Progress on Biosimilars: Not Fast Enough
Drugs that compete with brand-name drugs are usually called "generics." Off-brand products that compete with an especially complex category of drugs called "biologics," however, are called "biosimilars." Whereas generics are chemically identical to brand-name drugs, the FDA defines a biosimilar as having a new active ingredient while being highly similar to the reference product and exhibiting no clinically meaningful differences in safety, purity, and potency.
Examples of biologics include Humira (for rheumatoid arthritis), Epogen (for anemia due to chemotherapy), and Herceptin (for breast cancer), and such drugs are usually priced at high levels. For example, Humira is likely to cost a patient $50,000 per year, and some drugs for rare diseases can cost nearly $500,000 per year. Congress foresaw the importance of fostering biologic competition in 2009 when it passed the Biologics Price Competition and Innovation Act.
Certainly, the FDA needs to ensure that each biosimilar is as safe and effective as its biologic predecessor. Unfortunately, the FDA has not yet moved on to the stage of judging safety and efficacy, because it seems to be stuck on administrative issues such as a naming protocol for biosimilars and a suitable FDA fee structure for anyone who might venture to compete in the biosimilar space.
Although the FDA is unready to approve biosimilars, its regulatory counterparts in the European Union, Canada, Australia, and some Asian countries have already approved the manufacturing and dispensing of biosimilar drugs. Clearly, there are some pharmaceutical manufacturers who are able to produce safe and effective biosimilars. In the countries where biosimilars are allowed to compete, prices are already about 20 percent lower, and the CBO predicts that U.S. biologics' prices will be 40 percent lower after four years of biosimilar competition.
One of the more successful biologic drugs, erythropoietin, produces $100 million per month in profit. This means that aggressive competition for that one drug could yield up to $100 million per month in consumer savings. The FDA's failure to progress on biosimilars has a massive financial impact on consumers.
Express Scripts estimates a $250 billion savings for consumers over the next eleven years if competition by biosimilars is allowed. This means that, over the next 11 years, FDA inaction on biosimilars will average $2,000 in costs per household in the U.S.
Some in the pharmaceutical industry would rather talk about drug naming. There is a dispute over whether each biosimilar, because it is chemically slightly different from the original, should have a unique name. To some, it may seem obvious that precise chemical names should be kept distinct (and the drug's market names can be subjected to our customary trademark laws). The resulting names won't be less consumer-friendly than those in use today -- pharmaceutical makers already abandoned using pronounceable names when it comes to chemicals as opposed to brands. Try saying adalimumab or erythropoietin or trastuzumab at a normal speaking pace.
On the other hand, a number of pharmacy associations have concluded that distinct names would cause confusion and possibly medical errors. Whatever the resolution, the naming convention can be decided after the FDA establishes a pathway for competitive entry and while biosimilars make their way through the regulatory pipeline to final approval. That process will allow for these disputes to be settled.
The fact is that the naming issues have become a time-consuming task for the FDA. Shame on the FDA for allowing itself to be sidetracked by this nonsense -- it's a red herring kept alive by those benefiting from highly profitable biologicals. It should not delay getting safe products to market and justify forcing consumers to overpay. It has been happening in Europe since 2006, and the delay at the FDA is totally unwarranted.
Inaction on approving biosimilars harms consumers and benefits biologics patent-holders. The FDA seems unduly tolerant of its own slow progress, and this needs to change.
Alan Daley is a retired businessman who writes for the American Consumer Institute Center for Citizen Research.