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Follow-On Biologics:
Economic, Innovation and Policy
Reflections
The Fuqua School of Business
Duke University
November 6-7, 2008
Charles DiLiberti
V.P. Global Pharmacokinetics
and Bioequivalence,
Barr Laboratories, Inc.
“Commercial Opportunities and
Challenges for Follow-on
Biologics”
Presentation Overview
• Generic Biologics
– Commercial Opportunities & Savings
– Science & Technology Challenges
– Regulatory & Intellectual Property
Issues
• Summary
Commercial Opportunities &
Savings
Benefits of Generic Competition
• Significant Cost Saving Opportunities
– Savings for consumers and taxpayers
• Generic Competition Will Fuel
Innovation
– Brand companies will have the incentive
needed to vigorously pursue new
biologics
Increasing Significance of Biologic
Products
• US Biologic Revenues
– 1997: $17.4 Billion
– 2007: $ 65.2 Billion*
• 400 Biologics & Vaccines Currently in
Clinical Trials Targeting >200 Diseases**
• Between 2003 and 2006, biologics
represented 24% of all new chemical entities
approved by the US***
• Sales of biotech products in the US showed
an annual growth rate of 20% between 2001
and 2006 compared with 6% to 8% in the
pharmaceutical market***
* Ernst & Young
** Biotechnology Industry Organization
*** Journal of American Medical Association
, October 22, 2008
High Cost of Brand Biologics
Annual Cost per Patient
• Enbrel (Arthritis) $20,000*
• Cerezyme (Gaucher Disease) $200,000**
• Remicade (Arthritis) $35,000-$66,000***
Generic Competition Will
Reduce These Costs
*Baltimore Sun January 28, 2007
**Bloomberg January 11, 2007
***Philadelphia Inquirer September 19, 2006
Significant Cost Savings Opportunity
Generic Biologics Represent Significant Cost Savings
Opportunities and Stimulate Innovation
Epogen
Enbrel
•Market Before Generic
Launch: $2.5 Billion*
•Market Before Generic
Launch: $2.7 Billion*
•Brand/Year Today:
$9,000**
•Brand/Year Today:
$20,000***
•Generic Savings/Year
assuming 50% savings:
$4,500
•Generic Savings/Year
assuming 50% savings:
$10,000
*ABN AMRO February 2008
**National Journal February 10, 2007
***Baltimore Sun January 28, 2007
Generic Competition
Price Drops as Number of Manufacturers Increases
Market Size for Select Biologic
Products
Product
2006 Sales
($ Millions)
Patent Expiration
Aranesp (Darbapotein alfa)
$2,790
2016
Enbrel (Etanercept)
$2,736
2012
Epogen (Epotein alfa)
$2,511
2004
Remicade (Infliximab)
$2,355
2013
Rituxan (Rituximab)
$2,071
2013
Eprex (Ortho Biotech)
$2,064
2004
Avastin (Bevacizumab)
$1,746
2019
Rebetron (Ribavirin & Interferonalfa-2B)
$1,361
2001
Lantus (Insulin glargine)
$1,260
2015
Source: ABN AMRO February 2008
Market Size for Select Biologic
Products
Product
2006 Sales
($ Millions)
Patent
Expiration
Humira (Adalimumab)
$1,176
2013
Avonex (Interferon beta-1a)
$1,022
2003
Cerezyme (Imiglucerase)
$1,007
2010
Neupogen (Filgrastim)
$830
2013
Humalog (Insulin lispro)
$811
2013
Ceredase (alglucerase)
$537
2001
Rebif (Interferon beta-1a)
$493
2005
Neulasta (Pegfilgrastim)
$493
2015
Source: ABN AMRO February 2008
Perspective:
Historical Growth in Substitution
70
60
50
40
30
20
Source: IMS Health, Banc of America Securities LLC estimates
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
0
1984
10
Generic Biologics
Opportunity
• Generic Pharmaceuticals - A Vital Part in Health
Care System
– Approximately 67% of the Prescriptions Dispensed in the
US Are Generics*
• Biologics
– Worldwide Market Estimated around $75 Billion*
– Per Patient Cost for Biologic Products Can Exceed
$100,000 Per Year
•
Generic Biologics
– US Consumers Could Save $43 Billion Between 2011 and
2020**
– Estimated Value of Biologics that have already lost Patent
Protection: $10 Billion***
– Estimated Value of Biologics to lose Patent Protection in
the Next Ten Years: $20 Billion***
* IMS Health
**Citizens Against Government Waste (CAGW) Release, May 2, 2007
***ABN AMRO February 2008
Science & Technology Challenges
Scientific Challenges for
Generic Biologics
• Characterization
• Safety Assessment
• Therapeutic Equivalence
• Manufacturing Controls
Generic Biologics
• Generic biologics, sometimes called follow-on biologics
(FOBs), are protein products that are pharmaceutically
and therapeutically equivalent
• Generic biologics do not utilize the reference product’s
proprietary process, specifications or clinical data
• For established products, therapeutic equivalence can be
demonstrated using
– In vitro studies and/or
– Pharmacokinetics and/or
– Surrogate markers and/or
– Clinical outcomes
depending on the characteristics of the protein
Biologics 
Size Does Matter...
