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Posts Tagged ‘biosimilars

The Economic Impact of Biosimilars on Healthcare

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By: Devika Kapuria, MD

          Biologic drugs, also defined as large molecules, are an ever-increasing source of healthcare costs in the US. In contrast to small, chemically manufactured molecules, classic active substances that make up 90 percent of the drugs on the market today, biologics are therapeutic proteins that undergo production through biotechnological processes, some of which may require over 1000 steps. The average daily cost of a biologic in the US is $45 when compared with a chemical drug that costs only $2. Though expensive, their advent has significantly changed disease management and improved outcomes for patients with chronic diseases such as inflammatory bowel disease, rheumatoid arthritis and various forms of cancer. Between 2015-2016, biologics accounted for 20% of the global health market, and they are predicted to increase to almost 30% by 2020. Worldwide revenue from biologic drugs quadrupled from US $47 billion in 2002 to over US $200 billion in 2013.

The United States’ Food and Drug Administration (FDA) has defined a biosimilar as a biologic product that is highly similar to the reference product, notwithstanding minor differences in clinically-inactive components, and for which there are no clinically meaningful differences between the biologic product and the innovator product in terms of safety, purity and efficacy. For example, CT-P13 (Inflectra) is a biosimilar to infliximab (chimeric monoclonal antibody against TNF-α) that has recently obtained approval from the FDA for use of treatment of inflammatory bowel disease. CT-P13 has similar but slightly different pharmacokinetics and efficacy compared to infliximab. With many biologics going off patent, the biosimilar industry has expanded greatly. In the last two years alone, the FDA approved 4 biosimilar medications: Zarxio (filgrastim-sndz), Inflectra (infliximab-dyyb), Erelzi (etanercept-szzs) and Amjevita (adalimumab-atto).

Unlike generic versions of chemical drugs (small molecules that are significantly cheaper than their branded counterparts), the price difference between a biosimilar and the original biologic is not huge. This is due to several reasons. First, the development time and cost for biosimilars is much more than for generic medications. It takes 8-10 years and several hundred million dollars for the development of a biosimilar compared to around 5 years and $1-$5 million for the generic version of a small molecule drug. With only single entrants per category in the US, biosimilars are priced 15-20% lower than their brand name rivals, which, though cheaper, still amount to hundreds of thousands of dollars. By the end of 2016, the estimated global sales from biosimilars amounted to US $2.6 billion, and nearly $4 billion by 2019. Estimates for the cost savings of biosimilars for the US market are variable; the Congressional Budget Office estimated that the BPCI (Biologics Price Competition and Innovation) Act of 2009 would reduce expenditures on biologics by $25 billion by 2018. Another analysis from the Rand Corporation estimated that biosimilars would result in a $44.2 billion reduction in biologic spending between 2014 and 2024.

In the United States, a regulatory approval pathway for biosimilars was not established till the Patient Protection and Affordable Care Act of 2010. However, biosimilars have been used in Europe for over a decade, and this has led to the development of strategies for quicker adaptation, including changes in manufacturing, scaling up production and adapting to local healthcare policies. These changes have led to a competitive performance of biosimilars in the European market, with first generation biosimilars taking up between 50-80% of the market across 5 European countries, with an expected cost savings of $15 to$44 billion by 2020. One example that demonstrates a significant discount involves the marketing of Remsima, a biosimilar of Remicade (infliximab). In Norway, an aggressive approach towards marketing of Remsima was adopted with a 69% discount in comparison to the reference product. After two years, Remsima has garnered 92.9% of the market share in the country.

The shift to biosimilars may be challenging for both physicians and patients. While safety concerns related to biosimilars have been alleviated with post marketing studies from Europe, there still remains a significant lack of awareness about biosimilars amongst healthcare providers, especially about prescribing and administering them. Patient acceptance remains an important aspect as well, with several patients loyal to the reference brand who may not have the same level of confidence in the biosimilar. Also, like with generics, patients may believe that biosimilars are, in some way, inferior to the reference product. Increased reporting of post marketing studies and pharmacovigilance can play a role in alleviating some of these concerns.

In 2015, the FDA approved the first biosimilar in the US, after which, it has published a series of guidelines for biosimilar approval, under the BPCA act, including demonstrating biosimilarity and interchangeability with the reference product. This includes a total of 3 final guideline documents and 5 draft guidance documents. Starting in September 2017, the World Health Organization will accept applications for prequalification into their Essential Medication list for biosimilar versions of rituximab and trastuzumab, for the treatment of cancer. This program ensures that medications purchased by international agencies like the UNICEF meet standards for quality, safety and efficacy. Hopefully, this will increase competition in the biosimilar market to reduce price and increase access to medications in low-income countries.

Both human and economic factors need to be considered in this rapidly growing field. Increasing awareness among prescribers and patients about the safety and efficacy of biosimilars as well as improving regulatory aspects are essential for the widespread adaptation of biosimilars.

