What Follow-on Biologics Mean for the Future of the Biotechnology Industry

Generic versions of synthetic chemical drugs are now an accepted and important component of the pharmaceutical industry. In the US, the same is not yet true for follow-on biologics (FOBs). Europe has established a regulatory framework to enable the approval of what it designates similar biological medicinal products (biosimilars).¹ In the US, however, legislative discussions to create such an approval pathway are still ongoing. Meanwhile, in both regions, patents on innovator products are conspicuously expiring.

We believe that follow-on biologics must become part of the tool kit used to provide effective and affordable solutions to address patient needs. To make this possible, a regulatory pathway must be established to ensure that rigorous scientific standards are applied to develop high-quality follow-on products that are as safe and efficacious as their reference originator products. The road to success for FOB sponsors is not, and should not be, trivial, but nor should it be made impossible for short-sighted or parochial reasons.

Ajaz S. Hussain

This article addresses the history of follow-ons, Europe's regulations, and a future American regulatory framework. We argue that the competition that will result from an FOB pathway is good, not only for patients, but for the biotechnology industry as a whole.

Gillian R. Woollett

LESSONS OF HISTORY AND ECONOMICS

Biotechnology is a means of both research and manufacture. It enabled the creation of the first generation of follow-on biologics— most of the early biotechnology products were follow-ons to those already made through natural sourcing (Figure 1). The first biotech product was Eli Lilly's recombinant human insulin, Humulin, approved in 1982.

Figure 1. The evolution of biologics. The original biologics were naturally sourced products or synthetic products. As science progressed, biotechnology made it possible to manufacture recombinant forms of those products. Further scientific progress has made it possible to develop and approve follow-on biologics (FOBs) that are interchangeable with the innovator products, and include second generations of innovator products, new formulations, and new indications.

Science and technology have continued to make progress over the last 25 years. Now it is possible to efficiently and cost-effectively use advanced processes to develop and manufacture subsequent versions of biologic products at high quality, and even at higher quality, than the original products (Figure 2). As articulated by Mark McClellan while he was FDA Commissioner, it is time to "accelerate the public health benefits from modern methods to produce more precise, effective medicines and assure their quality."^2,3

Figure 2. Scientific progress in biopharmaceuticals continues in the areas of manufacturing technology, analytics, and clinical studies.

Sandoz was the first company to achieve regulatory approval for a biosimilar, with the April 2006 approval of Omnitrope (human growth hormone) in Europe. Omnitrope was approved based on the newly established European Medicines Agency–European Commission (EMEA–EC) pathway.^4,5 There were already multiple versions of recombinant human growth hormone on the market, but until Omnitrope, none had been compared to a previously approved product as part of its development. In May 2006, Sandoz's Omnitrope also achieved the first approval for a recombinant follow-on version of a recombinant reference product in the US. It was classified as a biologic drug because—as a result of the vagaries of history—hormones are regulated as drugs under the Food, Drug, and Cosmetic Act.^5,6 Sandoz recently received European regulatory approval for the liquid form of Omnitrope, which will provide patients a more convenient dosing option. Concurrently, Sandoz developed follow-on versions of epoetin alfa, and the European Commission approved the product on August 31, 2007. Given the significance and extent of the use of epoetin alfa, this is an important milestone in the development and approval of FOBs. The Novartis group of companies has been transparent about its support for FOBs and their importance for the prosperity of the biotech industry.^7,8

High Stakes: Access to Affordable, High Quality Medicines

The stakes are very high for the US public and its industry, as well as for the European biosimilars industry that will sell to the US market (given that the market place for all pharmaceuticals, including biologics, is increasingly global). Forecasts for the global generics market predict nearly a doubling, from $57.8 billion in 2005, to $121.3 billion in 2010, with the fastest growth expected in Western Europe and the US.⁹

