The Affordable Care Act was approved in 2010 with the goal of reducing healthcare costs. The Act’s main function was to clear the way for the Food and Drug Administration (FDA) to create an approval process for biosimilars. After lengthy discussions on all sides of the issue, FDA has issued draft guidelines for approval of a biosimilar.

In the guidelines issued February 9th, FDA states that approval will require studies to show that a biosimilar is “highly similar,” but that they will decide the extent and scope of required animal and clinical studies after looking at other analytical data. Basically there will be no standard cookie cutter approach, each product will be considered on a case-by-case basis and may require varying levels of studies to prove similarity. This seems reasonable due to the difficulty of manufacturing and complex nature of biologics. Since an exact copy of a biologic is not possible, manufacturers of biosimilars will need to prove that they have a highly similar product with the same function as the original biologic. Currently nine biosimilar clinical trial applications have been filed, but no drug applications as of yet.

While several biologics have been approved in Europe, waiting for FDA guidelines has held up any applications or approvals in the United States. Datamonitor estimates that the worldwide market for biosimilars will rise to $3.7 billion by 2015 from just $243 million in 2010. This projected increase is in large part due to more than 30 branded biologics with a total of $51 billion in revenue that are set to come off patent between 2011-2015. Big sellers scheduled to lose patent exclusivity include Epogen, Neupogen and Rituxan, which is one of the top 5 best selling biologics with an annual revenue over $6 billion.

Biosimilars are popular and have been strongly advocated for by congress because they promise a 25-45% discount off the original product price. The Congressional Budget Office has estimated a savings to public health care programs, including Medicare, of $25 billion dollars over the next 10 years. Many biologics are deemed wonder drugs that have incredible results for patients, but many of these treatments come with a high price tag. For example, Abbott’s biologic Humira, used for treatment of autoimmune disorders such as rheumatoid arthritis, Crohn’s Disease, and Psoriasis, costs on average $20,000 per patient, per year and the anti-anemia biologic Epogen costs about $10,000 per patient, per year. Clearly with the high cost of biologics, a 25% savings would go a long way towards reducing the rising cost of healthcare.

When it comes to cost reduction, Biosimilar companies have an advantage over the original manufacturer by using improved technologies, including production systems that are more advanced, more cost effective, and more defined than systems being used when the original product was approved. Once the FDA approves a drug, companies typically stick with their manufacturing process even when improvements are available. This is because no company wants to incur the expense of putting a drug back through the approval process, which a manufacturing change could trigger. Due to this, many of the original products are being manufactured in outdated systems and utilizing techniques no longer in practice. For example, some original products are still manufactured using animal or other undefined components. Biosimlilar companies can now employ manufacturing systems that are completely animal-free and defined and can achieve higher product yield with less cost. These improvements mean that biosimilar companies can reduce the cost to manufacture the same product, plus they do not have all the research and development costs involved in the original drug discovery. We recently featured a blog on The Dish titled “Strategies for Improving Antibody Production in CHO Cells,” which describes many new techniques being used to improve antibody production, all of which will most likely be used by biosimilar companies to gain their 25-45% price reduction.

Can biosimilars deliver on the estimated price reduction and when will biogenerics be available in the United States? No one knows for sure, but now that there is a pathway and many high revenue biologics losing patent exclusivity, my guess is that it won’t take long.

What do you think of biosimilars? Do you think that 25-45% price reductions are possible?

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