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Written by sciencepolicyforall

July 19, 2017 at 10:42 am

The Trans-Pacific Partnership and its Impact on Pharmaceutical Affordability

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By: Shakira M. Nelson, PhD, MPH

        For many, the Trans-Pacific Partnership (TPP) was a point of great debate during the 2016 Presidential primaries and election. As a simplified explanation, the TPP is a free-trade agreement involving the United States, Canada, Australia, Japan, New Zealand, Mexico, Chile, Peru, Brunei, Malaysia, Singapore and Vietnam, intended to “level the trading playing field” through the elimination of tariffs and other laws that create trade barriers. In its final form, the TPP would impact up to one-third of world trade and 40% of the global gross domestic product. Many who debated the ramifications of the TPP did so in the context of foreign policy interests. Although aligned with foreign policy, a major part of the TPP deals with intellectual property protection, and pharmaceutical drug development. If implemented, the effects of the TPP could greatly diminish public access to affordable medicines, both domestically and internationally. Moreover, the stronghold the TPP places on intellectual property could limit the development and marketing of less expensive options.

Intellectual property can be divided into two categories: industrial property and copyright. Patents, trademarks, and industrial design fall under industrial property. Patent development is a large part of scientists’ work, seen as almost a necessity to incentivizing innovation. Many argue that, without the ability to patent inventions and significant findings, scientists would not be able to generate profits used to sustain research and development; within the pharmaceutical industry, patents are the proverbial bread-and-butter. When in place, patents create a stronghold around the release of new chemical drugs, which prevents competition by generic brands. The standard length of time of a patent for a chemical drug is 20 years, which starts from the time the drug is invented.

Many new medicines under development today fall under the category of ‘biologics’. As the name suggests, biologics are treatments made from biological sources, and are very different from chemical drugs. Created to treat a multitude of diseases, including Ebola and cancer, biological sources include vaccines, anti-toxins, proteins, and monoclonal antibodies. Given their structural complexity compared to traditional drugs, and use of recombinant DNA technology, biologics are more difficult, and costlier to make. Moreover, manufacturers have a greater burden in ensuring product consistency, quality, and purity over time. This is done through certifying that the manufacturing process remains the same over time. Because of this, it is estimated that the price to manufacture biologics cost on average more than 22 times the price of chemical drugs. Current laws state that generic biologic development, known as biosimilars, cannot be approved until 12 years after the branded product has been approved – this is known as an exclusivity period. This was enacted under the Biologics Price Competition and Innovation Act of 2009, by the Food & Drug Administration (FDA).

The challenge with current policies is establishing a period-of-time that balances the need for companies to generate profits and cash flows, which will incentive them to conduct more research and compensate them for the extensive manufacturing processes, with the need to provide greater access through launching generic drugs and biosimilars. The trouble with the proposed policies of the TPP agreement is that they seem to embolden the pharmaceutical companies by introducing changes that would prevent competition from generics and biosimilars for longer periods of time than the current basic terms. The implications of this are far-reaching, as it may lead to a significant increase in the current costs of pharmaceutical drugs and biologics, hindering the health of the patients who rely upon these treatments.

Critics of the current system of patent length and biologic exclusivity periods fear that rather than incentivizing innovation, companies are being rewarded through their ability to charge higher amounts for drugs without the fear of competition on the market. Health policy experts concur, identifying policies such as the Hatch-Waxman Act of 1984 in allowing for the creation of drug monopolies, and “going too far in compensating the pharmaceutical industry at the public’s expense”. A report released in 2009 by the Federal Trade Commission stated that biosimilar development was more difficult to achieve than traditional generic drugs. For example, development requires comparisons to the original biologic, to prove efficacy and equivalence. Biosimilars must share the same mechanism of action, with no clinically significant differences in terms of safety or potency for the approved condition of use. The steps necessary to achieve this are significant, and therefore imposing a 12-year exclusivity period on biologics may be unnecessary. US Congressmen have pushed to compromise, floating an amendment to the TPP that would lower the exclusivity period to 8 years. However, critics and patients who rely upon drug competition to lower market prices, have protested this amendment stating that costs of new drugs and biologics are too high, and 8 years is too long of a length of time to wait for affordable generics and biosimilars to come on to the market.

The impact of decreasing the length of time it takes for biosimilars to come onto the market can be seen with Neupogen, a leukemia drug that was first approved by the FDA in 1991. Delivered via injection, Neupogen costs patients $3,000 for 10 injections. With injections needed daily, this drug could carry a price tag of well over $100,000 per year. It wasn’t until recently, however, that the first biosimilar was approved on the US market. The biosimilar, Zarxio, was approved as a leukemia drug and is priced at more than $1000 less than Neupogen. This pricing has the potential to decrease the yearly costs of this drug from $100,000 with Neupogen to $55,000-$75,000. Further evidence of these financial savings was provided by the Rand Corporation, which predicted a savings of over $44 billion over 10 years with an increased approval of biosimilars, for patients who rely upon these specific cancer treatments.