While we are unlikely to see an instantaneous uptake in biosimilar product sales (once the pathway is established and products created, doctors and patients must gain familiarity with these products), there is significant long-term potential given that more than one-third of all medicines currently under development are biotech drugs, and about $18 billion of these products will be off-patent by 2010.¹⁰ As an increasingly crucial part of the American healthcare system, payers, both public and private, will be especially interested in FOBs. The Pharmaceutical Care Management Association (PCMA) estimates that FOBs could save the US government's Medicare Part B program approximately $14 billion on prescription drug costs over the next decade if a clear regulatory pathway is established.¹¹ The Medicare Part B program alone spent more than $5 billion on biologics in 2006. An analysis by Belsey (Figure 3) predicts a galloping growth in US sales of biologics.¹²

Figure 3. Biotechnology represents a growing percentage of prescription sales.

EUROPE'S REGULATORY FRAMEWORK

We can look to the European regulatory experience to develop a workable approval pathway. We recognize that there will be important differences in the American model to account for the history of its biologics regulations and to accommodate its healthcare and reimbursement environment, which is very different from that seen in Europe.

The EMEA's 2005 regulations, interpreting the 2003 European law that created the new biosimilars pathway, instituted a formal system for reviewing biosimilar applications that assesses these medicines according to standards just as stringent to those used for originator products. Namely, the system requires sponsors to demonstrate comparability to the reference product in terms of physicochemical properties, biological activity, and its impurity profile. Comparable clinical safety and efficacy must be demonstrated. If we can combine the European regulatory framework (which started with legislation and has been extended all the way through to product-specific guidelines) with the very long experience in biologics and conspicuous leadership in biotechnology, the US can implement a reliable regulatory approval process, while increasing patient confidence in the industry and in the quality of all of its products, innovator and generic alike. Such confidence is vital to the health of the biotechnology and pharmaceutical industry. The noble goal is to make both innovator and follow-on biologics available to patients more effectively and efficiently.

Industry Resistance to FOBs

Industry critics lack confidence in the tremendous achievements of biotechnology to date, its bright future, and its ability to be accountable. While simplistic in many ways, one can compare the global FOB industry to the small-molecule generics industry of 1984. The success of the generics industry did not destroy the innovator industry; in fact, the beginning of the generics era coincided with the greatest era of pharmaceutical innovation ever.

While there are regulatory obstacles, manufacturing challenges, development issues, and marketing hurdles to overcome, the science and technology are available to support the approval of subsequent versions of complex, larger-molecule medicines. Regulators in both Europe and the US are increasingly recognizing these advances.^1,13 The regulators believe that such follow-on products can be safely approved today, and that it is even possible to designate some as interchangeable.¹⁴

It is unfortunate that some of the people in the biopharmaceutical industry with the most experience, who could help ensure the greatest benefits from all biologics, including FOBs, appear to doubt the capabilities of our regulators the most. They should instead help design a suitable approach for all sponsors and in the process perhaps alleviate some accumulated, but scientifically unnecessary, regulatory burdens. Now is the time to decide how future biotech medicines of all sorts—generic and innovator, first and second generation—will be regulated. To paraphrase Commissioner McClellan, it is time "to turn the art of drug development into a science."¹⁵

Ethically and practically, it is difficult and increasingly disheartening to hear many in the biotech industry fight against the competition and access to safe and effective medicines that FOBs represent. First, assuming as a basic premise that the innovator product and the FOB are comparable, it is obviously not in patients' best interests to allow monopoly pricing to continue indefinitely even when patents have expired and a return on investment has been made.Second, the lack of competitive pressure on prices means that innovators have no incentive to upgrade their manufacturing to reduce their cost of goods. Third, the innovators have no incentive to actually innovate and produce new and better products at all.

