New Frontiers in Biosimilar Pathways

Specialty Pharmacy TimesMarch/April 2013
Volume 4
Issue 2

US manufacturers prepare for expanding biosimilar market opportunities as this exciting landscape takes shape. The production of biosimilars poses challenges as pharma looks to curb health care spending.

US manufacturers prepare for expanding biosimilar market opportunities as this exciting landscape takes shape. The production of biosimilars poses challenges as pharma looks to curb health care spending.

It has been 3 years since the Patient Protection and Affordable Care Act (ACA)—the most significant overhaul of the US health care system in decades—was enacted with the overall goals of lowering health care costs and increasing accessibility to quality care. In that time, manufacturers, providers, and payers have all had to make substantial adjustments to meet new regulatory requirements.

Manufacturers who produce biologics remain particularly concerned by legislation, upheld by the Supreme Court ruling in June 2012, that aims to encourage the production of biosimilars to curb health care spending as it relates to high-cost biologic drugs, such as those used in oncology and rheumatology. With many biologic drugs nearing patent expiration in the next few years, the ACA called for the FDA to establish an abbreviated approval pathway for generic biologics, referred to as biosimilars.


Part of the struggle with defining an approval process for biosimilars has been the claim by biologic manufacturers that the science behind the production of biologics is significantly more complicated than for small-molecule drugs. Small-molecule drugs generally have well-defined chemical structures and can usually be analyzed to determine and copy all of their various components, thus generating a generic drug. By contrast, it is difficult and sometimes impossible to characterize a complex biologic by testing methods available in the laboratory, and some of the components of a finished biologic may be unknown.

Biologics are made by genetically engineering living cells to produce desired proteins. Because no 2 living cells are identical, no 2 biologics manufactured have identical materials or proceed in the same way. It also means there could be clinically meaningful differences between the biosimilars and the innovator product with regard to safety, purity, and potency. This complexity makes it impossible to show in the laboratory that 1 biologic will work exactly the same as another in patients. It is important to note that while the complexity argument associated with biosimilars is often utilized by branded manufacturers, biosimilar manufacturers may use the same argument to defend the proliferation of biosimilars since branded companies cannot guarantee 100% consistency among batches of biologics.


The ACA provided a 12-year exclusivity period for the innovator—or “reference”— biologic. A biosimilar product’s application cannot be submitted to the FDA until at least 4 years after the FDA approved the innovator product’s biologic license application. The first biologic determined to be interchangeable—meaning the biosimilar that is expected to produce the same clinical result as the innovator product—is granted a 1-year exclusivity period beginning the day the interchangeable product is commercially marketed.

Manufacturers of innovator biologics have insisted that biosimilars prove efficacy and safety based on the biosimilars’ own studies. For small-molecule drugs, in contrast, when a branded drug’s patent is nearing expiration, a generic drug maker can submit an FDA application utilizing clinical data of the branded drug. This makes the process for generic drug distribution relatively simple and low cost in terms of research and development. However, since a biologic is technically impossible to reproduce exactly, innovator manufacturers argue that a biosimilar coming to market should have to prove efficacy and safety on its own, like any innovator product must.

The provisions seek to ensure appropriate efficacy and safety while also making a clear approval pathway to allow lower-cost biosimilars on the market. An application for a new biosimilar requires specific information demonstrating that the biological product is biosimilar to an innovator product based on data derived from analytical studies. The studies need to demonstrate that the biological product is highly similar to the innovator product, notwithstanding minor differences in clinically inactive components.

Additionally, animal studies including the assessment of toxicity must also be included, as well as a clinical study or studies including the assessment of immunogenicity and pharmacokinetics. The studies need to be sufficient to demonstrate safety, purity, and potency in 1or more appropriate conditions of use for which the innovator product is licensed and intended to be used and for which licensure is sought for the biological product.1

Based on existing available information, as more clarification is forthcoming from the FDA, the application for a biosimilar must:

  • outline how the biological mechanism(s) of action for the biosimilar is the same as the innovator product;
  • illustrate the condition(s) of use prescribed, recommended, or suggested in the proposed labeling;
  • include proof that the biologic product was previously approved for the innovator drug with the same route of administration, dosage form, and strength of the biological product; and
  • provide information on the facility where the biological product is manufactured, packed, or held, including evidence that the facility meets safety standards.

Additionally, the application may contain any information in support of the biosimilar product, including publicly available data with respect to the reference product or another biological product.2

In February 2012, the FDA released preliminary guidelines for biosimilar pathways, which is referred to as the 351k process:

  • Quality Considerations in Demonstrating Biosimilarity to a Reference Protein Product
  • Scientific Considerations in Demonstrating Biosimilarity to a Reference Product
  • Biosimilars: Questions and Answers Regarding Implementation of BPCIA

The guidances were designed to provide manufacturers a framework for the evidence and data requirements that will be required for approval under the biosimilars pathway. While the guidances provided clarity into some aspects of biosimilar requirements, there remain many questions. The FDA has indicated that additional guidance is likely to be released sometime in 2013; however, the approval process will likely be an evolving process as biosimilar applications are reviewed.


