PM360 March 2011

PM360 COVER STORY: The Ride Is About to Get Bumpy

BY ROBERT WARD AND MICHAEL WISE

With biosimilars, the competitive forces shaping the global biologic brand markets reflect the traditional effects of the launch of a low-cost product. To assess the competitive landscape, marketers can evaluate four key domains of biologic differentiation: Construct, Delivery, Price, and Use.

AS A RESULT OF PHENOMENAL ADOPTION RATES AND INTRODUCTION OF UNPRECEDENTED IMPROVEMENTS in efficacy, the value of the global biologic brand markets exceeded $135 billion in sales in 2010. The rapid rise in utilization of these brands has led to a series of policy changes intended to increase the number of competitors and drive down prices. In 2011, the FDA is expected to roll out the biosimilar pathway authorized by the Biologics Price Competition and Innovation Act of 2009 (BPCI Act), and the EMA, having already approved series of biosimilars, is expected to finalize the Biosimilar Antibody Guidance (the draft is currently open for comment through May 31) as well.

The debate over these accelerated regulatory pathways has highlighted a series of physical characteristics of bio-therapeutics that may be used for comparative analysis and a number of product safety issues that may affect patient outcomes. In the new biologics landscape, these characteristics and issues will have increasingly important implications for both brand and biosimilar marketing, since the new policies have not mandated “interchangeability.” Without interchangeability, biosimilar adoption will be subject to the same market forces that have faced “low-cost” entrants in other commercial markets.

Traditional market analysis shows that launch of a “low-cost” competitor into a brand market creates a new price-sensitive customer segment. Typically the “low-cost” entrant experiences a rapid uptake and early plateau in market share. Order-of-entry analysis has been generally accurate in predicting the peak share of these late-entry “low-cost” competitors. As multiple “low-cost” entrants seek to compete, the resulting “price war” can drive prices down toward the marginal cost of production. The price declines often squeeze out undercapitalized or high cost-of-goods entrants, allowing the “low-cost” leader to emerge. At the same time, in the “brand loyal” segment, the market forces are quite different. Brand adoption continues to be driven by the customer perception of brand attributes, and brands can often raise prices to maintain top-line revenue growth in the face of this new competition. Differentiation remains the key to adoption and pricing power, and brands succeed through continuing to evolve unique value attributes.

FOUR KEY DOMAINS
In global biosimilar markets today, the competitive forces shaping biologics marketing reflect the traditional effects of the launch of a “low-cost” product. For example, we have observed rapid uptake with an early plateau in market share for many undifferentiated biosimilars. To assess the competitive landscape, marketers may choose to evaluate four key domains of biologic differentiation: Construct, Delivery, Price, and Use.

The Construct domain reflects the physical characteristics of the brand, for example, the sequence, structure, or sugars. In Germany, as multiple erythropoietin (EPO) biosimilars launched during the 2008-2009 period, the importance of a differentiated construct is illustrated by the impact on the market shares of Aranesp and Dynepo. Aranesp, a second-generation construct offering an improvement in dosing, shows a stable market share, while Dynepo, a first-generation construct, experiences significant erosion due to biosimilar penetration. It is interesting to note that Dynepo, produced from human cells, is the only first-generation erythropoietin that does not have the Neu5Gc sugar carried by the EPO molecules produced in non-human cells. All of the competing first-generation EPO brands and biosimilars carry this potentially immunogenic Neu5Gc sugar. However, Dynepo did not have data allowing translation of this difference in the construct into an effect on patient outcomes. As a less-differentiated brand, Dynepo faced biosimilar competition that resulted in declining market share and a subsequent decision by Shire to discontinue marketing it. Increasingly, success in biologics marketing requires translating physical characteristics of the construct to meaningful patient outcomes, e.g., observed rates of immunogenicity. Marketers may wish to consider how requirements for risk management plans can serve as a basis for physicians and payers to evaluate comparative biologic effectiveness.

The Delivery domain reflects the route of administration for the brand, for example, the auto-injector for subcutaneous administration. Market research conducted in the growth hormone market shows that patients and physicians frequently make a prescribing decision based on the injection device. A review of transcripts from publicly available U.S. formulary discussions shows that company representatives often balance growth hormone brand presentations by discussing both the available device options and the key clinical data. The importance of a device strategy is highlighted by the slow initial launch trajectory of the biosimilar Omnitrope due to perceptions of disadvantages in delivery. More recently, sales have improved as Omnitrope has introduced a new, competitive device solution.

