Tony Hagen is senior managing editor for The Center for Biosimilars

Tony Hagen

Editor's note: Read the first story in this series about the 

Memorial Sloan Kettering biologics drug pricing model

A proposal to cap biologics prices on the theory that biosimilars are not producing hoped-for savings is not practical and could undermine savings achieved so far with these agents, a diverse panel of biosimilars professionals told The Center for Biosimilars

The Drug Pricing Lab at Memorial Sloan Kettering (MSK) has developed what it calls the 

Production Plus Profit Pricing (P-quad) mode

l, which would allow originator companies to enjoy product exclusivity for a maximum of 12 years, as guaranteed under the Biologics Price Competition and Innovation Act (BPCIA); however, after that point, originator product and biosimilars would be priced according to production costs and a 10% profit only.

“We assume that net biologic prices (after rebates) paid by plan sponsors and the federal government would decrease to 35% of current levels following the end of the 12-year exclusivity period,” said a Milliman report on P-quad commissioned by the Drug Pricing Lab.

Gross spending on biologics increased 14.6% annually from 2015 to 2019, according to Milliman, and reining in this meteoric rise is essential to ensure access and affordability for patients; however, P-quad would involve a disruptive reconstruction of the pricing system, said Gillian Woollett, principal research scientist for Avalere Health, which consults on health care issues for health plans, providers, government agencies, and industry associations.

“Biosimilars approved in any of the highly regulated markets can compete with their reference products if the reimbursement and commercialization incentives are fair—hence, we do not need to wholly remake the US free market system to enable their use. Indeed, that would be counterproductive and likely extremely slow,” Woollett said.

“The proposal requires the originators to disclose their development costs to provide the base for the future 10% profit after exclusivity expires, and I simply do not see that happening. Hence, their proposal is not feasible either,” she added.

Stacie L. Ropka, PhD, an intellectual property attorney with Axinn, Veltrop & Harkrider, who specializes in the life sciences, noted that patents obtained for biologics products often extend protections well beyond the 12 years of guaranteed exclusivity under the BPCIA and cannot be swept away so easily.

“It appears from the description of P-quad provided by the Drug Pricing Lab and Milliman that patent rights would not entitle originator companies to longer protection from biosimilar price competition, and this is problematic from a legal standpoint as it would take away the property rights afforded under the patent laws of the United States,” Ropka said. "Presumably, originator companies would still be able to use their patents to protect market share," Ropka added.

If P-quad were to be implemented, the battleground could potentially shift toward emphasis on production techniques, which are often proprietary and could give one company an advantage over another, Ropka said. “For example, you have to worry about the patents that protect methods to increase yield thus bring down the costs of production. Biologics companies are working quite a bit on bringing the costs of production down.” 

Originator companies would be able to recoup their product development costs under P-quad, but biosimilar companies would not be able to do the same, and it has been estimated that the costs of developing a biosimilar may reach $200 million. This, too, is problematic. A biosimilar developer that cannot have its development costs factored into the product price may be discouraged from producing, Ropka said. “If there is no upside for a biosimilar, why would they bother?”

Ivo Abraham, PhD, a professor at the University of Arizona Center for Health Outcomes and PharmacoEconomic Research, agreed, saying “given all the challenges in the United States to get your product approved, starting with patent minefields and litigation, often over minor details.”

He suggested that preclinical development, clinical development, and marketing expenses are background costs of bringing biosimilars to market that do need to be compensated.

Given the many stakeholders in the biologics marketplace, there are likely to be many competing arguments for how this formula should be determined, and the P-quad formula for determining manufacturer compensation, along with the proposed 10% cap on profits, would inevitability face stout opposition in court, Abraham said.

The P-quad model was developed by Peter Bach, MD, MAPP, director of MSK’s Center for Health Policy and Outcomes, and Mark Trusheim, MSc, a visiting scientist with the Sloan School of Management at Massachusetts Institute of Technology.

P-quad underrates the accomplishments of biosimilars thus far in bringing medicine into the affordable range for many Americans, said Charles L. Bennett, MD, PhD, a professor in the clinical Pharmacy and Outcomes Sciences department at the College of Pharmacy of the University of South Carolina.

“Peter Bach's proposal of setting biologic prices at cost-plus rather than allowing for competitive markets to work will set biosimilar development back a decade,” Bennett said. “The current utilization and economic success of the first 2 US oncology biosimilars, for filgrastim and epoetin, now account after a few years for up to 70% market share [vs originator brands] and 40% price reduction.”