THE REGULATORY PATHWAY MUST BE CLEAR

We believe a clear regulatory pathway is important. Companies need regulatory clarity to rationally and systematically invest in the development of these drugs, and patients need better access to medicines. And perhaps more importantly, biosimilars legislation would stimulate innovator companies to develop new, better products as their patents expire. Instead, the current regulations encourage the original sponsors to extract as much as they can from products on which that they retain de facto indefinite monopolies. Hence, without a clear pathway, there is no way to proceed and everyone—patients, the industry (both generic and innovator), payors—all suffer.

When patents expire, competition should begin. The FDA has been designated as the expert agency to evaluate innovator products and FOBs, including those that are interchangeable with their reference products. Legislation is needed to affirm the FDA's authority to license FOBs that reference those products currently approved under the Public Health Service Act (PHSA).¹⁶ Such legislation would not apply to follow-on versions of the so-called biologic drugs approved under the Food, Drug, and Cosmetic Act, for which a pathway already exists.

It is evident that the science and technology exist to make such follow-on products—how would there be any reference products if that were not the case? And each of these reference products, by definition, was approved by the FDA, so they certainly know how to evaluate them.

If introduced in the current Congress, such designation of authority would enable the FDA to immediately establish a pathway that would then allow an incremental approach to implementation, only moving forward with review and approval of more complex products as the science progresses and sponsors submit adequate data. The specific elements defined in any new regulatory pathway will impact its viability for sponsors, the flexibility that the FDA has to accommodate progress and apply sound science, and the ultimate value of any products approved to patients. It will, as now, always be up to the sponsor to provide the data to assure the FDA that their product is safe, pure, and potent. And by ensuring consistent, appropriately high regulatory standards for all biologics, such a designation of authority to the Agency would enable expanded patient access to safe and effective off-patent biologics, stimulate continued innovation, and ensure that as the science continues to advance, more of these products become available to patients,

Benefits of Interchangeability

In the EU, with 27 distinct member countries (but only 23 official languages) and their associated legislative and regulatory histories, plus healthcare and reimbursement systems, the EMEA defers to member states for decisions on interchangeability. In the US, Congress should give the FDA the authority to formally recommend such a designation for an FOB based on a demonstration of comparability.

Table 1. Interchangeability versus substitutability. In both Europe and the US, the regulatory authorities can determine if two drugs are interchangeable, and health authorities determine substitutabilty.

The FDA has this role in the small-molecule drugs arena, although the regulatory responsibilities of the FDA remain distinct from the practice of medicine, which is the jurisdiction of physicians and other health care providers and subject to state regulation (Table 1, Figure 4). The FDA can approve substitutable small-molecule drugs based on demonstration of pharmaceutical equivalence and bioequivalence. Both originators and generic companies have to rejustify pharmaceutical equivalence and bioequivalence when manufacturing changes are made. For biotechnology drugs, comparability essentially establishes equivalence of pre- and post manufacturing changes, and the post-change product is deemed substitutable or interchangeable to the pre-change product. The FDA's experience with comparability is pertinent to this point. An FDA guidance-based initiative in the mid-1990s enabled sponsors to change the manufacturing of their own products.¹⁷ This shows that the agency, using established standards, can successfully evaluate an FOB sponsor's data, and judge the appropriateness of the products being designated as interchangeable.

Figure 4A. One way to visualize the different categories of biologics is shown below. Many follow-on biologics will overlap entirely with first-generation biologics, and only second-generation biologics are clearly distinct. All follow-on biologics, whether biogenerics (regulated under the US Food, Drug, and Cosmetics Act) or biosimilars (regulated under the Public Health Service Act) will comply with existing statutory standards.

A designation of interchangeability by the FDA allows the healthcare system to have confidence that the FDA has evaluated products according to strict established regulatory criteria and determined them to be highly similar or comparable (each an established term-of-art, and not a trivial standard to meet). Currently, decisions on switching biologics are being made independent of this evaluation, for example at the formulary level and as a result of patients changing healthcare plans when they change jobs. It will be far better to include the expertise of the FDA, as a formal part of a transparent and accountable process. This will allow the state health boards of pharmacy and medicine to have access to appropriate information on which to make informed decisions and recommendations, including when to delegate substitutability decisions to pharmacists and others. This, in turn, allows both consumers and providers to have confidence in the quality and value of FOBs.