Filgrastim
(G-CSF)
2659 atoms
rDNA Technology Drugs:
Chemical
Drug:
Azithromycin
124 atoms
Interferon
2804 atoms
Monoclonal
Antibody
21112 atoms
Misinformation Campaign
About Generic Biologics
Myth:
• Raw materials of biologic origin are hard
to source and only brand biotechs know
where to find them.
Reality:
• Raw materials are available today for
many generic biologics including insulin,
G-CSF, erythropoietin, interferons, etc.
Misinformation Campaign
About Generic Biologics
Myth:
• Biologics are too complicated to be
characterized.
Reality:
• Numerous highly sophisticated analytical
methods have been developed, permitting
complete characterization. More advances will
be achieved each year.
Misinformation Campaign
About Generic Biologics
Myth:
• Generic companies lack the medical, scientific,
and technical ability to produce safe and
effective biotech products.
Reality:
• Generic companies can and do make safe and
effective biologics. Many safe and effective
biologics currently are made in controlled
environments and marketed by generic
companies outside the U.S.
Generic Biologics (Biosimilars)
in the EU
• The ability to make generic biologics is far from
a theoretical possibility.
• In 2004 EU issued EMEA Draft Guidelines for
four classes of generic biologics, referred to as
biosimiliars in the EU.
• Since 2004, the EU has approved several
biosimilar products.
EU Biosimilar Approvals
DRUG
•
•
•
•
•
•
•
•
•
•
•
EU MARKET AUTHORIZATION DATE
Sandoz’s Omnitrope®
(somatropin)
April 12, 2006
BioPartners’ Valtropin®
(somatropin)
April 24, 2006
Sandoz’s Binocrit®
Medice’s Abseamed®
Hexal Biotech’s Epoetin alfa Hexal®
(recombinant human erythropoietin alfa)
August 28, 2007
Stada Arzneimittel’s Silapo®
Hospira’s Retacrit®
(epoetin zeta)
December 18, 2007
Teva’s Tevagrastim®
Ratiopharm’s Ratiograstim®
Ratiopharm’s Filgrastim ratiopharm®
CT Arzneimittel’s Biograstim®
(human G-CSF)
September 15, 2008
current through September 25, 2008
FDA Approves Sandoz’s
Omnitrope
• There has been some movement in the US
to approve generic biologics.
• FDA approved Omnitrope in May 2006.
• FDA stated, however, that this approval
does not create a pathway for all generic
biologics. Omnitrope referenced a brand
product (Genotropin) approved under the
FDCA.
Misinformation Campaign
About Generic Biologics
Myth:
• “The Product is the Process.”
Reality:
• “Old models and mantras are inhibiting progress
– the product is no longer the process.”
(Statement of Mathias Hukkelhoven, Ph.D.,
Senior V.P., Global Head, Drug Regulatory
Affairs, Novartis, Sept. 14-15, 2004).
Misinformation Campaign
About Generic Biologics
Reality (continued):
• Biotech products can be fully characterized and
compared analytically.
• Biotech Firms routinely justify their own process
changes via FDA approved comparability
protocols.
Development of
Generic Biologics
• Strictly Controlled Process (Validated)
• Extensive Analytical Comparability
(Characterization)
• Comparable Biological Activity
(In Vitro/In Vivo)
• Non-Clinical Comparability (Safety,
Immunogenicity...)
• Comparable pharmacokinetics (blood
concentration profile)
• Comparable Clinical Efficacy and Safety
Development Considerations
• Product Complexity
– From Development To Clinical
• Characterization
– Biosynthesis, In-Process and Finished Product
• Nomenclature
– Lack of Strict Definition, INN Issue
•
•
•
•
High Cost of Development
Marketing Requirements and Cost
Post-Marketing Safety Surveillance
IP Strength
Regulatory & Intellectual Propert
Issues
Challenges for Generic
Biologics
• Regulatory
– Congress needs to create an abbreviated
approval pathway
• Intellectual Property
– Brand exclusivity
– Generic exclusivity
– Resolution of patent litigation prior to generic
launch
Regulatory Issues
• Regulatory Framework Complicated By
Existence of Two Laws For Biologics
– FDCA for NDA Products
– PHSA for BLA Products
• NDA Products
– Generic Pathway Exits, But FDA Implementation
Is Unclear
• BLA Products
– Three Issues Need To Be Resolved
• Mechanics of Approval Pathway Need To Be Defined
• Brand/Generic Exclusivity
• An Efficient Patent Dispute Resolution Mechanism
Abbreviated Generic Pathway
Under PHSA
• A Generic Pathway Should:
– Give FDA Authority To Decide Approval
Requirements For Generic Products
– Adopt Exclusivity Provisions No Greater
Than Those Found In Hatch-Waxman
– Permit Pre-Launch Adjudication of Certain
Patent Disputes
Abbreviated Generic Pathway
Under PHSA
• FDA should be permitted to decide what
tests/data are necessary for approval as a
comparable or interchangeable generic.