Similar advances can be expected for other biosimilars as they become established, Bennett said. “Savings with other biosimilars will occur in the competitive marketplace, pending policy attention to anti-competitive pay-for-delay agreements and extensive patent thickets used by reference biologic sponsors. As former FDA commissioner Scott Gottlieb noted in the FDA's Biologic Action Plan, strengthening competition in biosimilar markets, rather than setting low prices for originator biosimilars, will facilitate biosimilar savings for all biosimilars.”

Abandoning free-market pricing dynamics could undo much of this progress, he said. “Artificial pricing is a terrific way to stop innovation and to end the rollout of potentially blockbuster savings with biosimilars.”

Articles

Biosimilars get short shrift in a proposed pricing model developed by the Drug Pricing Lab at Memorial Sloan Kettering (MSK), experts say. 

Biosimilar Experts Poke Holes in MSK's P-quad Model on Biosimilar Pricing 

The US biosimilars market has been slow to develop, and 6 years after the first biosimilar appeared on market, biosimilars are available in just 7 drug categories and average discounts from originators afforded by these agents are 30%. To some, this pace of biosimilar adoption and the savings achieved are not adequate.

, the longtime drug pricing critic Peter Bach, MD, MAPP, director of the Drug Pricing Lab and Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, has proposed that after a 12-year window of product exclusivity, profits on originator biologics should be capped at 10% above costs of production and distribution.

In what Bach and his co-authors have dubbed the “P-quad” system, prices on originator products would likely drop by 35%. P-quad stands for Production Plus Profit Pricing. “We propose that it is time to assess the success of the [Biologics Price Competition and Innovation Act] 11 years after its passage. Both evidence and market realities suggest biosimilar policy is not achieving its intended objective,” they wrote.

prepared by the actuarial and consulting company Milliman for the Drug Pricing Lab, under a scenario of the P-quad system and biosimilar competition combined, federal government health plans would save $140 billion from 2021 through 2025, vs an anticipated $45 billion under the current system, which allows originator and biosimilar companies to set their own prices. Across public and private payer plans, the total savings estimated under the combination scenario would be $360 billion vs $95 billion, respectively, the Milliman report said.

“Policymakers should be asking if biosimilars are challenging every biologic drug that has reached its end of exclusivity (or nearly so), and whether that competitive pressure is meaningfully driving down net prices for both the innovator and its competing biosimilars. Today’s biosimilar market evinces neither of these features,” Bach, Mark R. Trusheim, MSc, and Nancy Yu, MBA, argue in their report titled “Biosimilars: Market Changes Do Not Equal Policy Success.”

The originator products facing biosimilar competition currently in the US market are a small minority compared with the number of biologics that still do not face such competition, the investigators argue. “That amounts to only 15% of all biologic drugs that were past exclusivity facing any competition.” Further, there’s little hope for dramatic improvement, they contend. “The market will not stay like this over the next decade, but it isn’t likely to improve that much either.”

According to the Milliman report, the P-quad proposal for a 10% cap on profits would apply to biosimilars as well, and this has the potential to discourage originator manufacturers and biosimilar developers from entering the market because they would not be allowed to include in their pricing the cost of original product investment or extra padding for future drug development.

Milliman also notes that, historically, in the 24-month window after launch, biosimilars have been much less successful than generics at achieving market share over more costly originator products. “Biosimilar market share varies considerably by product and time from launch, with 30% on average expected after 24 months,” the report said. By contrast, generic products have captured 70% to 90% market share within 2 years of launch.

Further, biosimilars can’t be grabbed off a stock room or pharmacy shelf like generic products. Availability is often limited by geographic areas, health care institutions may have different usage policies, and manufacturer rebates are a significant factor determining which biosimilars are accepted and whether originators are preferred by payers.

Milliman considered 3 scenarios to obtain a comparison of projected savings from the P-quad system: no biosimilar competition, the current environment in which biosimilars and originator products compete, and the P-quad system where allowed profits are capped after 12 years of exclusivity.

The following were the estimated savings (approximate) for the P-quad system vs the current system, according to the Milliman analysis:

Private group payer plans would save $155 billion over 5 years vs $30 billion under the current system.

Medicare Part B would save $120 billion vs $50 billion.

