemia treatment. It has since become available in 17 countries, competing with other erythropoiesis-stimulating agents like Eprex (sold as Procrit in the US). Hospira has used medical-affairs agencies to educate physicians on the safety and efficacy of Retacrit and a sales force to detail doctors.

Higher manufacturing costs will be built into biogenerics pricing. Look for 20-30% discounts, rather than the 70-80% price cuts seen among drugs like generic simvastatin.

“The model will be like branded to discounted-branded, rather than branded to generics,” noted Bashe, adding that only a few biopharma players will be able to afford to enter the space.

As for potential biogenerics targets, products with a very good history of safety will be considered. “The key hurdle to entering this marketplace is physician confidence and safety,” he said.

Hospira is hoping to bring biogenerics to these shores, starting with Retacrit and other treatments used in the renal and oncology settings. The company has several recombinant monoclonal antibodies in testing.

The FDA has yet to flesh out an FOB approval process, including such details as whether new clinical trials will be needed.

“The FDA should have authority to require clinicals on a case-by-case basis,” a Hospira spokesperson said. “Initially, we expect there will be requirements in the United States for limited clinical studies. We are ready to conduct such reasonable trials and also expect to be able to leverage our experience in Europe.”

As of September 2009, less than two years after their initial EU launch, epoetin biosimilars have captured 6% of the total epoetin market, including more than 35% of the German short-acting epoetin market (in units) and just over 20% of Germany's total epoetin market, according to Hospira.

Hospira also found that biosimilars have impacted price, with total sales declining 15% on flat annual unit sales.

Bashe predicted that the US experience will be different, despite his belief that 1-4% market share will go to biosimilars in the first five years and 10-20% during the next five.

“This is not a question of erosion of the industry,” he said. “This is a question of transformation of a part of the industry.”

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