Figure 4B. This also relates to interchangeability. The interchangeabilty of first-generation biologics and biogenerics (regulated under the US Food, Drug, and Cosmetics Act ) is presumed statutarily, and the interchangeabilty of biosimilars (regulated under the Public Health Service Act) is possible based on the same regulatory principles of comparability that we use to make pre- and post-manufacturing-chance biologics interchangeable today.

Patients benefit from a product comparability-based pathway because it avoids arbitrary, unnecessary, or unethical duplication of pre-approval studies or clinical trials, and allows appropriate extrapolation between indications based on mechanism of action, while also accommodating scientific progress to allow regulators access to the highest quality and most pertinent data on which to approve an FOB. Comparability is a very high regulatory standard, but one which provides consistency with current evaluation standards for innovator products. Any sponsor can use comparability principles to develop new and improved versions of existing products and thereby improve options for patients, while maintaining the ability to efficiently use prior knowledge to enhance their efforts.

Throughout the development of an FOB, all of the comparative data are generated by the follow-on sponsor from its own trials and by using its own analytical assays to compare its material to commercial samples of the reference product. No access to any of the innovator's data is required at any stage. Approval of the FOB rests solely and surely on the shoulders of the subsequent sponsor's comparative data in state-of-the-art studies run side-by-side with the innovator's reference product. Indeed, this is the only way that scientific progress can be used in the development of the FOB. The "old" manufacturing data in the innovator's dossier is no longer relevant, let alone optimal, to the new manufacturing and quality procedures available to the subsequent sponsor 15 to 20 years later when patents have expired.

Intellectual Property Protection Remains Fundamental

Strong intellectual property (IP) protection, meanwhile, remains important for continued investment in FOBs and other therapies. Intellectual property covers patents, trade secrets, and other confidential information held by a company and filed with a regulatory authority. While some contend that the concept of FOBs threatens innovation, we counter that these IP rights are in fact of greater value, not undermined, when combined with a strong, appropriately regulated FOB pathway based on comparability and prior knowledge for second-generation products. Such a pathway will let certain follow-on products be approved, but only if follow-on sponsors develop their own independent data packages when patents expire. However, a well-designed pathway also prevents approval of products that cannot overcome the same appropriately high, science-based regulatory standards. The pathway will also stimulate the use of state-of-the-art manufacturing and competition will put a value on the reduced cost-of-goods. This protects patients from low quality products, while also encouraging companies to invest in quality processes and facilities to make any biologic.

Currently, the absence of competition leaves the industry vulnerable to accusations of indefinite monopolistic practices that need to be curtailed. Patent expiration has little meaning without competition. If prices don't fall due to competition, politicians may seize on draconian measures such as price controls. Nothing would hurt the industry more.

Litigation over patents can be expected to occur, but such court proceedings can remain independent of the regulatory approval process, just as they are for innovator biologics today. The complexity of biotechnology product patent claims is such that waiting for resolution before the FDA can complete its review will not be anything other than an additional barrier to the timely availability of FOBs. Excessive patent litigation is a de facto tax on both the innovator and generic industries—cumbersome and expensive and providing no net extra value to patients.

The FDA, by completing the regulatory review and issuing a license, allows the sponsor to make a business decision with an asset in hand. This is how the biotechnology industry has traditionally worked and it is what should continue here.¹⁸ It may be reasonable to develop procedures that could apply at the conclusion of the FDA approval process, including, for example, a 45-day notification to the sponsor of the reference product of an issued approval, during which time an innovator could institute litigation if it believed that its patent or other IP rights have been violated. After having issued this notice, sponsors of FOBs could decide how best to approach the market if they believed there were no outstanding patents, or that any patents still in force are invalid or not infringed, just as they can for any Public Health Service Act biologic today. They could choose to launch at risk.

