[Michael Jorrin, who we like to call “Doc Gumshoe”, is a medical writer who shares his thoughts with us once or twice a month. He does not usually recommend or discuss investments, and, as with all of our contributors, his words are his own and he chooses his own topics.]
To start us off, three quick answers to the second part of that question:
- One, for people with any of a number of truly serious diseases, the availability of biosimilars may make the difference between getting appropriate treatment and not being able to afford it.
- Two, for the health-care system and the economy as a whole, biosimilars could result in billions in savings, which would likely affect our individual financial well-being.
- And, three, the implications for the pharmaceutical industry, both positive and negative, are huge. Some pharmas will clearly take a hit, while others will reap significant profits.
We’ll circle back to the economic implications of biosimilars later on, but to put the matter in perspective, consider for a moment just how big a slice of the total global drug market biosimilars could command.
The total global market for all drugs is currently in the neighborhood of a trillion dollars – that’s a $1 with 12 zeroes after it. Of that total, biologics account for about $200 billion. According to some analysts, within about 5 years biosimilars will account for as much as half – $100 billion – of that amount. Somewhere around 700 biosimilars are now at some point in the planning stages, and more than 200 pharmaceutical companies or medical centers are working on biosimilars. The biosimilar tide is rising, and it’s more than a groundswell.
What are biosimilars, anyway?
From the name we can tell that biosimilars are similar to something – the question is, what? We need to start out with a bit of background on biologic agents or drugs, as they are called.
The biologic category covers a multitude of substances, whose common feature is that they originate in a natural process of some kind. It would be far too simple to try to draw a strict distinction between “made in a lab” and “made by a living organism,” because many biologics are both – they are made in a lab by living organisms. Many substances used in medicine – e.g., insulin, hormones such as estrogen and growth factor, immunoglobulins, and other blood products such as clotting factors – are biologics. However, in the pharmaceutical industry, the term “biologics” is employed to refer to man-made agents that are created by adapting or engineering a living source, such as cells from a living organism, to generate a substance with specific, desired characteristics. These biologics cannot be synthesized from chemicals, as non-biologic drugs are.
Two common classes of pharmaceutical biologics are monoclonal antibodies, often abbreviated as mAbs, and receptor blockers, whose names typically end in “cept.” Monoclonal antibodies are frequently based on the action of physiologic antibodies that the organism generates to fight potentially harmful substances, while receptor blockers guard against those substances by occupying the receptor for those substances and preventing the harmful substance from interacting with the receptor.
Examples of widely-used biologics include drugs used in many diseases and conditions, e.g.:
- Epogen (erythropoietin) from Amgen (AMGN): stimulates cells in the bone marrow that generate red blood cells (erythrocytes). This biologic is a recombinant protein that mimics physiologic erythropoietin; it is also sold as Procrit, from Janssen. This biologic is legitimately used to treat anemia arising from any of a number of medical conditions, and somewhat less legitimately to enhance sports performance, since boosting the number of red blood cells increases oxygen availability. In case you don’t remember, this was Lance Armstrong’s performance booster of choice.
- Herceptin (trastuzumab) from Genentech/Roche (RHHBY): an antagonist to the HER2/neu gene that accelerates and aggravates breast cancer; it is also used in some gastric cancers. Trastuzumab is a humanized monoclonal antibody, meaning that it is closely similar to antibodies formed in the human body in response to the HER2 gene.
- Orencia (abatacept) from Bristol-Myers Squibb (BMY): a T-cell receptor blocker used to treat rheumatoid arthritis; T-cells are among the many auto-immune agents that can attack host tissues. Abatacept is an engineered fusion protein that mimics cytotoxic T-lymphocyte 4 (CTLA-4), a protein that regulates the activity of T-cells. Deficiencies in this protein have been linked to a number of autoimmune diseases besides rheumatoid arthritis.
- Remicade (infliximab) from Janssen (JNJ): a monoclonal antibody to tumor necrosis factor alpha (TNFα), a cytokine that is active in controlling some malignancies, but can also attack the surfaces of our joints and trigger inflammation in various parts of the body. Infliximab is used to treat rheumatoid arthritis and some other autoimmune diseases.
- Rituxan (rituximab) from Genentech / Biogen Idec (BIIB): also a monoclonal antibody, which binds to CD20 cells on the surface of B-cells which have become malignant. When rituximab binds to those CD20 cells, natural killer cells in the body have a much higher chance of eliminating the malignant B-cells. Rituximab is primarily used to treat a form of cancer known as non-Hodgkin’s lymphoma.