Indeed, a delivery strategy is also critical for IV-administered biologics, where the length of infusion and requirements for a “crash-cart” or for a post-infusion observation period can impact adoption. Biosimilars may provide improved infusion protocols or volumes that offer physicians greater flexibility or patients greater comfort. Currently, the global biologics development pipeline contains over 70 infusion brands, many with overlapping indications for use. In some markets, adoption may be limited by the number of available infusion centers. Marketers may wish to consider how the lifecycle plan addresses the need to differentiate the device and infusion protocol and ensure infusion capacity. Delivery is a particularly critical consideration for regional marketing, where differences in medical practices, reimbursement, or temperature may require different presentations.

The creation of a “Price Sensitive” segment in the highly regulated markets is already having a significant impact on both price and contracting strategy. In Germany, overall pricing in biologics categories in which biosimilars have been introduced has declined. Typically, the biosimilar launch has been 20% to 30% below the brand price and, on entry, brands have initially reduced prices. For undifferentiated “low-cost” competitors, capturing market volume is critical for a sustainable business. We anticipate that continued price reductions for biosimilars in multiple entrant markets may force some suppliers to exit the market.

In the quest for volume, it is likely that therapeutic interchange will be an increasingly important element of biosimilar strategies. For healthcare delivery systems, therapeutic interchange is a practice of replacing a prescribed biopharmaceutical with a chemically dissimilar biopharmaceutical considered to be therapeutically equivalent. In the regulated markets, therapeutic interchange of low-molecular weight heparins, erythropoeitins, growth hormone, and other biologics have already been reported to produce cost savings. As healthcare delivery systems improve their measures of effectiveness, they increase their ability to make a determination of therapeutic equivalence. Pressures for therapeutic interchange will continue to increase for biologic categories with minimal differentiation between brands and biosimilars.

On the forefront of patient effectiveness research is the Dutch Rheumatoid Arthritis Monitoring (DREAM) registry that allows 12 hospitals to collaborate in evaluating the ongoing safety and effectiveness of treatment for rheumatoid arthritis. The overall objective is to identify best practices for achieving optimal patient outcomes. Similarly in the U.K., value-based pricing is intended to drive the adoption of practices to measure the effectiveness of therapeutics and thereby enable regional payers to focus reimbursement on “best practices.” These trends are likely to increase the pressure to employ therapeutic interchange as one component of driving adoption of practice guidelines. Marketers will need to increasingly focus on brand attributes that can be used in the community as measures of effectiveness.

Traditionally, biopharmaceutical “Use” has translated into approved indications where a broad label is an advantage for marketing. In the new global biologics markets, “use” will increasingly translate into providing a clear definition of the patient group that represents a high-responder population in which the unique attributes of the brand directly relate to the high response. As an example, this past fall when new data prompted a review of Avastin, FDA cancer czar Richard Pazdur commented, “It might be possible to keep the breast cancer approval for Avastin for targeted groups, if the company’s research could identify which groups of patients are likely to improve on the drug.” This is a question that biologic marketers should expect to hear in the near future from pharmacy and therapeutic committees evaluating an array of alternative brands and biosimilars: Is there a high-responder subpopulation for your brand?

Marketers may wish to evaluate existing indications for subgroups of patients that are outliers for safety or effectiveness due to innate patient characteristics. For example, post-launch Biogen Idec and Elan were faced with a challenge associated with the use of the multiple sclerosis biologic Tysabri. It was found that a subgroup of patients with latent JC virus infections were at risk of developing the potentially fatal progressive multifocal leukoencephalopathy (PML). The partners have embarked on the development of a new diagnostic test that will allow physicians to identify patients with the best profile for Tysabri therapy. Within the competitive market for multiple sclerosis therapeutics, the diagnostic may translate to increased Tysabri utilization by this new “high-responder” subgroup. Similarly, genetic variations in the affinity of a patient’s antibody Fc receptors has a significant impact on the results of treatment with a number of therapeutic antibodies. Changing the sugars or the sequence of the antibody can improve the effectiveness for the low-affinity, poor-responder patient subpopulation. Marketers should be aware that in the near future, payers may decline reimbursement for “poor-responder” subpopulations that can be diagnosed prior to treatment. The lifecycle plan should include a means of addressing patient subpopulations that are outliers for safety or efficacy.