Medicare Part D would save $50 billion vs $5 billion.

Medicaid would save $10 billion vs $5 billion.

Individual plans would save close to $20 billion vs under $5 billion.

The P-quad concept assumed a net price decrease of 65% on average for originator products and biosimilars combined; and for a scenario that doesn’t include biosimilars for 41 biologic products, P-quad would increase federal savings by $40 billion over the 2021 to 2025 period, the Milliman report estimated.

Peter Bach, MD, MAPP, and his Drug Pricing Lab at Memorial Sloan Kettering (MSK) argue profit caps will do better than the current biosimilar system. 

MSK's Bach Touts Cap on Originator, Biosimilar Profits

 on the pricing effects of biosimilar competition notes structural “frictions” that reduce potential savings from these lower-cost products and recommends changes in product coding, patent exclusivities, and antitrust enforcement in order to improve competitive dynamics and lower health care costs.

“The fact that a number of biosimilars are approved and do not enter the market, alongside the muted price responses, highlight the frictions affecting the development of competitive markets for biological products after loss of market exclusivity,” write the authors of the paper.

They contend that the current high level of difficulty for biosimilar products to achieve interchangeability status with originator products, the payment structure in the Medicare Part B program for biologics, aggressive industry behavior toward patenting on biologics, and private payer coverage policies for biologics “all contribute to sluggishness in the evolution of biosimilar competition.”

The investigators included Richard G. Frank, PhD, of the Department of Health Care Policy at Harvard Medical School; Mahnum Shahzad of Harvard University; and William B. Feldman, MD, DPhil, MPH, and Aaron S. Kesselheim., MD, HD, MPH, of the Department of Medicine at Brigham and Women’s Hospital in Boston, Massachusetts. The paper was published by the National Bureau of Economic Research.

Biologics “have been largely insulated from price competition,” they wrote. “The top 10 biologics each have cumulative sales of more than $40 billion since launch and have been exclusive sellers for an average of 17 years.”

In the United States, biosimilars have helped to reduce the cost of biologic therapies and supportive products, but on average, the effect has not been dramatic, the authors contend. In the competitive range of 1 to 3 biosimilar entrants to market for a particular drug category, each additional market product results in a price reduction of 5.4 to 7 percentage points, according to the white paper.

Generics, the authors note, have been far more successful in reducing health care costs, largely because they are easier to manufacture than biosimilars and face fewer competitive barriers. Generics now account for 90% of sales in their product category (simple molecule, chemical structure) and have achieved average product discounts of 60% to 90% in their first year of market entry.

The first biosimilar was approved by the FDA and launched in 2015, and since that time, there have been 29 biosimilar approvals. Many approved biosimilars are held up by litigation or settlements between the biosimilar manufacturers and the originator company that delay product entry.

The authors argue that US policy is at odds with the goal of introducing cost competition in the biologics field because CMS, since 2018, has allowed each of these products (originators and biosimilars) to carry its own reimbursement code and price under Part B of Medicare, which they contend “insulates originator biological products from direct ‘head-to-head’ price competition.”

Further, they contend the double standard of approving biosimilars but requiring additional evidence for an interchangeable designation creates doubt in the minds of physicians and patients, leaving open the possibility of meaningful differences between an originator and its biosimilars. This differentiation creates friction in demand for biosimilars and means that by reducing an innovator product price modestly, “an originator may retain more market share than would be the case in small molecule markets with generic competition,” they wrote.

According to a recent study, the prospect of biosimilar competition tends to cause originator manufacturers to raise their prices. Click here for the 

Frank RG, Shazad M, Feldman WB, Kesselheim AS. Biosimilar competition: early learning. National Bureau of Economic Research. March 18, 2021. Accessed March 19, 2021. https://www.nber.org/papers/w28460

Biosimilars are intended to save money for the health care system, but for many reasons, they are not succeeding in this mission, Harvard authors argue. 

Harvard Paper: CMS Coding, Other Factors at Fault for Tepid Biosimilar Savings

Merck said it is taking steps to register its planned biosimilar and women’s health products spinoff as a publicly traded stock corporation. The company filed a Form 10 registration statement with the Securities and Exchange Commission for Organon, which will become an independent business entity housing brands currently under the Merck umbrella, including the women’s health and biosimilar products.

Although biosimilars are on their way to becoming veritable blockbusters for some companies, based on recent revenue reports, this has not been the case for Merck.