- Stelara (ustekinumab) from Janssen: a monoclonal antibody against two interleukins – IL-12 and IL-23 which are active in the pathogenesis of psoriasis, another disease which is now understood to be autoimmune. Mild cases of psoriasis are often treated by addressing the skin symptoms alone, but clinicians are now (mostly!) aware that in more severe cases, they have to be on the lookout for the systemic complications, which can include fairly severe rheumatoid arthritis.
How some biologics work
An example of such interactions, employed by many drugs used to treat rheumatoid arthritis (RA), are the strategies to prevent damage from TNFα. This is a molecule of a class called cytokines, which is involved in autoimmune regulation and in the process of eradicating cancer cells. However, in people with RA, TNFα also erodes the surfaces of the joints; this is one of the fundamental disease processes in RA, and a number of biologics aim to deter this process.
The organism, in its normal process of attempting to maintain health, develops antibodies both to invaders perceived as harmful and to substances developed in the body that have the capacity to become harmful. The cytokine family, an enormous group of proteins that we generate for a vast array of purposes, includes a number of troublesome members. We might call them “black sheep cytokines,” and our ever-watchful physiologic systems detect them and create antibodies to keep them in line. When these antibodies fail to perform, however, we get sick.
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Synthesized biologic antibodies use recombinant DNA technology to copy these physiologic antibodies and use them to combat those diseases. The process of identifying which specific antibody combats the disease-causing substance is complex. When it is successful, it results in the creation of an antibody that antagonizes the single specific culprit, while not interfering with other necessary physiologic processes.
Another strategy for preventing or minimizing the damage from a harmful substance such as TNFα is to create an agent that precisely fits into the receptor for the substance, thus blocking the receptor and preventing TNFα from interacting with it. We could think of it as putting a blank key into a lock. The grooves in the key permit it to fit neatly into the lock, but the profile of the key does not allow it to turn the lock. However, while the blank key is in the lock, the key that would otherwise work can’t be inserted, and the lock stays locked. Receptor blockers do exactly that; the receptor blocker itself is inactive, but it effectively prevents the rogue cytokine from reaching its target.
A risk that attaches to many biologics is that antagonizing or blocking the activity of a physiologic substance, only some of whose effects may be harmful, may indeed result in serious adverse effects. Taking tumor necrosis factor as an example, that particular substance is a causative agent in some diseases, but also helps combat some infections. TNFα inhibitors, whether antibodies or receptor blockers, are generally considered safe, but they are linked with some significant risks, among them the reactivation of tuberculosis in persons who have been previously exposed, and also triggering episodes of Herpes zoster. In spite of the name, inhibiting TNFα is not associated with increases in cancers, perhaps because the activity of this cytokine has more to do with disposal of already killed tumors than with actually killing tumors.
Biologics versus biosimilars: the approval process
One reason that biologics are so expensive is that the development of the original agent is highly complex. As we’ve said, they’re painstakingly created to mimic exceedingly complex molecules; this is contrast to many of the most widely-used small-molecule drugs, many of which were discovered by accident or by simple trial-and-error methods (i.e., keep trying the chemicals in your library of 40,000 chemicals until you find one that works in a Petri dish). This doesn’t work for biologics for the simple reason that there aren’t any biologics hanging around in your library, just waiting to be tried out. So the candidate biologics are essentially grown, evolving from some natural substrate. For example, the substrate used in many biologics is Chinese hamster ovary cells, commonly abbreviated as CHO.
From the approval standpoint, the regulators don’t care a whole lot about how the biologic is grown, or what its structure is. Their concern, as entirely appropriate, is with safety and efficacy. So, once the pharma outfit that developed the biologic has something that they think works, they have to undertake a lengthy (and costly!) series of clinical trials to demonstrate that their agent is at least as effective and at least as safe as the existing treatment options. (We’ve discussed the intricacies of FDA approval in a previous Doc Gumshoe piece, which you can see here.)
It’s a completely different process for biosimilars. Before we get into that, let’s spell out the differences between biosimilars and generics. Generics are chemically and structurally identical with the original drugs, the chief difference being that the original drug continues to be sold under the trademarked name (e.g., Advil), while the generic is sold under the generic or non-proprietary name (e.g., ibuprofen). (Note: there may be differences in the standards to which generics are manufactured, and there may be other ingredients in the generic – fillers, colorings – that are different from the original drug, but they are supposed to be chemically identical).
Not so with biosimilars, because, even though the patent on the original drug may have expired, the process through which they made this drug continues to be proprietary. The cell line from which the original biologic is grown continues to reside in the manufacturing facility of the original developer; “if you want to copy my drug, go out and find your own cell line.”
