Article reprinted from The RPM Report May 19, 2009
Biosimilars haven’t had a huge impact in Europe—yet. Sponsors and analysts expect that to change over time. Will the US market parallel the European experience? Read on...
“You can be sure we’re on a winning train, and [sales] will go up,” says Hannes Teissl, head of Biopharmaceuticals at Sandoz, of the biosimilars situation in Europe. “The debate is over how long” it will take.
Novartis AG’s Sandoz is a biosimilars leader, with three marketed drugs: Omnitrope (somatropin, human growth hormone), Binocrit (Epoetin alfa) and Zanzio (filgrastim).
Omnitrope was approved in the EU in 2006 and the same year in the US via the abbreviated 505 (b)(2) pathway—after legal wrangling with a reluctant FDA.
But the drug, despite being at least 25% cheaper than incumbents including Pfizer Inc.’s Genotropin or Merck Serono SA’s Saizen, has hardly been a rip-roaring success. It sells less than $4 million per year in the US according to IMS Health—that’s about 1% of the total growth hormone market. (European figures are difficult to compile because of different distribution systems and lack of transparency.) Nor has biosimilar growth hormone pushed up usage: the number of overall units sold has stayed relatively flat. “It’s not impressive,” summed up IMS Health’s Alan Sheppard, Principal, Global Generics. “Omnitrope has failed to gain significant share” in the US.
Still, an abbreviated regulatory pathway for most biologics doesn’t exist in the US as of yet. The debate is still ongoing as to what such legislation should look like and questions remain whether a FOBs compromise bill can be achieved this year.
But even in somewhat more biosimilar-friendly Europe, whose dedicated regulatory pathway is now over three years old and where Omnitrope has clocked up most of its 8,000 patient-years of exposure, “market inroads are maybe not being made as fast as we’d hoped,” acknowledged European Generic Association, Director General Greg Perry at a conference in April in London.
The issues are familiar: lack of trust in biosimilar drugs by prescribers and patients and, most critically, the absence of interchangeability for biosimilar drugs in many markets. Europe has left this decision to individual member states.
Germany: Biosimilars’ Clover
Germany is where the biosimilars light shines brightest, however; Hungary may soon follow suit (See “Hungary’s EPO Model). That’s because Germany is where pricing pressure, by and large, is the greatest. The country’s Federal Healthcare Committee (Gemeinsamer Budesausschuss der Selbstverwaltung), which decides which products and services are reimbursed, has embraced biosimilars whole-heartedly. And individual health insurance funds (Krankenkassen), of which there are about 250 across the country, have a strong influence on local prescribing and dispensing decisions in particular thanks to a two-year old law allowing manufacturers as well as hospitals and providers to negotiate rebates directly with them.
Thus they have, for instance, imposed the same reference price across all growth hormone products, including biosimilars. Some regions must even meet certain pre-defined quotas of biosimilar products. Biologics, after all, account for nearly a quarter of the growth in the global drug market, according to IMS Health.
Sandoz’s Binocrit, launched in Germany at the end of 2007, is slowly gaining share. According to IMS Health, the number of standard units sold by branded players has declined from 450 million in the last quarter of 2006 to 250 million in the last quarter of 2008. Overall volume usage has increased in Germany from 400 million doses in the third quarter of 2007 to 520 million in the fourth quarter of 2008, although these figures cover retail sales only, since most hospital contracts don’t provide cost/volume details. It’s difficult to say what has driven the rise, warns IMS’s Sheppard, but it may in part be down due to a Sandoz-driven price decrease.
“We went in at a 15% discount,” explains Teissl, “so everyone else reduced their prices, and we went to a 33% discount.” The result: a 30% share in the IV epoietin alfa segment and an “injection of competition in the market.”
In addition to the pricing-pressure-driven tailwind for biosimilars firms in Germany, there is, importantly, “an awareness of what biosimilars are. It’s not a topic anymore. People know that they are safe, that they work the same way as innovator drugs, and in some instance that they’re even better because they’ve been manufactured using newer technology,” claims Teissl.