Organon, based in White House Station, New Jersey, is slated to become an independent company by the end of the first half of 2021. Merck acquired the company through its merger with Schering-Plough in 2009.

“Merck is confident that the spinoff will deliver significant benefits for both companies, better meet patient and customer needs, and create value for Merck shareholders,” said Rob Davis, executive vice president of Global Services and chief financial officer for Merck, in a 

In partnership with Samsung Bioepis, Merck markets infliximab (Renflexis), trastuzumab (Ontruzant), and etanercept (Brenzys, Eticovo) biosimilars, although not all in the United States, and the products were developed by Samsung Bioepis, not Merck. The company has previously predicted that Organon will generate 75% of its sales revenue from markets outside the United States. In sum, the products included in the spinoff generated 2020 revenue of $6.5 billion for Merck.

The biosimilars to be included in the Organon portfolio generated roughly $250 million in 2019. Kenneth C. Frazier, Merck’s chairman and CEO, said at the time of the spinoff announcement that the company has shifted “the focus of our efforts and resources to our best opportunities for growth.” In its 2020 earnings and revenue breakdown, Merck did not provide details on specific biosimilar earnings.

In the United States, the market for infliximab biosimilars has been the most disappointing in terms of uptake. An Amgen 

 last year stated that as of the second quarter of 2020, infliximab biosimilars had achieved a 20% share of the US market for infliximab, despite having been introduced in the first quarter of 2017. Biosimilars are competitors to originator brands and, costing less to develop, are expected to be offered at discounts; however, in practice, their acceptance and use in the United States have been gradual and the savings achieved modest compared with early forecasts.

Trastuzumab biosimilars were introduced in the United States in the second quarter of 2019 and have been on the market for less time than infliximab biosimilars, but they achieved a 39% share of the trastuzumab market by the second quarter of 2020, according to the Amgen report.

In the United States, etanercept biosimilars have been delayed due to litigation. Sandoz developed the biosimilar Erelzi to compete in this market and received FDA approval in August 2016; however, launch of this product is not expected to occur before 

, owing to Amgen’s patent rights on the original product (Enbrel). Eticovo was approved in 2019 but no launch date has been announced.

Organon’s full year 2021 revenue is expected to be somewhere between $6 billion and $6.5 billion, Merck said. “Organon will be well positioned for growth led by its women’s health and biosimilars portfolios, with expected low to mid single-digit annual revenue growth off of a 2021 base year,” Merck said in a 2021 earnings 

Although Merck is stepping out of the biosimilars business via this spinoff, that was not the case for Pfizer when it discharged its Upjohn unit in 2020, allowing for the formation of Viatris. Pfizer held onto its biosimilars portfolio, which generated 

 in the fourth quarter of 2020, up 86% from the comparable 2019 quarter. Mylan, which merged with Upjohn to become Viatris, also is deeply invested in biosimilars. 

Following lackluster experience with biosimilar marketing in the United States, Merck moves forward with spinoff plan. 

Merck Will Make Its Biosimilars Spinoff a Publicly Traded Company

Early adoption of the trastuzumab biosimilar Kanjinti was high among patients with breast cancer whether or not they had prior use of the originator (Herceptin), investigators said in a poster presentation at the National Comprehensive Cancer Network (NCCN) Virtual Annual Conference 2021.

Investigators set out to measure how quickly patients with a breast cancer diagnosis were started on the biosimilar during the agent’s first year of availability. Kanjinti, an Amgen product, was launched in July 2019. They used Flatiron Health retrospective data to develop 2 patient cohorts: those with early breast cancer (eBC, n = 2149) and those with metastatic breast cancer (mBC, n = 799). Those cohorts were further subdivided into patients with prior reference product (RP) exposure and no RP exposure.

Investigators said that among trastuzumab-naïve patients, the median time from diagnosis of eBC to initiation of biosimilar trastuzumab was 34 days; the respective time for those with a diagnosis of mBC was 30 days.

Among patients with prior RP exposure, 81% of patients with eBC transitioned and 75% with mBC transitioned to the biosimilar within 28 days of the final administration of RP. “Use of [Kanjinti] was observed in both RP-naïve and prior RP-treated patients, with evidence showing comparable patient characteristics between the 2 groups,” investigators wrote (

The investigators found that the first providers began to employ the trastuzumab biosimilar soon after it was launched—within 4 and 12 days of market entry. In the United States, Kanjinti was the first trastuzumab biosimilar to be launched, although it was not the first trastuzumab biosimilar to be approved by the FDA. 

