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the ability of biopharma firms to develop “generic” versions of some of the most expensive drugs on the planet. While biosimilars will not sell at anywhere near the discount that generic small molecules achieve, they will result in significant cost savings for the health care system. A win for Abbott’s petition will clearly be a loss for healthcare consumers. An alternative view (that I do not subscribe to) would be that an Abbott victory would be a win for the citizenry because it would force competitors to develop not just essentially similar drugs, but superior medicines (so-called biobetters). With a well-designed, innovative drug, coming up with something that truly is significantly better could be quite a challenging proposition. Cost (and not efficacy) will be the most important consideration in the biosimilars marketplace, just as it is in the generics world.
It’s hard to imagine that attorneys representing many of the biopharma industry heavyweights were not aware that someone might trot out this “unjust taking” argument, and they have a well-reasoned argument to make against it. The case may eventually find itself in front of the U.S. Supreme Court, although much pontificating is likely ahead of us before that happens. Many of the legal issues that reach the Court these days are not clear-cut and politically explosive, as evidenced by an increasing number of 5-4 decisions in recent years. The ramifications of any decisions reached by the FDA or the Court are likely to reverberate throughout the industry and will affect costs of the U.S. healthcare system for years to come.
The path to creating generic versions of “small molecule” drugs is relatively straightforward. Manufacturers must show that their drugs are chemically identical to branded molecules, and that they have similar physical characteristics, such as solubility. Selling of generic drugs can begin once these traits have been demonstrated and patents on the branded drugs have expired. A key point is that expensive, time consuming clinical trials are not required to get approval to sell generic drugs. In contrast, the road to biosimilars has been rocky, studded with regulatory potholes that forced many companies to slow down their efforts to develop these medicines. The FDA has been struggling for years to sort out the many compound issues involved. The primary concern is how one shows that a complex drug is truly similar (given their heterogeneous nature at the molecular level) to a marketed medicine without doing a clinical trial. Very minor changes in recombinant proteins can result in their becoming immunogenic, with potentially disastrous consequences for patients.
Amgen, in seeking to defend their own rheumatoid arthritis treatment from biosimilars, took a different legal tack than Abbott in order to protect their blockbuster’s sales. The original Immunex patent on etanercept (Enbrel) was issued in 1996 and is due to expire in 2013; worldwide sales were approximately $7.2 billion in 2010. Enbrel competitors were massing on the sidelines, getting ready to start selling their own versions of this bellwether treatment. Competitors (including Merck BioVentures) were thwarted in late 2011 when Amgen received another patent on etanercept (via a patent application that Immunex had licensed from Roche) that extended its legal protection until 2028. Amgen’s competitors may choose to fight the new patent, or develop altered versions of this medicine that will enable them to get around it. Any “improved” version of Enbrel will likely need to undergo clinical trials before the FDA could approve it. This requirement would raise the cost of entry significantly, and may be sufficient to keep out all but the biggest biopharma players.
Outside of the U.S., competitors have already begun selling etanercept biosimilars in countries where intellectual property concerns were not an issue. A biosimilar version of Enbrel known as Yisaipu is currently available in China, where intellectual property protections have often been ignored in the past. A significant recent change in Chinese patent laws now empowers the Government “to issue compulsory licenses to eligible companies to produce generic versions of patented drugs during state emergencies, unusual circumstances, or in the public interest [emphasis mine]”. If implemented, this could give Chinese companies wanting to make and sell biosimilars in their home market free rein to ignore intellectual property held by other drug makers in China.
There’s no way to predict how this biosimilar battle is going to play out. Any decision that the Supreme Court makes regarding the Affordable Care Act could impact Abbott’s petition with the FDA. The only thing that can be stated with assurance is that some lawyers are going to be pocketing bucketfuls of cash. There is much more at stake here beyond future Humira revenues that are potentially at risk. If Abbott’s assertion is upheld that biosimilars should not be allowed because of the need to protect trade secrets, then it would virtually guarantee a perpetual monopoly for the makers of most biologics. Some have argued that patents on drugs should be forever, a view I strongly disagree with. Amgen’s patenting/licensing strategy will likely protect Enbrel from competition for some 32 years, meaning they will be milking this cash cow for many years to come. Blocking the introduction of biosimilars into the marketplace is simply a bad deal for the health care system. As activist Lawrence Lessig put it (in a different context) “Before the monopoly should be permitted, there must be reason to believe it will do some good – for society, and not just for monopoly holders”.
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