1. Wednesday, September 23, 2009
Pathway for Biosimilars Included in Healthcare Reform
Generic, Brand Manufacturers Disagree over Exclusivity Period
Manufacturers of generic pharmaceuticals have waited a long time for creation of a regulatory
pathway that allows for the approval of generic biologic drugs, known as biosimilars, because the
complexity of biologic products makes it difficult to produce exact copies. Previous efforts to create a
pathway for the approval of biosimilars have been unsuccessful, but a House committee recently
voted to make biosimilars a part of comprehensive healthcare reform legislation. Although opinions
differ over the length of the market exclusivity period for original biologic products, the success of a
biosimilars measure will depend largely on creation of an approval pathway that assures physicians
and payers these products are safe and effective.
The biosimilars amendment being added to America’s Affordable Health Choices Act (HR 3200)
incorporates the principles of HR 1548, titled the Pathway for Biosimilars Act. In its mark-up of the
bill, the House Energy and Commerce Committee voted 47-11 on the biosimilars provisions,
reflecting broad support. The proposal would give the original makers of these medications 12 years
of market exclusivity. Proponents say the exclusivity period is intended to strike a balance between
the need to reward innovation and the desire to control drug costs. The amendment was introduced
by Reps. Anna Eshoo (D-CA), Jay Inslee (D-WA), and Joe Barton (R-TX).
According to the Pharmaceutical Research and Manufacturers of America (PhRMA), more than 300
biologics had been approved by the US Food and Drug Administration as of 2008, and 633
biotechnology medicines were in development, including more than 250 for various cancers. If the
national healthcare reform campaign is successful, inclusion of a biosimilars provision could
eventually lead to lower prices for some very expensive medicines. Specifically, the exclusivity policy
provides a minimum of 12 years not only to original products, but to most next-generation products.
Although biosimilar products are expected to cost significantly less than the branded originals, the
high cost of producing these drugs means that savings may not be of the same magnitude as
savings from generic small-molecule drugs. “I don’t think that it is going to be anywhere near as
significant as with a small-molecule drug,” said Katheryn Symank, MS, research analyst,
pharmaceuticals & biotechnology, Frost & Sullivan. She estimated that biosimilars would cost 25% to
30% less than the original products, whereas small-molecule generics can sell for as much as 70%
less than the branded originals.
Ms. Symank told Managed Care – First Report (MC-FR) that not all generic manufacturers will be
willing or able to produce biosimilars because the processes can be very complex and costly.
Because the copies may not be exact, patients may be required to get a separate prescription for
biosimilar products, rather than simply substituting a generic. Despite the difficulties and expense,

2. savings from the use of these products could add up over time.
“There are some biologics that have an annual cost of therapy of $400,000 a year,” Ms. Symank
said. “So even if you have 25% off of $400,000 per year per patient, that’s still significant. As the
years progress and more companies are able to enter the biologics market, I think that the prices will
continue to go down.”
Industry Groups React
Following the House committee’s endorsement of what the group called “reasonable data
protection,” PhRMA president and CEO Billy Tauzin expressed his support for development of an
abbreviated but responsible approval pathway for biosimilars. Mr. Tauzin called the bipartisan vote “a
step in the right direction because it strikes an appropriate balance between the desire for enhanced
competition and preserving incentives for innovation.”
“Such incentives are vital for ensuring continued development of biologics that patients with complex
diseases rely on today and will help to provide cures in the future,” Mr. Tauzin added.
Jim Greenwood, president and CEO of the Biotechnology Industry Organization, called the
amendment “a decisive win for the patients of today and tomorrow.” Mr. Greenwood added that the
amendment “strikes the appropriate balance among ensuring patient safety, expanding competition,
reducing costs, and providing necessary and fair incentives that will provide for continued biomedical
innovation.”
Although the brand name pharmaceutical manufacturers expressed satisfaction with the biosimilars
amendment, makers of generic drugs are displeased with the length of patent protection. Kathleen
Jaeger, president and CEO of the Generic Pharmaceutical Association, expressed disappointment,
stating that committee members had “decided to put brand pharmaceutical profits before patient
needs” and that “the amendment passed tosses patient needs out the window.”
“It is ironic that as Congress works to reduce healthcare costs and increase access to high-quality
care that some members are choosing to go down a path that only benefits the brand
pharmaceutical industry,” Ms. Jaeger said. “Clearly, our shared goal should be to get affordable
lifesaving medicines to patients in a timely fashion. Sadly, this amendment fails to even come close
to that goal.”
Part of a Deal?
It has been reported that drug makers were rewarded with the 12-year exclusivity period for biologics
in return for their support of national healthcare reform efforts. News of an agreement that was struck
between the White House and PhRMA was reported in the New York Times. “We were assured: ‘We
need somebody to come in first. If you come in first, you will have a rock-solid deal,’” Mr. Tauzin said.
“Who is ever going to go into a deal with the White House again if they don’t keep their word? You
are just going to duke it out instead.”
PhRMA recently pledged to reduce Part D enrollees’ drug costs by providing a 50% discount on
brand name drugs purchased by seniors in the Medicare coverage gap, known as the “doughnut
hole.” They said the proposal would save seniors in the doughnut hole an estimated $80 billion on
prescription drugs over 10 years, and the concept has been included in HR 3200.
PhRMA’s proposal calls for the entire negotiated price of brand name drugs covered by Part D and
purchased in the coverage gap to count toward beneficiaries’ out-of-pocket costs, thus lowering total
out-of-pocket spending. Drug manufacturers say the proposal would not require any additional

3. paperwork on the part of beneficiaries, and there would not be an asset test used for eligibility.
Process Is Key
In an interview with MC-FR, Gil Bashe, executive vice president of the Health Practice at Makovsky +
Co. said that biosimilars have existed around the world with the exception of the United States for
quite some time and noted that Europe has a very detailed policy and pathway for dealing with
biosimilars approval. Mr. Bashe will be a chairperson and distinguished speaker at an upcoming
conference on biologic and biosimilar patent and production issues conducted by the Center for
Business Intelligence.
Mr. Bashe said that although biologic products are expensive, “the managed care industry as a
whole wants to make sure that an individual beneficiary’s health requirements are met, whether it is
a small molecule or a large molecule. That is not going to change.”
Without an adequate and accepted process to ensure the safety and effectiveness of biosimilars,
however, physicians and health plan managers may be wary of making decisions on prescribing and
paying for these products. “Traditionally, with small-molecule generics, it was enough to say they
were bioequivalent, but with biosimilars it is not enough to say that,” Mr. Bashe told MC-FR. “Then
what do we do about that? That’s the question that has to be addressed at this juncture.”
“The big weighty conversation that the physician audience, the regulatory audience, and Congress
need to be much more absorbed in is the pathway for approval,” Mr. Bashe continued. “And if we
had a very clear pathway for approval as Europe does, we would see quicker resolution of some of
these applications.”—Charles Boersig