The study did not evaluate for reasons why patients previously treated with RP were transitioned to the biosimilar, owing to a lack of appropriate data, investigators said.

Jin R, Accortt NA, Sandschafer D, Lawrence T, Mahtani RL. Characteristics of breast cancer patients treated with trastuzumab-anns, a trastuzumab biosimilar, in a real-world setting. Poster presented at: NCCN Virtual Annual Conference 2021; March 18-22, 2021. Accessed March 18, 2021. https://www.nccn.org/professionals/meetings/annual_conference_2021.aspx

Investigators observed early adoption of the trastuzumab biosimilar Kanjinti in patients with early breast cancer and metastatic breast cancer. 

Study: Rapid Adoption Noted for Kanjinti During First Year of Availability

Pfizer is offloading a biosimilars manufacturing plant in Hangzhou, China, to WuXi Biologics, backing out of a $350 million investment it began there in 2016 to produce biosimilars for the China market, Pfizer said in a statement.

“After a comprehensive review of the biosimilars market and the company’s global manufacturing network, Pfizer has made a difficult decision to halt its biosimilars programs in China and sell 100% of its equity interest in Pfizer Biologics (Hangzhou) Co. Ltd,” the company said.

as Pfizer’s first biotechnology center in Asia and incorporated what was described as advanced, flexible, single-use biomanufacturing technology that would allow rapid production and savings over existing processes of up to 50%. At the time of the announced construction, an opening was anticipated in 2018. Pfizer said at the time it was encouraged by a series of Chinese government reforms designed to stimulate the biologics industry. The factory was expressly intended for the production of biosimilars and other biologics and was expected to employ more than 150 workers.

 designed to improve regulation of biosimilar and biologics development and also speed up review of product candidates to broaden access for the country’s population. The country has numerous biosimilars on the market, but none of them produced by foreign companies (

Pfizer’s operations at Hangzhou will terminate in the first half 2021, and Wuxi Biologics, which is based in Wu Xi City, China, will use the plant to manufacturer biologics for local and global markets. BioProcess said Pfizer will continue producing drugs for the China market.

In a statement, WuXi said it will acquire Pfizer’s labor force at the 50,000-square-meter Hangzhou plant, which contains a pair of 2000-liter single-use bioreactors and is equipped for filling vials and syringes for shipment in ready-to-use doses.

“We are pleased to work with Pfizer and add the new Hangzhou biologics manufacturing facilities to our global network to address the surging manufacturing demands for late-stage and commercial products,” 

 CEO of WuXi Biologics. “Globally, drug substance and drug product capacities are in urgent need now.”

Pfizer has enjoyed dramatic recent success with biosimilars, reaping 

in biosimilar income for the fourth quarter of 2020, up 86% from the final quarter of 2019. The company launched bevacizumab (Zirabev), trastuzumab (Trazimera), and rituximab (Ruxience) biosimilars in the United States in 2020.

The decision to spin off the Hangzhou plant contrasts with Pfizer’s 2020 decision to discharge its Upjohn division but retain its biosimilars unit.

Pfizer said it has made a business decision to cease production of biosimilars at a $350 million plant it built recently in Hangzhou, China.

Pfizer Scales Down Biosimilars Activity in China

The movement of potential rival products through clinical trial stages and toward new drug application (NDA) filings represents a series of “pipeline shocks” that cause originators to raise their prices, according to investigators who studied how brand prices behave as competitor products get closer to market.

Furthermore, there’s not much incentive for rival producers to enter market at significant discounts because not only do payers automatically cover approved drugs, but also fixed co-pays for tiered medicines tend to muffle the effect of price increases for patients, authors of the study wrote.

The significance is that it may take multiple competitors in a single drug category before the competitive pressure causes prices to decline. The investigators charted the pricing of insulins, primarily, and observed dramatic price increases in originator products prior to the arrival of competitors (

). They also noted steep price increases in products that are likely to face biosimilar competition soon, such as Enbrel (etanercept) and Humira (adalimumab).

The authors called this increasing price phenomenon a “new” paradox of pharmaceutical pricing. Previously, the pharmaceutical industry has been known for the “prescription drug paradox,” which holds that when generics enter market, originator brands lose market share and raise prices of their brands to compensate for the lost income. Although brands might lose additional market share by raising prices, many consumers stay loyal to brands and eschew generics.

