BIOSIMS LAND ON SHORES OF BIG PHARMA

Biosimilars are on the way and will reduce the cost of biologics

Awave of new pharmaceutical products called biosimilars is on the cusp of breaking through next year in Canada and it could translate into billions of dollars in savings for the health-care system.

Biosimilars — also called subsequent entry biologics — have only been around for a few years in Canada, since Sandoz Canada’s Omnitrope growth hormone therapy was first approved in 2009.

They can be thought of as the generics of the biological drug space, but unlike the so- called small- molecule products that are exact copies of other treatments, biosimilars, as the name suggests, can have some variations, as long as they produce the same results as the originator.

Such drugs should help lower health-care costs, but may have a negative impact on established drug company earnings if they cut into profits, although the biggest brand name drugmakers are entering the space. Merck & Co. Inc., Pfizer Inc. and Amgen Inc. are all developing products that mimic existing biologics with expired patents.

“The market materially underestimates the magnitude and the timing of the impact on exposed innovator companies as well as the commercial opportunities for the biosimilar sponsors,” said Citigroup Inc. analyst Andrew Baum in a note.

But it’s still early days for the industry and there are, of course, obstacles to overcome in bringing these expensive treatments to the patients who need them.

“You need to have a level of expertise to bring to the game in order to be able to research, manufacture and develop those types of compounds,” said John Snowden, executive director at Amgen Canada, which has announced six biosimilars in the pipeline. “It’s not as simple as manufacturing a smallmolecule generic.”

In 2014, biologics sales accounted for $5.6 billion or 24 per cent of the entire Canadian market for pharmaceuticals, including four of the five top-selling drugs in the country. The overall pharmaceutical market is growing at about three per cent a year while biologics are growing four times faster at 12 per cent.

Part of that growth is because biologics are some of the most expensive drug treatments available, sometimes costing between $10,000 and $30,000 a year. Biosimilars, while they won’t bring treatments for new diseases, will decrease that cost.

Companies say that because of the relatively large amount of research involved in producing biosimilars, they only tend to be between 15 and 30 per cent less expensive than the originator. Nevertheless, that can still ease the burden on the public health-care system as well private insurers. At current biologics prices, savings could add up to $4 billion over the next six years.

“It saves the system money and therefore makes it possible for the system to expand coverage to more people,” said Steve Morgan, a professor at the University of British Columbia’s School of Population and Public Health. “In a sense, the financial benefits to patients are limited, but the benefits in terms of the accessibility and the sustainability of the system that provides coverage for medicines are really important.”

And, he adds, Canadian companies could do a better when it comes to discounts. Although conventional wisdom suggests biosimilars can’t be priced that much cheaper than the originator products, experience elsewhere suggests it isn’t true. For example, the biosimilar industry in Scandinavia is several years ahead of Canada in its development and its experience shows that pharmaceutical companies can do much better.

“It’s not a reasonable discount (here) and we’re fast learning that discounts can be much deeper,” Morgan said. “I think 2016 will be a big year in terms of the global awareness of the success that countries like Norway have had with relatively aggressive programs.”

In the meantime, development continues. In March, Pfizer subsidiary Hospira launched Inflectra, a biosimilar of Johnson & Johnson’s arthritis treatment Remicade, which is the leading pharmaceutical product in Canada with nearly $800 million in sales last year.

“We believe this is the year that we’ll see some adoption in this country that parallels some of the adoption that we’ve seen in other western markets,” said Pfizer’s Gerry Stefanatos.

Although biosimilars have been adopted slowly in Canada, competition is getting much fiercer among some of the biggest drug companies.

In December, Merck announced it was working with Samsung Bioepis Co. to bring a portfolio of biosimilars to market in Canada over the coming years.

Getting those products to patients, however, will require navigating Canada’s biosimilar regulatory environment, which was established by Health Canada in 2010 and is considered to be one of the biggest challenges for drug companies to overcome.

Another issue is that even after a drug patent expires, many originator companies have been able to retain business because physicians must use their own discretion when prescribing either branded biologics or biosimilars.

“We are asking government, insurance companies and other decisionmakers to implement policies that will encourage the use of biosimilar medications,” said Elie Betito, director of government affairs at Apotex, a Canadian pharmaceutical company launching two biosimilars in 2016.

For now, this lack of regulatory guidance on interchangeability dissuades doctors from switching patients to biosimilars and gives an advantage to the originators.

“For a company that’s marketing and commercializing biosimilars, no matter how good you are, it’s a closed circuit that’s difficult to penetrate,” said Bruno Mäder, head of the Merck Biosimilars Business Unit in Canada.

“To some, it’s very surprising that an originator company has taken a stand that way. We think right now if you look at the importance of biologics in Canada, some payers are pleased with the savings they’re getting, but at the end of the year, the only company that will have business will be the originator and that’s not sustainable.”

In the next year, Morgan believes the biggest change could be how provinces respond to the entry of biosimilar drugs. If they develop a pricing-policy structure that determines how much patients are charged for these new products, it could turn the advantage in favour of biosimilar producers.

“We’re on the cusp of this policy arena for Canada,” Morgan said. “We don’t know how that’s going to take place in Canada and that’s a big issue for the competitors because they want to know they’re going to get sales volume. The key thing that is important for Canadian policy-makers is that you have to reward lower prices with a secure demand.”