So the chief goal in developing a biosimilar is to create a molecule – and these are very large and complex molecules – that is as close to the original molecule as possible, and especially in the parts of the molecule that are central and essential to its function.
The regulators – both the FDA and the European Medicines Agency (EMA) – have made the reasonable assumption that if the structure of the biosimilar is closely similar to that of the original biologic, the resulting drug will work the same way in human patients – i.e., have similar characteristics in terms of efficacy and safety. So what developers of biosimilars have to establish is precisely that – that their agent is sufficiently similar to the original drug to support the assumption that it should receive the same level of regulatory approval.
The FDA issued regulatory guidelines for an “abbreviated pathway to approval,” under section 351(k) of the Public Health Services Act, revised in February of 2012, that lays out (in guarded language) that the emphasis for approval of biosimilars would be on the chemical structure. This does not mean that Phase 3 trials involving efficacy and safety are totally unnecessary, only that the process is much shorter. And, from the standpoint of the drug developers, a whole lot cheaper. So, combined with a much less expensive initial development process, the entire cost goes way down.
Which has huge implications for the pricing of the biosimilar, and also, by extension, for the price the original biologic will be able to command. Because, ultimately, the tail that’s going to wag the dog here is not going to be the regulators, or the physician community, or the prospective patients, but the payers – the insurance companies that are now smarting under the cost of biologics. The biosimilars are going to be cheaper, and you can count on the payers pushing biosimilars to the hilt.
But what if the biosimilar turns out to be better than the original?
Believe it or not, this is not necessarily a positive. What a biosimilar hopes to accomplish is to get an indication for precisely the disease state that the original biologic is approved to treat. The biosimilar would like to be viewed in the same light as a generic – same indications, same dosing, same adverse events. The prescribing physician would ideally be able to use it interchangeably with the bio-original. If the biosimilar turns out to be better in just about any respect, it opens up regulatory booby traps: it is now a new drug, and needs to follow a different regulatory pathway, namely section 351(a) of the same act mentioned above, which requires more and longer clinical trials. And costs a whole lot more money, for, probably, not much advantage.
At least for the first indication, the developers of the biosimilars want their agents to be viewed as just the same as the bio-original agent. If the patient has RA, and the physician would usually have prescribed infliximab (Remicade) for that patient, and the patient’s insurance company substituted the infliximab biosimilar, what the biosimilar developer wants is for the reaction to be, “no big deal – it’s basically the same thing.”
However, the infliximab biosimilar will employ the same mechanism as the bio-original, which is TNFα inhibition, and, as we said, TNFα is involved in many autoimmune diseases besides RA. Once the infliximab biosimilar is out there, chances are that it will be used off label, and the evidence will begin to trickle in. There’s a distinct chance that the biosimilar will be better in some respect than the original. The developer then may well initiate clinical studies, comparing the biosimilar not just with the original infliximab, but with other agents. These need not be direct “head-to-head” comparisons, but assessments on the basis of the data. If the biosimilar was associated with fewer adverse events of a specific nature, such as induction of anti-drug antibodies, or if it attained higher scores in terms of patient-reported outcomes, the biosimilar might come to be preferred, not just over the bio-original, but over other drugs in the same general class. For example, if we were talking about an infliximab biosimilar that appeared to be a “bio-better” in some respects, it might come to be preferred over other biologics that treat such diseases as psoriatic arthritis, ulcerative colitis, Crohn’s disease, and others.
So, in a certain sense, biosimilars might be seen as posing a larger threat to the conventional pharmaceuticals even than generics.
The evolving attitude of big pharma towards biosimilars
At the start, there’s no doubt that Big Pharma regarded biosimilars as a threat. Their position was, “we invented these agents, we spent billions – literally! – developing them and testing them in clinical trials, and now some little upstart outfits are going to copy our drugs and eat our lunch? We’ll fight tooth and nail!”
It can’t be denied that they had a point. As we said earlier, developing a biologic is far more complex, time-consuming, and expensive, than developing a small molecule drug. It requires deep expertise not only in the pathophysiology of the disease state, but in molecular biology. And, beyond the level of expertise, the developers of the bio-originals made a business assumption that certainly colored their decision-making process. They assumed that they would retain exclusivity long past the patent life of their agent, for the simple reason that no one else would know how to make it. Another pharma outfit might be able to analyze their drug and map its structure, but they would not have the substrate from which to grow it. The substrate itself had been bio-engineered, and the process was a closely-guarded secret.
The initial stance of Big Pharma was that if imitators came along, they would necessarily be different from the bio-originals. They would not be comparably effective, would likely be less safe, and could possibly be dangerous. And they made no bones about saying so.