• Congress should not impose unnecessary
barriers to generic approvals, e.g.,
mandatory guidance or rule-making
requirements; mandatory clinical trials;
requirement that generics seek approval for
all approved brand uses.
Abbreviated Generic Pathway
Under PHSA
• Congress should carefully consider any
new, additional exclusivities awarded
to brand biologics.
• Considerable incentives already exist
for brand biotech companies.
Existing Incentives for Brand
Biotech Companies
INCENTIVE
Patent Term Restoration
Drug manufacturers get back up to 5 years of time lost
to product testing and approval delays.
PTO Patent Restoration
If the patent approval is delayed by PTO’s fault,
patentee gets back each day in excess of 3 years.
Orphan Drug Exclusivity
7 years of exclusivity for drugs treating rare diseases.
General Business R&D
Tax Credit
Allows manufacturers to claim 20% of qualified
spending in the U.S. above the base amount.
Puerto Rico Tax Credit
Allows U.S. corporations to exempt 40% of income
from business operations owned in P.R., U.S.V.I., etc.
Foreign Tax Credit
Allows U.S. corporations to claim limited tax credit for
taxes paid to foreign governments.
URAA
Patent Term Restoration
The Uruguay Rounds Agreement Act (“URAA”) gives
drug companies a 20 year patent from the date it was
filed (rather than 17 years from issue).
Abbreviated Generic Pathway
Under PHSA
• If Congress decides to give additional
exclusivities to brand companies,
Hatch-Waxman establishes the
maximum length and number of
exclusivities that can be justified:
- 5 years for truly new, innovative products
- 3 years for certain improvements to alreadyapproved brand products
Abbreviated Generic Pathway
Under PHSA
• Unlike the incentives that already exist
to develop new brand biologics, no
incentives exist to develop generic
biologics.
• Generic biologics legislation should
include an incentive, just as HatchWaxman does for small molecule
drugs, for the development of generic
biologics.
Abbreviated Generic Pathway
Under PHSA
• Effective generic biologics legislation
will include a mechanism for
expeditious resolution of patent
disputes.
• Hatch-Waxman has shown that patent
mechanisms can be abused to delay
generic market entry.
Abbreviated Generic Pathway
Under PHSA
• Only those patent disputes that would
cause the generic company to delay
launch should be litigated
simultaneously with the FDA approval
process.
• Disputes over any other patent that the
brand owns should wait until the
generic company actually launches.
Abbreviated Generic Pathway
Under PHSA
• Such a process ensures that brand
companies cannot use weak or
suspect patents to delay generic
market entry.
• At the same time, the process protects
all legitimate patent rights – it allows
litigation over all patents, but controls
when that litigation can start so that
generic marketing isn’t unduly delayed.
Regulatory Issues
U.S. Proposed Legislation
• Negotiations Are Ongoing
• Much Momentum Gained in Debate
• Optimistic for Ultimate Resolution
Summary
Generic Biologics in US
• Significant Momentum in US Congress
• Failed to Pass in 2007-08 Session;
Likely to Be On Legislative Agenda in
2009
• Strong Consensus for Generic Biologics
Among Payers, Consumer Groups
• Debate Centers On Three Issues
– Mechanics of Pathway
– How to Resolve IP Issues
– Exclusivity Issue
Broad, Bipartisan Support for a
Workable Pathway for Generic Biologics
Groups in Support
Groups in Opposition
Consumer Groups
•AARP
•AFL-CIO
•AFSCME
•California Public Employees’ Retirement System
(CalPERS)
•Consumer Federation of America
•Consumers Union
•Families USA
•National Consumers League
•National Multiple Sclerosis Society (MS)
•National Research Center for Women & Families
•National Organization for Rare Disorders (NORD)
•National Women's Health Network
•Pharmaceutical Care Management
•Public Citizen
•Service Employees International Union (SEIU)
•Spastic Paraplegia Foundation
•US Public Interest Research Group
•United Auto Workers (UAW)
Business Groups
•Caterpillar, Inc.
•DaimlerChrysler Corporation
•Eastman Kodak Company
•Ford Motor Company
•General Motors Corporation
Health Plans
•Aetna Inc.
•America’s Health Insurance Plans
•Blue Cross Blue Shield Association
•Humana
Pharmaceutical Stakeholders
•Apotex
•Ben Venue
•Barr Laboratories
•Caremark
•Express Scripts
•Generic Pharmaceutical Association (GPHA)
•Hospira
•Medco
•Momenta
•National
Association of Chain Drug Stores
State Governors
State Governors
•Vermont
•Wisconsin
•Minnesota
•Kansas
•Kaiser Permanente
•United Health Group
•Wellpoint
•National Association of Health Underwriters
•Pharmaceutical Care Management Association (PCMA)
•Ranbaxy Pharmaceuticals
•Sandoz
•Teva Pharmaceuticals USA
•Watson Pharmaceuticals
•Walgreens Company
•Montana
•Virginia
•West Virginia
•Mississippi
•Washington
•Nevada
•BIO
•PhRMA