As Congress develops legislation that leaves the separation of regulatory pathways and patents alone, legislators may wish to consider other mechanisms by which to make the exclusive marketing period more predictable for all sponsors. They could try reproducing in the US a system similar to the EU data-exclusivity provisions (more accurately called market-exclusivity provisions) for innovator biologics approved after enactment of any new legislation. This is a way to enhance regulatory certainty for all sponsors, and would be independent of the patent estates and so encourage the development of products with little or no patent protection. Such an approach would prevent diversion of excess resources by either innovators or the sponsors of FOBs on slow and expensive patent litigation, and enable those resources to be dedicated to product development, as well as to new and more-efficient biologic manufacturing. Such predictability at a given time post FDA-approval of the reference product is a win–win scenario for the biopharmaceutical industry, and also for patients.

PATIENT NEEDS COME FIRST

Many of the arguments currently being made for biologics, especially with respect to access and safety, are the same as those made during the debate and discussion that surrounded the 1984 approval of the Hatch-Waxman Act in the US and the subsequent introduction of small-molecule generics.¹⁷ On one side, there is great support to increase opportunities for competition when patents have expired, and thereby decrease the costs of medicines by stimulating more-efficient manufacturing. And in the US, this includes those who recognize competition as a justification for continued free-market pricing for innovator products and hence as crucial to the survival of the innovator industry. On the other side, questions are raised as to whether science and technology are really able to handle the level of complexity involved in producing FOBs of equivalent quality to their reference products. There are also concerns from doctors and patients about using FOBs because of an assumption that these products will not be equivalent to the originals, but that cannot be the case if FDA has used the comparability standard. However, it is up to the industry and regulators to help consumers and payers alike understand that FOBs will be at least as safe as innovator products at their point of approval if consistent regulatory standards are applied to all biologics equally. Then it is up to sponsors of all biologics to meet those standards.

A clear and fair regulatory pathway stressing comparability would give patients in the US greater access to high-quality and improved biotechnology products at competitive prices; bolster the European biosimilars industry; and provide innovators relief from outdated requirements as well as create a less burdensome regulatory pathway to improve existing products.

If US public policy incentivizes what is best about the industry, the industry will respond accordingly. If instead, public policy fosters complacency and inertia, then that is what we will see. If, indeed, follow-on biologics are not possible for scientific and technical reasons, then the FDA will not approve them. What the opponents of biosimilars are most afraid of is that they are indeed possible, just as Sandoz has shown in Europe and begun to show in the US.

Although there are many issues to overcome, passing legislation for a comparability-based, interchangeable biologics pathway in the US is one of the biggest challenges and greatest opportunities facing the biopharmaceutical industry today. It is time for all of us to work with the US government to improve the review for all biologics, and to enable every patient access to safe and effective medicines that will be more affordable, while also encouraging the development of new therapies. The industry has reasons to be optimistic about the future for these great products, and what they offer to patients, and should welcome the opportunity for full and fair competition, as long as the products are made to the same high quality to ensure safety and efficacy for patients.

Ajaz S. Hussain, PhD, is the vice president and global head of biopharmaceutical development atSandoz (a member of the Novartis Group of Companies), Princeton, NJ, 609.627.8602, ajaz.hussain@sandoz.com

Gillian R. Woollett, MA, DPhil, is chief scientist at Engel & Novitt, LLP, Washington, DC.

REFERENCES

1. Directive 2004/27/EC of the European Parliament and of the Council of 31 March 2004 amending Directive 2001/83/EC on the Community code relating to medicinal products for humans. Off J Eur Union. 2004 Apr 30, plus associated general and product class-specific guidelines.