In their study of originator pricing, the authors found that as potential rival products moved through early stage trials, the connection between price increases and product development was negligible, most likely because in earlier stages of development, it’s still unclear that drug products will eventually receive FDA approval and incumbent drug producers aren’t as worried about competition. But for those potential rival drug candidates completing phase 3 trials and with NDAs in the offing, the pricing effect is quite strong.

“The competition risk facing an incumbent depends on successful completion of trials by potential entrants, not the initiation of trials,” the authors wrote.

Competition risk varies depending on whether the potential rival is likely to be a new brand with a different formulation or a copy of the incumbent brand. For new product rivals, the chances of successfully completing trials are considerably worse, the authors wrote. The likelihood of moving from a phase 2 trial to phase 3 is just 35.5%, whereas the chance of succeeding with phase 3 trials ranges from 55% to 64%. “Thus, the credibility of the threat of entry increases considerably once a drug successfully clears phase 3,” the authors wrote.

A succession of 2 late-stage pipeline shocks added roughly $58 to the monthly insulin cost for a patient taking about 12.48 mL of insulin, the authors said.

One problem with the current pricing system is that insurers pay so much of the price of biologics and generics that they undermine price competition, they said. This removes the incentive for new market entrants to offer significant discounts from the originator product. At the same time, incumbent manufacturers anticipate this pricing behavior from new rivals and are incentivized to raise their prices to offset revenue loss from the arrival of a competitor drug, the authors said. Even if payers downgrade the preferred tier status for the originator drug, patients may see only small changes to their out-of-pocket payment requirements, which softens the incentive for them to change drugs.

Insulin biosimilars are now approved under the Biologics Price Competition and Innovation Act, although none have been approved since this regulatory pathway was instituted for them early in 2020. The authors studied pipeline shocks from insulin product advances before this pathway was established and observed that insulin prices per mL increased despite the development, approval, and launch of competitors to dominant brands. Similarly, patient out-of-pocket costs for insulin increased 56% from 2007 to 2015, although patient costs as a share of total insulin costs declined, meaning payers picked up the bulk of the price increases.

The 5 potential insulin product entrants studied were Afrezza, Tresiba, Ryzodeg, Basaglar, and Toujeo. NDAs were filed for each of these products during the study period. The incumbent insulins included in the study were Lantus, Novolog, Humalog, Humulin, Levemir, Novolin, and Apidra.

“Many hope that biosimilar competition will [counteract] the ongoing rise in biologic branded drug prices, but so far, there is considerable debate over whether these reductions in price will materialize,” the authors said. “A contribution of our insulin analysis is that it provides real world evidence for the impact of potential biosimilar pipeline shocks.”

In their study of pricing for Enbrel and Humira, the authors found that the biosimilar pipeline shocks resulted in much greater price increases than for insulins. “The biosimilar shocks for each drug increase price for both Humira and Enbrel by over $700 (74.9% for Humira, 63.2% for Enbrel) for a 30-day supply,” they wrote. The amount of litigation over these products also increased as the incumbent manufacturers fought off the potential competition.

In their conclusions, the authors stated they believe that the litigation surrounding biosimilars will boost costs of doing business for incumbent manufacturers and add to the pressure they feel to raise their prices prior to the arrival of rival products. Biosimilar companies also will have to charge higher prices to recoup their legal expenses.

They said the structure of the payer system in the United States contributes to price increases and argued that the muffling effect of fixed co-pays would limit the incentives for physicians and patients to switch to biosimilars as they become available. “This lack of demand response from price increases incentivizes entering biosimilars to reference/shadow price incumbent products in the market,” they wrote.

Another factor that influences end prices of drugs, they said, is that, due to expense and time involved, manufacturers, payers, and pharmacy benefit managers likely do not automatically engage in renegotiation of drug prices, rebates, and tier positions as rival product candidates get closer to FDA approval and launch. These interactions may occur quarterly or less frequently, and therefore, “The market power held by a manufacturer likely persists until after entry occurs, a considerable time frame given FDA review lag between NDA submission and approval.”

The authors concluded “there is considerable work to be done to assess the role of manufacturer-insurer bargaining power.”

Ellyson AM, Basu A. Do pharmaceutical prices rise anticipating branded competition? 