PR is still a huge issue elsewhere though—not helped by specific decisions in France, Spain and the Netherlands to ban pharmacists from substituting a biosimilar version if a physician has prescribed the original. The decisions give official credence to the claim that these products are, after all, not equivalent to the originals and should not be treated as such.
In the UK in particular where the government hasn’t banned substitution but has said it doesn’t expect it to occur, “you have the big power of innovators against you, who have been preparing for years with armies of lawyers and massive lobbying with regulators. There’s also false messaging in many cases,” Teissl continues. As such, despite similar cost-pressures throughout Europe, “we’re not there yet in some countries,” he admits. “We’re pioneers.”
Marketing Biosimilars: No Clear Model
Indeed, Sandoz and other biosimilar hopefuls have a significant marketing and promotional challenge ahead—not just for the overall concept, but for individual products as more come to market in the same category. Sandoz was first with Omnitrope and biosimilar EPO, but its version of filgrastim, launched in February 2009, is second to Teva Pharmaceutical Industries Ltd./ratiopharm GMBH’s TevaGrastim, approved in the EU in September 2008.
Despite being several months behind Teva, Teissl’ confident that “it doesn’t mean we’re too late.” The key, he continues, is to establish a good relationship with oncologists and have a hospital sales force offering a “nice service package”. The timing isn’t as important as with small molecule generics, Teissl argues. “It’s more a question of how you’re set up and how well prepared you are.”
For filgrastim, Teissl says the company is currently discussing whether to leverage Novartis Pharma’s commercial muscle and product offering in oncology. “We can create a portfolio bundle for this target group [of prescribers] with more products, including other (non biologic) generics and potentially Novartis drugs as well.”
Beyond touting the general benefits of biosimilars (for example at conferences and in awareness campaigns) and deploying sales forces at the physician/product level, Sandoz’ marketing efforts also target payors. “We’re advising them … how much they’re losing by not more aggressively using biosimilars,” recounts Teissl.
The European experience underlines that the long-term issue for biosimilars will be market penetration. That is and will remain “the heart of the biosimilar challenge,” in Europe and in the US, according to Bernstein analyst Ronny Gal.
Gal assumes that US legislation will come eventually, and that interchangeability will—eventually—be part of that law. (Japan is following Europe’s lead too: authorities in March 2009 issued guidelines for developing and registering biosimilars. None has yet been approved, though Nippon Chemical Research filed a biosimilar EPO in November 2008.)
Gal is also confident that at least a few of the big players are overcoming the various other hurdles to getting a biosimilar out, including cost ($200 million per product), time (it takes about 7-10 years to get one to market), the very real specter of litigation, and the limited number of targets (each with its own problems). But as for how biosimilars will get to patients after that: “I’m not sure if there’s a model yet.”
During a talk at the London EGA conference, Gal questioned how substitution might work in the US, even if it were allowed. “The only way biosimilars will take off is with buy-in from managed care,” he explains. Otherwise biosimilars firms would need the same marketing budget as innovators—making meaningful price-cuts impossible.
For example, Gal described a scenario where Mylan has a generic version of the multiple sclerosis drug beta-interferon (Avonex). The company would have to have a relationship with an insurer to make certain that drug, not any other, was dispensed—and that insurer would need to capture a significant portion of the savings to justify the cost of driving use of Mylan’s product.
If the insurer did buy into Mylan’s drug—and Gal reckons those he has spoken to are “very excited about the possibility of participating in biosimilars”--it and the prescribing doctors would have to be consistent and stay with one product, for safety reasons if no other. The implication: those late to market in a particular category would suffer very low share and, as is already widely appreciated given the marketing challenge, “innovator companies will have a significant advantage.”
So will biosimilars make it at all? Yes, says Gal. “Eventually they’ll take a 50% share. There’s no other way to pay for health care.” Thus, for those large enough to bear the up-front costs, “there’s no option” but to play in this game, Gal continues. “Biosimilars will double the size of this industry.”
-Melanie Senior
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