Internationally, the policies of the TPP also have far reaching effects on the availability and costs of pharmaceuticals. The 12-year exclusivity period would be imposed upon the other countries involved in the TPP, where currently for some, such as Brunei, there is no current exclusivity protection. By imposing the 12-year period, global competition could become restricted. Additionally, the TPP proposes other key patent protections that play a bigger role on the international market. One protection, known as evergreening, allows drug companies to request patent extensions for new uses of old drugs. The immediate effect of this is an extension of monopolies on drug sales for minor reasons. The second protection allows pharmaceutical companies to request patent extensions if it takes “more than 5 years for an application to be granted or rejected.” Advocacy groups fear that the price of drugs would undermine the efforts of health initiatives, such as the Global Fund to Fight AIDS, Tuberculosis, and Malaria. These initiatives rely upon price competition to manage costs, with the availability of cheap generics helping drive costs down.

Although the current administration has ended the USA’s association with the Trans-Pacific Partnership, it is important to note that other countries may try to implement some of the policies, affecting the availability and affordability of drug treatments. To decrease this burden, the US could work to assist in negotiating exceptions for the poorer and smaller countries, to help them meet any challenges they may come up against. Within the US itself, it is important for policies, laws and any future trade agreements to be modified, with more of a focus on the affordability and regulation of drugs and biologics. Imposing price controls may offer a modest benefit, but may not be a long-term solution. A focus on lowering the patent length for new drugs and biologics can be an immediate step. Although the push back from pharmaceutical lobbyists will be substantial, alleviating the financial burden on families afflicted with cancer and diseases should be the focus.

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Science Policy Around the Web – March 13, 2015

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By: Thomas Calder, Ph.D


Drug Policy

F.D.A. Approves Zarxio, Its First Biosimilar Drug

For the first time in the U.S., the Food and Drug Administration has approved the use of a “biosimilar” drug, called Zarxio. This drug will be prescribed for cancer patients undergoing chemotherapy to help prevent infections. Biosimilar drugs are essentially generic versions of costlier drugs known as biologics, which are created from a living cell instead of a chemistry lab. Many European countries have already approved several biosimilar drugs, but the U.S. patent system has previously prevented their approval. The complex creation process of brand-name drug has essentially protected these drugs from competition. New technologies are allowing drug companies to create biosimilar drugs to overcome these patent rules, which may equate to big savings for the healthcare system. Zarxio is projected to reduce healthcare costs by $5.7 billion in the U.S. over the next 10 years. According to Dr. John K. Jenkins, director of the Office of New Drugs in F.D.A.’s Center for Drug Evaluation and Research, “The biological products tend to be products that have very high prices. With competition, one of the goals is to see hopefully lower prices to make access better for the patients who need these products.” Currently, 11 other biosimilars are in development, and if approved, Express Scripts estimates the U.S. will save $250 billion over the next 10 years. (Sabrina Tavernise and Andrew Pollack, New York Times)

Ebola Research

New Ebola drug trial starts in Sierra Leone

An experimental drug to combat Ebola is entering phase II trials. Researchers are testing the drug in Sierra Leone, which is still experiencing 10 new Ebola cases everyday. The drug consists of small RNA molecules that were coded to interfere with the replication process of the Ebola virus. These RNAs are encapsulated in a lipid nanoparticle that transports and delivers the RNA to its target. The researchers hope to enroll up to 100 patients for this trial, and potentially use non-enrolled patients as controls. There are several challenges to this clinical trial. First, the drug must be administered for 2 hours, and will therefore require a doctor or nurse to monitor the patient for long periods of time while wearing protective equipment in the intense tropical heat. Second, the drug may have dangerous side effects, such as an extreme immune response known as a “cytokine storm.” Third, new Ebola cases are continuing to drop and therefore, there is a short time frame to test this new drug and potentially begin phase III trials. According to Trudie Lang, a global health researcher at the University of Oxford, “We are looking for a big effect, and if there is a big yes or a big no, we hope to see that sooner.” If the drug is ineffective, the researchers hope to quickly test a different drug while there are still Ebola cases in western Africa—with the ultimate goal of saving lives in future Ebola epidemics. (Kai Kupferschmidt, ScienceInsider)

Federal Research Funding

Physical scientists offer outside-the-box idea for funding U.S. basic research

Federal funding for research and development (R&D) in the U.S. has been decreasing in recent years, when adjusted for inflation. The downward trend in buying power may continue into the future. In fact, the percentage of the federal budget that is dedicated to discretionary spending is projected to go from 36% in 2012 to only 23% in 2040. Therefore, strategies may need to be developed to support and maintain federally funded R&D programs. Two physicists, Michael Lubell and Scott Franklin, have proposed a unique idea of creating a $100 billion dollar endowment called the “Research Bank.” This endowment would provide roughly $7 billion every year for research funds. The scientists proposed that the original funds could come from taxes of overseas corporate profits. According to Lubell, convincing congress of this plan is a “heavy lift,” especially since taxing overseas corporate profits is highly controversial. While this funding strategy may never gain traction in congress, Lubell and Franklin are helping to foster policy discussions on R&D funding strategies. (Robert F. Service, ScienceInsider)

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Written by sciencepolicyforall

March 13, 2015 at 9:00 am