"Shocked" by the threat of competition, originator manufacturers start raising prices long before rival products appear on the scene, investigators found.

Study: Rival Drugs Drive Up Costs

Iceland-based biopharmaceutical developer Alvotech said it is getting closer to becoming a biosimilar marketer with commitments for $35 million in funds from private investors. This represents the second round of a private placement drive to secure $100 million in total. The company completed the first round for $65 million in October 2020.

Although it currently has no biosimilars on the market, Alvotech is developing biosimilars for the treatment of autoimmune disorders, cancer, and inflammation. It has signed multiple partnerships with companies around the world to market these as regulatory approvals are secured.

“We are very pleased to have secured this private placement as we embark on the exciting phase in our evolution from a developer to becoming a manufacturer and supplier of biosimilar medicines, and we look forward to bringing our first products to market,” said Robert Wessman, chair, in a 

The company said its shareholder base includes Aztiq Pharma, of Iceland, which was founded by Wessman; Fuji Pharma, Japan; YAS Holdings, Abu Dhabi; Shinhan, Republic of Korea; Baxter Healthcare SA, United States; Athos (Strüngmann), Germany; and CVC Capital Partners and Temasek, both of Singapore.

 with Cipla Gulf to commercialize biosimilars in Australia and New Zealand. Other global distribution partnerships have been signed with DKSH, Teva, Kamada, and JAMP Pharma.

 in January 2021, and in November 2020, the company filed for approval of an 

 in the United States and European Union.

For more about Alvotech’s biosimilars development and commercialization strategy, click 

Samsung Bioepis has reached an agreement with Yuhan to market an adalimumab biosimilar (Adalloce) in Republic of Korea by the end of June 2021. The product would reference AbbVie’s Humira, according to 

. This would represent the first adalimumab biosimilar to be marketed in Korea. Samsung Bioepis acquired regulatory license to market Adalloce in September 2017.

The tumor necrosis factor (TNF) inhibitor is intended for treatment of rheumatoid arthritis, ankylosing spondylitis, and Crohn disease. The partnership with Yuhan also calls for marketing other TNF biosimilars, including etanercept and infliximab, referencing Enbrel and Remicade, respectively. In sum, the Republic of Korea market for these 3 products is estimated at $176 million. Korea Biomed stated that Adalloce was retailed in the European Union beginning in October 2018 and had amassed sales of $396.6 million.

Alvotech closes on $35 million in funding, and Samsung Bioepis gets closer to marketing an adalimumab biosimilar. Alvotech's planned high-tech expansion is pictured.

Alvotech, Samsung Bioepis Advance on Biosimilars Gameboard

The US Senate has passed a bill that would require the FDA to beef up education on biosimilars in order to improve uptake of these lower-cost agents, which are considered as safe and efficacious as the originator biologics they are patterned after.

The Advancing Education on Biosimilars Act was approved unanimously. The bill (S 1681) was co-sponsored by Senator Maggie Hassan, D-New Hampshire. “Our bipartisan legislation will help lower the cost of health care by educating more Granite Staters and Americans about biosimilars—an under-the-radar alternative to expensive brand-name drugs,” Hassan said in a 

in May 2019 and was voted on successfully in December 2020 but required a fresh vote this year.

Under the bill, the FDA would be required to create a biosimilars education website with information on biosimilars and other biologics covering key statutory and regulatory terms used to describe and classify biosimilars, such as interchangeability. It would have to be tailored to the unique needs of health care providers, meaning the material should be appropriately presented and explained.

The bill would also require that comparative data for originator biologics and biosimilars is made available; and, on an ongoing basis, continuing education programs would have to be maintained to inform health care providers, including nurses, about biosimilars.

A House version of the bill (HR 4400) was introduced in September 2019 and referred to the Subcommittee on Health.

The Senate has passed a bill requiring the FDA to provide educational information that supports and promotes the adoption of biosimilars. 

Biosimilars Education Bill Gains Senate Approval

A safe harbor in the maritime world is a relatively calm place to drop anchor during a storm. In the world of biologics, safe harbor is a legal provision that allows use of an originator product to help develop biosimilars without danger of patent infringement. 

However, case law shows that correctly interpreting safe harbor has been challenging for some. Biosimilar developers are treading cautiously following a 2019 ruling that slapped Hospira with a $70 million penalty for legally unprotected use of Amgen’s epoetin alfa (Epogen).

