What the new health care reform bill means for biosimilars and how this legislation impacts specialty pharmaceuticals.
The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010, and contains a number of controversial provisions. One of those controversial but very significant provisions is the establishment of a biosimilars pathway, which is outlined within a mere 34 pages of the nearly 2000-page bill.
Many of us within specialty pharmacy have followed this legislation closely and with great anticipation. Patients, physicians, and payers are looking to understand the legislation, the potential impact, and whether it will truly mean a cost savings for the health care system. Headlines related to the high cost of drugs—and specifically to the high cost of specialty drugs—appear almost daily, all of which has served to further heighten the interest and anticipation. Although the bill leaves a lot of work yet to be done by the FDA, key elements outlined include timing, exclusivity periods, pricing, and interchangeability.
Timing and Criteria
A phase-in period was not provided and the FDA may issue a guidance document; however, it is not a prerequisite for approval. It is under this premise that the FDA has signaled an “open for business” approach, where they are accepting and considering applications on a case-by-case basis. The FDA is required to begin a process to develop appropriate user fees and develop performance and safety goals for biosimilars, and to implement that process by October 1, 2012.
Sponsors must submit their applications for biosimilars against a single reference drug that is approved in the United States. This provided the definitive answer to those who speculated that all approved European biosimilar agents would be eligible for immediate approval. New approvals will be based upon analytical studies, animal studies, and clinical studies (including immunogenicity).
Other criteria require the biosimilars applicant to demonstrate the same mechanism of action, conditions of use, route of administration, dosage form, and strength. The approval will be for the same indications as the reference product. The bill places the burden on the FDA for evaluation and approval according to these criteria, but it also extends their authority to waive any of these criteria on a case-by-case basis.
Protection for Reference Products
One of the most highly debated provisions of the biosimilars legislation was that related to the establishment of exclusivity periods. The bill allows for a 12-year data exclusivity period, which has been viewed as a win for biopharma. President Obama sought a period roughly half of that and the Federal Trade Commission went as far as to suggest that no data exclusivity period was necessary.
The bill limits the sponsor’s ability to gain extensions based on minor changes such as route of administration, dosage form, and strength. One year of market exclusivity is granted to the first agent designated as interchangeable for any given reference product.
Biosimilar versions of drugs reimbursed according to average selling price (ASP) received a strong endorsement in the form of pricing guidance. The construction of the bill appears to have recognized the incongruity of encouraging use of lower cost agents while basing physi-cian reimbursement on an ASP plus percentage basis. The bill provides a means for buy-and-bill drugs to be reimbursed by the sum of the biosimilar’s ASP (presumably much lower) plus 6% of the ASP amount for the reference drug. This effectively removed what would otherwise have been a disincentive to use lower cost drugs. Many of these drugs are infused, complex agents, such as monoclonal antibodies, and offer the potential for huge savings, but may take longer to gain approval. This type of pricing incentive may be very necessary and appropriate to foster competition.
Perhaps the most significant provision within the PPACA is the establishment of an Interchangeable Biologic designation. As the bill defines it, inter-changeable biologics “may be substituted for reference product without the intervention of the health care provider who prescribed the reference product.” The criteria for establishing an interchangeable agent is not defined beyond indicating that the product should be “expected to produce the same clinical result in any given patient” and that products administered more than once should not carry increased risk of safety or diminished efficacy because of alternation or switching. It is believed that relatively robust clinical studies, particularly those which address immunogenicity concerns, will be required in order to gain the interchangeable designation.
A primary purpose of establishing this pathway was to foster competition in order to reduce overall health care spending. Successful approval of interchangeable biosimilar agents is key to creating broad utilization of biosimilar agents. Without this designation, the biosimilar agent may need to be written for specifically, just as any other brand. Since most of the branded reference drugs have active sales forces, this creates the need for the biosimilar manufacturer to field a sales or clinical education force to educate the physician community and encourage familiarity with writing for these agents. This increases the cost and burden for the biosimilars manufacturer that may, in turn, reduce the savings that might otherwise be realized in the marketplace.
Experience with noninterchangeable biosimilar agents in Europe suggests that these field educators are necessary to effectively compete with entrenched branded reference products. In order to maximize competition and savings potential for our health care system, interchangeability must be fostered.
Without question, the primary consideration for all must be patient safety. Large molecules are known to be more difficult to characterize; however, that does not mean that safe and interchangeable biosimilars should be considered beyond our grasp. Effective study design and creative application of current technology can afford the means to ensure that safe and effective compounds are made available. Advance planning, well-defined study end points, and good communication will be essential to manufacturers who seek to gain the interchangeable designation.
Since biologics have the designation of “interchangeable” versus the small molecule designation of “substitutable,” it may also leave open the door for the FDA to designate certain drugs as interchangeable only for patients new to therapy. Conceivably, this could be a solution to reduce concerns about immunogenicity as a result of alternating agents.
As the pathway takes shape, 3 important considerations will continue to be safety, savings, and studies. The latter consideration is critical to fostering any opportunity to have the biosimilar designated as interchangeable with the reference product.
Manufacturers will need to be diligent in planning ahead, will need clear guidance when consulting with the FDA, and should also consult their pharmacy partners to ensure that proper, meaningful research occurs. This is essential to ensuring that concerns regarding patient safety and drug efficacy are properly addressed and these new biosimilar products are made available without unnecessary delay.
About the Author Mr. Martin is Group Vice President of Business Development at Accredo Health Group, Inc in Memphis, Tennessee. He joins Specialty Pharmacy Times as an Editorial Board member and offers his insights into the biosimilars market with this article. The Accredo Health Group, Inc is headquartered in Memphis, Tennessee and provides specialty pharmacy and related services for patients with complex and chronic conditions through its Therapeutic Resource Centers.