EMERGING MARKETS
Today, roughly 90% of global biologics sales take place in highly regulated markets where brand differentiation is expected to remain the primary driver of sales growth. The fastest-growing biologics markets are found outside of the U.S., E.U., and Japan. These emerging markets represent a significant opportunity to expand biologics utilization where price may have been a significant barrier to adoption. For example, when Dr. Reddy’s launched Reditux in India at a 50% discount to Roche’s Mabthera, it was reported that overall anti-CD20 utilization grew significantly and that this increased use was a key driver of Reditux’s achievement of 50% market share. The expansion was attributed in part to greater affordability. Across Brazil, Russia, India, and China, biosimilars may already be available from a wide variety of smaller regional producers. To better understand these regional biosimilars, a few years ago regional products were collected from emerging markets and assayed to allow comparison to the U.S./E.U. product specifications. The results showed that, at that time, many of the biosimilars failed to meet quality, purity, or potency specifications. However, in their markets of origin, there was a shortage of pharmacovigilance data, so it was not possible to determine how these suboptimal biosimilars may have impacted patient outcomes. For small molecule pharmaceuticals, this challenge is being addressed in part by the U.S. Pharmacopeia program “Promoting the Quality of Medicines” that assists emerging markets in creating the capabilities to test and ensure a high-quality drug supply. Marketers seeking to establish quality as a key brand attribute may wish to consider partnering with local regulatory authorities to institute quality-monitoring capabilities.

PATENT LANDSCAPE
As brands continue to innovate through lifecycle planning to maintain a differentiated value proposition, many of the new discoveries may be eligible for patent protection. In some cases, supplementary protection certificates may mean that patent expiration occurs at different times in regional markets. For biosimilars pursuing an EMA filing through the central procedure, a comprehensive evaluation of brand protection in the individual member countries is essential. In China the complexity of the regulatory pathway and the patent landscape require development of a country-specific strategy. To date, much of the highest-profile biologics patent litigation has occurred between companies recognized as brand producers. Over the next decade, litigation between brand and biosimilar companies will move to center stage. Court decisions can affect the scope of patent protection. The recent federal circuit decision in Centocor Ortho Biotech, Inc. v. Abbott Laboratories, and its effect on the scope of antibody patent protection, is a good example that has important implications for both the respective brands and the strategies that might be pursued by future biosimilars. As new court decisions or changes in patent law can continue to affect patent coverage, marketers should find value from an annual review of the patent landscape around both their brand and related biologics.

CONCLUSION
As the global biologics markets change with the introduction of biosimilars, market forces will continue to support commercial adoption of highly differentiated brands that can demonstrate effectiveness in clinical practice. The creation of a price-sensitive market segment may result in expanding access to biologic therapies to new patient populations that today cannot afford treatment. Some of these patients may reside in markets where the biosimilar may require new delivery forms or dosage schedules in order to adapt to existing medical practices. In the highly regulated markets, improvements in measuring patient clinical outcomes will drive an increasing emphasis on comparative effectiveness as a basis for reimbursement. Brands that adapt to this new environment will continue to innovate by developing lifecycle plans that lead to the introduction of improved constructs, uses, means of delivery, and contracts.

USEFUL REFERENCES
• Huub Schellekens and Ellen Moors. Clinical comparability and European biosimilar regulations. Nature Biotechnology 28:1 28-31 (2010). 2010 January • EMA draft guideline on biosimilar medicines containing monoclonal antibodies released for consultation http://www.ema.europa.eu/ema/index.jsp?curl=pages/news_and_events/news/2... /news_detail_001155.jsp&murl=menus/news_and_events/news_and_events.jsp&mid= WC0b01ac058004d5c1&jsenabled=true
• Biosimilars: How much entry and price competition will result? http://www.ohe.org/page/publications/publication.cfm?catid=28&archive=0&... 713
• Registries for Evaluating Patient Outcomes: A User’s Guide http://www.effectivehealthcare.ahrq.gov/repFiles/PatOutcomes.pdf
• ACCP Position Statement: Guidelines for Therapeutic Interchange—2004 http://www.accp.com/docs/positions/guidelines/Pharm2511_ACCP-TherapIntch...

Michael Wise is a partner at the international law firm Perkins Coie. For over 20 years, his practice has focused on intellectual property in the life sciences industry. Wise has extensive experience in patent litigation, patent interferences, and patent prosecution. His technical focus is biologics, and he has counseled both branded biologics makers and biosimilar companies on patent matters. He is presently the chair of the firm’s China Intellectual Property Practice and has been involved in the developing China biologics industry for over 10 years. He can be reached at MWise@perkinscoie.com