The biosimilar pathway brings forth an opportunity for stakeholders to potentially access specialty biologic therapies at a lower cost than branded alternatives. Since the ACA’s enactment, the expectation for biosimilar price reduction has decreased. Initially many, including payers, anticipated savings as much as 30% to 40%; however, the latest Xcenda survey data indicate that many payers now believe total cost savings could end up between 10% and 20%.3

In addition to the costs associated with manufacturing a biosimilar, a manufacturer will need to ensure that it has the proper resources in place to successfully bring a biosimilar to market. After all, biologics are typically high-cost, specialty products that will require the appropriate patient and provider support as well as strategic considerations to successfully launch. As such, the launch of a biosimilar product, in terms of resources required, will likely look much closer to the launch of a branded product than the launch of a generic drug, which typically requires minimal investment in support services and strategic considerations. Specifically, biosimilar manufactures will need to consider putting in place the following resources:

Patient Assistance Programs

It is important to remember that while biosimilars are anticipated to have a lower price point than innovator biologics, they are still likely to be relatively costly. Patient cost-share could still be a challenge and may require a patient access strategy. Providers and patients have come to depend on robust patient assistance offerings from manufacturers in order for both the uninsured and underinsured to access high-cost specialty products, particularly those of a chronic nature such as multiple sclerosis, rheumatoid arthritis, and some forms of oncology.

Reimbursement Support

Because biologics tend to be administered in hospital outpatient settings or physician offices, manufacturers of biosimilars will need to have reimbursement support services in place for health care providers. A suite of services including a reimbursement hotline, coding and billing tools, and coverage research and information will be critical for biosimilar manufacturers to provide support to their provider customers.

Payer Strategy

It has become commonplace for payers to advocate for the use of generic prescriptions in many cases, often charging higher copays to patients choosing to use a brand name drug when a generic substitute is available. However, payers are anticipated to be less likely to immediately require the use of biosimilars over a brand name biologic, in part because a biosimilar is not simply a generic of a biologic. Therefore, manufacturers of biosimilars will need to have strong payer strategies in place (eg, value proposition, contracting strategy) to make a solid case for the use of their product. As biosimilars come to market and payers become more comfortable with their safety and efficacy, the need for this may dwindle over time, but initially, biosimilar manufacturers will have to ensure a solid strategy to ensure uptake and utilization.

Lastly, the cost savings of biosimilars is expected to impact payer decision making as it pertains to mandating the switch to a biosimilar. The figure illustrates that the higher the cost savings, the more willingness by payers to require a switch to a biosimilar for new and existing patients.4

Distribution Strategy

The distribution strategy for biosimilars will be as critical as it has been for branded biologics. Because biosimilars are specialty products, many will have special requirements for how they are handled, shipped, and stored. In addition, as with many specialty products—especially those with a Risk Evaluation and Mitigation Strategy— there may be a need for limited or closed distribution. As such, a biosimilar manufacturer will have to weigh distribution considerations as part of the pre-market preparation.

All of the above components are likely to be critical to the successful uptake and utilization of a biosimilar; however, all of these tactics can come at a significant cost to manufacturers depending on the scope of services. The requirements will likely further erode potential cost savings of biosimilars— at least initially. Additionally, generic manufacturers who may seek entry into the biosimilar space may not have as much experience in the development of these types of support services. Understanding the design and successful implementation of these services will be a crucial component for success in bringing a biosimilar to market.


While it is clear that biotechnology is a focus of many big pharmaceutical companies, it is unclear who will drive the biosimilars development process. Pharmaceutical giants such as Pfizer, Merck, and Novartis are exploring biosimilar development and how it could impact their brand market share, but generic manufacturers such as Sandoz and Teva—already active in the global biosimilars market—are more likely to be the key players in the United States. Lastly, the recent mergers of firms that have traditional biologic products (eg, biologics and vaccines) with more traditional smallmolecule or generics companies, such as Genentech and Roche, Schering Plough and Merck, and Wyeth and Pfizer, signal new directions for branded and generic manufacturers alike as they relate to biologics and biosimilars.


The main goal of the ACA’s biosimilar pathways legislation was to reduce the costs of and expand access to biologic drugs by providing a clear approval pathway for lower-cost biosimilars. In 2007, the Congressional Budget Office estimated that the creation of biosimilar pathways would reduce total drug expenditures by $25 billion over 10 years, with direct government spending seeing a reduction of $6.6 billion over 10 years.5

As the approvals process for biosimilars has taken shape, however, it is clear that producing biosimilars is a far more resourceintensive process for manufacturers than replicating small-molecule products. In addition, it is possible that the necessary resources to launch and support a biosimilar will further erode potential cost savings.