This is among recent developments that are shaping litigation in biosimilars, according to Rob Cerwinski, JD, a partner in Goodwin’s Intellectual Property (IP) Litigation group who coauthored the updated 

Guide to Biosimilars Litigation and Regulation in the US, 2020-2021 

with Alexandra Valenti, JD, also a partner in the IP Litigation group.

The above-mentioned case involved Hospira’s manufacture of 21 batches of a biosimilar candidate referencing Epogen. Just 7 of the batches were ruled to be necessary for a biologics license application (BLA) for approval of the drug and the remainder were judged to be for commercial use, which was not protected.

“That kind of liability for premarket, preauthorization manufacturing was definitely something that everybody watched very carefully, so I think as a consequence of that ruling, everyone is scrutinizing whether any of their preapproval activities could be held to be commercial instead of purely in support of the FDA regulatory process,” Cerwinski said.

A related issue is the use of patented material by a biosimilar sponsor to comply with FDA postapproval reporting and disclosure requirements. It’s unclear whether safe harbor covers a biosimilar developer for this type of use. “What we’ve seen is some confusion. Sometimes it does, sometimes it doesn’t,” he said.

Antitrust concerns have long been a concern in the biosimilars area because various barriers, such as excessive patenting, product rebates, and misinformation, are perceived to prevent the smooth and rapid uptake of lower-cost biosimilars in markets dominated by originator brands. Many will be watching California’s new pay-for-delay statute, which went into effect January 1, 2020, and was the first state law aimed at thwarting the practice of originators paying generics and biosimilar manufacturers not to market their products, Cerwinski said.

“Will we see actions on the state level by California asserting the statutory authority it now has under that so-called pay-for-delay statute? And if, in fact, California does bring pay-for-delay suits and there are settlements that earn money for California, will we see other states enact similar legislation? I think there are some very interesting issues to watch on the state level on this issue,” he said.

On the federal level, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) require pharmaceutical companies to report patent litigation settlements to the FTC and DOJ for antitrust scrutiny, he noted. Similarly, the new California law requires pharmaceutical companies to report patent litigation suits to state regulatory authorities. “The statutory scheme that California has set up for how it will scrutinize those settlements is somewhat different than the federal rules/case law/practice that we’ve been living with for a number of years now. So, it’s a second layer of somewhat different regulation of these patent settlements that has really caused quite a ripple in the industry,” Cerwinski said.

The Biologics Price Competition and Innovation Act contains a pathway for biosimilar approval that anticipated the growing dominance of biologics in medicine and the need for lower-cost versions of these products. Companies appear to be getting used to the process of hammering out patent disputes prior FDA approval of biosimilars (aka, the patent dance); however, some issues still need clarification, such as the extent of manufacturing process information that must be disclosed to the originator company by the biosimilar developer.

“Is there really any requirement to disclose manufacturing information beyond the detailed information that’s in the BLA? I think parties still struggle with that,” Cerwinski said. “There are still attempts by the reference product sponsors to demand wholesale pre-suit discovery, using that provision. And there are attempts by biosimilar applicants to resist that and simply produce the application, saying, ‘Look, all the information that’s relevant to our manufacturing process is in there.‘ And we haven’t really seen a case to [definitively] resolve that ambiguity in the statute definitively yet.”

Another grey area is the conditions under which a biosimilar maker must reissue a 180-day notice of intent to begin marketing (Notice of Commercial Marketing). Changes to the biologics application and other developments appear to have the potential to trigger such an event and also may require a new patent dance, “but where exactly that line is has not been resolved,” Cerwinski said. “It’s going to take the right case with the right facts in order for the Federal Circuit to resolve this issue.”

Cerwinski and Valenti also have observed a complexity in biosimilars litigation that is commensurate with the complexity of manufacturing these agents vs generics. Biosimilars are covered by many more patents, such as patents for substance combinations (aka composition of matter), methods of use, dosage strength, dosage intervals, devices such as syringes and vials, and impurities and protein charge variation. “That means lots of experts and often-protracted litigation timetables, and what we’ve seen here are very complicated injunction motions that often look like miniature trials,” Cerwinski said.

For a video discussion by Cerwinski and Valenti on other updates to the 

Guide to Biosimilars litigation and Regulation in the US, 2020-2021

The Biologics Price Competition and Innovation Act has been around for 10 years, but grey legal areas still abound, Goodwin attorneys note.