2. A call to arms. Next Generation Pharmaceuticals. Available from www.gdspublishing.com/ic_pdf/ngp/fda3.pdf.

3. Abboud L, Hensley S. New prescription for drug makers: update the plant. The Wall Street Journal. 2003;Sept 3.

4. EMEA announcement of the positive opinion for Omnitrope. 2006 Jan 27. Available from www.emea.europa.eu/pdfs/human/press/pr/3179706en.pdf.

5. US Food and Drug Administration. FDA's information page about Omnitrope. Available from www.fda.gov/Cder/drug/infopage/somatropin/default.htm.

6. US Food, Drug, and Cosmetic Act of 1938. Current version, as amended through 2004 Dec 31, is available from http://www.fda.gov/opacom/laws/fdcact/fdctoc.htm. For an explanation, see www.fda.gov/oc/history/historyoffda/section2.html.

7. Hussain A, Pomerantz E, Rummelt A. Paving the critical path for innovation to thrive in the biotechnology industry through comparable innovation in the US regulatory framework. The RPM report. 2006 Feb;1(3):19–24,

8. Testimony of Ajaz S. Hussain, PhD, vice president and global head of biopharmaceutical development, Novartis Corporation, before the Senate Committee on Health, Education, Labor, and Pensions for their hearing on follow-on biologics. 2007; Mar 8. Available from help.senate.gov/Hearings/2007_03_08/Hussain.pdf.

9. Generics: Global Industry Guide. Industry Profile. Datamonitor. 2006 Oct. Available from www.pharmalive.com/special_reports/sample.cfm?reportID=231.

10. Pharmaceutical Research and Manufacturers of America (PhRMA). New Medicines in Development for Biotechnology. 2006 survey. Washington, DC: PhRMA; 2006. Available from www.phrma.org/new_medicines_in_development_for_biotechnology/.

11. Engel & Novitt, LLP. Potential savings that might be realized by the medicare program from enactment of legislation such as the access to life-saving medicine act that establishes a new cBLA pathway for follow-on biologics. A report to the Pharmaceutical care management association (PCMA) based upon a preliminary assessment of available data. Washington, DC: Engel & Novitt, 2007Jan 2. Available from www.pcmanet.org/newsroom/2007/.

12. Derived from Belsey MJ, Harris LM, Das RR, Chertkow, J. Biosimilars: initial excitement gives way to reality. Nat Rev Drug Discov. 2006 Jul; 5(7)535–6.

13. FDA official urges congress to pass follow-on biologics bill. FDA week. 2007 Oct 12;13(41).

14. Statement of Janet Woodcock, deputy commissioner and chief medical officer, US FDA, before the Committee on Oversight and Government Reform, United States House of Represen-tatives. Follow-on protein products. Committee on oversight and govern-ment reform hearing on safe and affordable biotech drugs-the need for a generic pathway. 2007; Mar 26.

15. Exhibit 3: Statement of Mathias Hukkelhoven, PhD, Novartis Corporation. FDA Public Workshop. Scientific considerations related to developing follow-on protein products. Docket No. 2004N-0355. 2004; September 14–15. Available from www.fda.gov/OHRMS/DOCKETS/dockets/04p0171/04p-0171-c000005-04-Exhibit-03-vol1.pdf.

16. Public Health Service Act of 1946. Title 42, Chapter 6A. United States Code, The Public Health and Welfare.

17. US FDA. ICH Guidance for Industry. Q5E comparability of biotechnological/biological products subject to changes in their manufacturing process. Rockville, MD: 2005; Jun 30.

18. The Competition and Patent Term Restoration Act of 1984 (Hatch Waxman Act) was the exception by linking the approval decision of FDA to an assessment of the patent status through a cumbersome and resource intensive patent listing system that they have had to maintain. However no such linkage is needed for biologics, and the patent is not in any way undermined. The courts can serve the biotechnology industry patent estates just as they do those of any other industry.