Given the laborious development process required by the legislation, it begs the question of how much lower can and will the cost of biosimilars be compared with the innovator products? Generic smallmolecule drugs have lower research and development costs. Therefore, they can be priced as less expensive, as the manufacturer does not need to recoup research and development costs.

Certainly, biosimilars represent an exciting new market opportunity for manufacturers and are expected to be a profitable and valuable health care tool in the long term. It remains to be seen, however, how much savings will be netted from their development in the immediate future. Much of this will be determined in the next 3 to 5 years as the FDA begins to review and approve biosimilars and release additional guidance.

Generic & Branded Manufacturer Biosimilar Development Partnerships

  • Merck BioVentures: In 2008, Merck purchased Insmed’s biologic platform, which included the generic forms of Neupogen and Neulasta, and established its BioVentures business unit. The goal of this investment is to have 5 or more biosimilars in the pipeline over the next several years, with the first hitting the market in 2016. For Merck, this strategic deal is important to ensure the company is market-ready given the eventual shift to biosimilars.
  • Amgen and Watson: In late 2011, Amgen and Watson announced a new partnership to develop and market oncology biosimilars. The companies will split development costs roughly in half, although Watson is precluded from contributing more than $400 million over the next 7 years or through 2018. Watson will receive loyalties and milestone payments on sales, with the first product launch anticipated in 2017. While the agreement is favorable to Watson, Amgen believes there is value in establishing a mechanism to respond to market changes as biosimilars are created and will compete with drugs Amgen developed.
  • Biogen Idec and Samsung Biologics: In December 2011, Biogen Idec announced a partnership with Samsung Biologics to develop and market biosimilars. Biogen Idec is set to invest $300 million to develop biosimilars, an effort which CEO George Scangos says could generate upwards of $1 billion in revenue. The Biogen Idec-Samsung deal precludes any Biogen Idec products from being developed as biosimilars.
  • Teva and Lonza Group: In January 2012, Teva, a generic manufacturer market leader, entered into an agreement with the Lonza Group, a European-based supplier and manufacturer of pharmaceutical and life-science products, to develop biosimilars. Teva is reportedly testing a drug resembling Amgen’s Neulasta as one of its first biosimilars to market. While Teva is a leader in the generic manufacturer space, the partnership with the Lonza Group will help further build its infrastructure to produce biosimilars
  • Dr. Reddy’s Laboratories: In the spring of 2012, Germany’s Merck KGaA announced a partnership with Dr. Reddy’s Laboratories, an Indian manufacturer. Under the agreement, the companies will co-develop molecules, and Dr. Reddy’s will drive early product testing and development. Merck KGaA will take on late-stage trials, manufacturing, and commercialization for most parts of the world. The companies will co-market products within the US on a profit-sharing basis.


1. H.R. 3590, The Patient Protection and Affordable Care Act, passed March 23, 2010, 111th Congress, 2nd Session. Sec 7002, 7003, pp 686-703.

2. 2 H.R. 3590, The Patient Protection and Affordable Care Act, passed March 23, 2010, 111th Congress, 2nd Session. Sec 7002, 7003, pp 686-703.

3. Xcenda Managed Care Network, Payer Pulse Survey Data. Fall 2011.

4. Xcenda Managed Care Network, Payer Pulse Survey Data. Fall 2011.

5. Congressional Budget Office Cost Estimate. Congressional Budget Office website.

About the Author

Molly Burich is assistant director of the Reimbursement Strategy & Health Policy group at Xcenda, an AmerisourceBergen Consulting Services company based in Charlotte, North Carolina. She focuses on reimbursement and health policy issues as they relate to strategic reimbursement planning. Working in collaboration with reimbursement strategy and managed markets teams across Xcenda, Ms. Burich helps pharmaceutical, biotech, and medical device companies address challenges and identify opportunities related to reimbursement, coding, payment, managed care, and government payers. Ms. Burich has conducted work in several disease states, including multiple sclerosis and hemophilia, with a special focus in oncology. Before joining Xcenda, she worked for a health care policy consulting firm based in Washington, DC. In that role, Ms. Burich specialized in reimbursement strategy and product commercialization for new pharmaceuticals and biotechnologies. In addition, she closely monitored ongoing legislative and regulatory changes for pharmaceutical, biotechnology, and medical device companies. Ms. Burich received a master of science in public service management with an emphasis in public policy from DePaul University in Chicago and a bachelor of arts in political science from the University of Northern Colorado in Greeley, Colorado.

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