Biosimilars represent a unique opportunity for Sandoz. As the first pharmaceutical company to have a biosimilar filed, approved and launched in Europe and the US, the company continues to be a pioneer and global leader in this rapidly evolving space. With biosimilars expected to deliver more than $54B in savings in the U.S. through 2026 ($250B globally by 2026), this industry segment is poised to play a significant role in the future of the company.1
As proven therapeutic alternatives to reference biologics, biosimilars can help to fill an important unmet need by providing expanded options, enhancing affordability for health systems, and increasing access to therapy. For this reason, biosimilars are an opportunity to realize benefits for the patient, and the entire healthcare community, by helping reduce the burden of rising treatment costs.
Sandoz at the forefront
Sandoz has a rich history of more than three decades of experience with biotechnology development and two decades with biosimilars. To date, the company offers biosimilar products in more than 75 countries and has accumulated more than 340 million patient-exposure days.2
Sandoz will remain actively involved in all aspects of the biosimilar industry and regulatory environment to improve access to biosimilar products for patients who need them most. Today, the company has biosimilar molecules in development to treat diseases in the areas of dermatology, gastroenterology, nephrology, oncology and rheumatology.
To examine the biosimilars outlook for Sandoz in 2017, we must consider recent developments, specifically, important challenges and opportunities in the areas of interchangeability, naming conventions and the structure of reimbursements.
Removing barriers to access
A biosimilar with an interchangeable designation may be substituted for the reference medicine by a pharmacist without the intervention of the health care provider, a practice that is widely accepted across Europe. In the U.S., the FDA recently issued draft guidance that would require manufacturers to submit additional, specific data in order to receive an interchangeable designation.
Sandoz agrees with multiple aspects of the FDA draft guidance including:
that each biosimilar product should be reviewed on a case-by-case basis, and
the concept of extrapolation can be applied to biologics with an interchangeable designation just as it can be applied to biosimilar products.
It is important to understand that an interchangeable designation does not represent a higher standard of product quality. Sandoz is working diligently to ensure that some of the data and clinical requirements, such as product sourcing parameters and study endpoints, do not become an unnecessary barrier to patients.
As effective as the reference product
Biosimilars contain an amino acid sequence that is 100 percent identical and have a three-dimensional shape that is indistinguishable compared to that of the reference product.3
Structural and functional elements are rigorously compared with powerful analytical tools to show that the biosimilar has no differences that are clinically relevant when compared to the original biologic.
If introduced to the market properly, biosimilars can have a huge impact. Case in point, Zarxio, the first biosimilar approved in the U.S., is helping many U.S. patients who have an impaired ability to produce white blood cells.
What’s in a name?
In January 2017, the FDA finalized a naming guidance that requires the addition of four-digit, non-meaningful suffixes to the nonproprietary names of all currently-licensed biologics and those to be licensed in the future. The FDA suggests that the addition of a suffix will strengthen pharmacovigilance and minimize inadvertent substitution of products that have not been deemed interchangeable.
However, others including Sandoz believe the opposite will happen and that the FDA proposed naming changes for biologics are unnecessary and may even lead to safety risks. The current naming system without a suffix has been used successfully for over six decades and helps advise physicians of the active ingredients in all drugs, as well as biologics. This process is coordinated with the International Nonproprietary Naming Conventions administered by the World Health Organization.
Current bar code technology using existing naming conventions already provides easy access and traceability, and has been widely adopted across the country for all other drugs, especially as providers upgrade or install electronic health record systems.
Impacting the entire healthcare system
The cost burden of implementing the use of the four-digit suffixes is also not yet appreciated. In a statement to the FDA, the National Council for Prescription Drug Programs (NCPDP) pointed out that more than 60,000 pharmacies, 5,500 hospitals, insurers, and thousands of physician practices and other healthcare organizations will have to collectively spend billions of dollars to redesign and reprogram systems.4
Adding more names and complexity will lead to coding errors and system changes that may cause prescribing, dispensing and refill errors.