The attitudes of much of the rest of the health-care community were markedly different. Medical societies looked at the big picture and concluded that if indeed biosimilars were as described, i.e., as close to the bio-originals as made no difference, then all in all it would be a good thing for a lot of patients and for the commonwealth in general. Payers supported biosimilars for obvious reasons. Regulators focused on what they saw as the central point – if they were chemically and structurally the same, they should move forward on the assumption that they would behave the same way, so they articulated that “abbreviated pathway to approval” mentioned above.
It looked as though the coming of biosimilars was a done deal.
Big Pharma jumps on the bandwagon
It’s not only that big pharma realized that the biosimilar tide was rising and they had better swim with it or be swept away. There was another factor. Big pharma realized that they could have a major marketing advantage over biosimilars developed by the Johnny-come-latelys, and that they could dominate the field.
The first players that looked into biosimilars were smaller research outfits, mostly outside of the US and Europe, who hoped to develop biosimilars and get them on the market in countries with less stringent regulations. This followed the strategy of developers and marketers of generics, mostly in Asia, that brought their drugs to the market well in advance of the expiration of patents on those drugs in more developed countries. In spite of the efforts of the originators of these drugs in the US and Europe to squelch those generics, they were permitted to be marketed, mostly based on the needs of the local populations. Then, following the expiration of patents on the original drugs, the generics have been imported to the more developed countries. Developers hoped that this strategy would work for their biosimilars as well.
But coming up with a biosimilar is much, much more complex than analyzing a simple molecule and synthesizing it. As I think I’ve said, perhaps ad nauseam, first you have to identify a naturally-occurring substrate or cell line, then you have to do some high-level molecular biology to tinker with it so that it will generate the desired biologic substance, and only then you have to do complex analysis to determine whether the ensuing biologic entity is similar to the original biologic you’re trying to copy.
Granted that the science of molecular biology has greatly advanced, and that there are highly proficient practitioners and labs in many parts of the world. But would the perception of a biosimilar developed by a company in (you name the country) match up to the perception of a biosimilar developed by the pharma outfit that was in on the ground floor, inventing and developing the first biologics? Would patients, and doctors, and payers, not prefer a biosimilar from Big Pharma to one from ABC Pharma in country XYZ?
For that reason, many of the biggest pharmaceutical companies in the world are deep into biosimilar development, including Amgen, Biogen Idec, Lilly (LLY), Merck (MRK), Novartis (NVS), Pfizer (PFE), Sandoz, Sanofi (SNY), and a bunch of others. Pfizer alone has five biosimilars in the pipeline, banking on their reputation for having done original research in biologics. A very active player is Samsung Bioepis, an offshoot of the company we all know as the one that recently outsold Apple’s iPhone. Samsung saw an opportunity in biosimilars and jumped on it. But they too are collaborating with established big pharma, both in the research and the marketing of their proposed drugs.
For the big pharma outfits not to have at least participated in developing biosimilars, to avoid competing with their original biologics, would have been an error along the lines of Kodak’s colossal blunder in not going forward with digital photography (on which they had already lavished a great deal of time and money) because they didn’t want to compete with their film photography franchise.
What does Doc Gumshoe take from this? First, it seems clear that the treatment of a number of complex and difficult diseases is going to become less expensive and therefore more accessible to the population, both here and abroad. Second, that the regulators are not always in the pockets of big pharma, but will, at least some of the time, make decisions that benefit the larger community. And third, that you can never, never write off Big Pharma, either as a marketer or as an innovator.
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As I write this, Ebola fears mount, ranging from legitimate concerns to hysteria. Granted, there is a great deal about this disease that is not known with a high degree of certainty, but my guess is that a great part of the problem in Africa is the almost total deficiency in elementary sanitation, and the almost total inability of the health-care systems in the affected regions to offer even the most elementary supportive measures. When sanitation and supportive measures are available, Ebola appears to be effectively controllable, such as in a very large Goodyear rubber plantation in Liberia, which is in near proximity to villages that have been ravaged by Ebola. Within the plantation community, which houses 8,500 employees and 71,200 dependents, there have been very, very few fatal cases and very little transmission. As of the beginning of October, there was only one Ebola patient in the community. This was accomplished through sanitation and supportive care. I do not think we need to fear a spread of Ebola here in our midst.
And something else to anticipate, perhaps relatively soon, is a rapid Ebola blood test. An outfit in Colorado called Corgenix (CONX) is close to perfecting a blood test that can detect Ebola in as little as 15 minutes. Other Ebola blood tests, slower and more complicated, may also be available. I think we can look forward to something more accurate than a thermometer being employed at US airports to screen incoming passengers from affected regions. The question is, how soon.