The NCPDP believes this new mandate will also result in ongoing indirect costs associated with drug price increases, adverse patient safety issues, drug shortages, and supply chain disruption that will impact the private sector, as well as numerous federal, state and local government entities.
It is possible that in trying to solve a theoretical but as of yet unproven patient safety problem, the FDA will likely create one—and potentially on a large scale.
Competition and innovation rely on reimbursement
Reimbursement policies need to be fair in order to increase use of biosimilars by healthcare providers, to spur competition among manufacturers and ultimately reduce costs.
In 2016, the Centers for Medicare & Medicaid Services (CMS) created a payment policy that groups all biosimilars with the same reference product into a single billing and payment code. Under this scenario, the grouped biosimilars are reimbursed at a blended average sales price that does not factor in the reference medicine. The CMS rule aimed to treat biosimilars like generic medicines despite the fact that biosimilars are profoundly different and objections were voiced by numerous stakeholders, including patient and healthcare-related groups.
Effective January 1, 2018, newly approved biosimilars with a common reference product will no longer be grouped into the same Healthcare Common Procedure Coding System (HCPCS) code, creating a more competitive biosimilars marketplace.5 Reimbursement for biosimilars will continue to be the average sales price of the product plus six percent of the average sales price of the reference product. Assigning each biosimilar its own unique HCPCS code benefits patients and the healthcare system by creating a robust, competitive biologic market by increasing the potential for innovation while lowering the risks associated with developing and marketing these complex products.
Litigation and the Political Environment
The recently decided Sandoz Inc.v. Amgen Inc. U.S. Supreme Court case has helped to define how quickly patients can benefit from biosimilars once they are approved, and provided additional clarity related on the patent dance.
The political environment in the U.S. remains dynamic. The Affordable Care Act (ACA) continues to be a highly debated issue, but the promise of biosimilars remains a topic of interest on both sides of the aisle.
Looking to the future
Biosimilars are an important tool to reduce the increasing cost of healthcare. Despite the challenges, 2017 promises to be a big year for the introduction of new biosimilars in the U.S. and European Union markets. The potential patient benefit from biosimilars in the European Union and the U.S. are significant. The RAND Corporation and Express Scripts project savings from biosimilars in the U.S. will range between $54 billion to $150 billion over the ten years from 2017 through 2026.
Sandoz has biosimilars in various stages of development for dermatology, gastroenterology, nephrology, oncology and rheumatology. As a proven leader and innovator in biosimilar development and with a continuing commitment to providing enhanced access to these life-saving treatments, Sandoz will continue to work to realize the promise of biosimilars across the globe.
A biosimilar is a biologic medicine that matches the efficacy and safety of an approved biologic (known as the reference medicine) and is generally marketed once the twelve year regulatory exclusivity period afforded biologic products pursuant to the BPCIA and relevant patents have expired. In order to receive regulatory approval, a biosimilar undergoes a rigorous review of analytical studies, pre-clinical testing and clinical trials to confirm that patients and health care practitioners can expect the same results from a biosimilar as they do from a reference medicine. Biosimilar medicines are used to treat disabling and life-threatening conditions including cancer, diabetes and arthritis. They also have the potential to reduce the financial burden on the healthcare system by introducing competition and/or direct cost savings.
1 Mulcahy AW, Predmore Z, Mattke S. The Cost Savings Potential of Biosimilar Drugs in the United States. Rand Corporation; Santa Monica, CA: 2014.
2 Novartis Data on File: Medicines for Europe presentation at the US Advisory Committee review of a Mylan biosimilar
3 US Department of Health and Human Services. Scientific considerations in demonstrating biosimilarity to a reference product. Washington, DC: US Dept. of Health and Human Services; April 2015.
4 Letter dated 2/7/2017 from Terry Fortin, Standards Specialist and Lee Ann C. Stember, President of National Council for Prescription Drug Programs to the FDA Desk Officer re: OMB Control No. 0910-New, “Nonproprietary Naming of Biological Products” Docket No. FDA-2013-D-1543