biosimilars business

The lucrative world of copycat drugs

  • Why it matters

    Why it matters

    • A German discount agreement with pharmaceutical companies is hindering generic drugmakers from getting doctors to perscribe their biotech copycat drugs.
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  • Facts

    Facts

    • The eight biggest biotech products that have or will be losing their patents between 2015 and 2020 have annual sales of €42 billion.
    • In Germany alone, biotech products with a sales volume of over €1 billion will be losing their patent protection in the coming three years.
    • Although 20 different products are now on the market, at 1.8 percent their share of the total volume of prescriptions remains very small.
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    Audio

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Lab Experiment
Appliance of science in a biotech lab. Source: Getty Images

Adalimumab is really hot at the moment. The biotech drug, which is used to combat inflammatory diseases like rheumatoid arthritis, psoriasis, or the inflammatory bowel disease Crohn’s, has sales amounting to around $15 billion a year.

A dozen firms are currently working on developing a copy of Humira, the U.S. pharmaceutical company Abbvie’s trade name for the drug. The companies want to be on the market with a copy of the drug in time for when Humira’s patent runs out in 2018.

The battle for the market in these biopharmaceutically produced drugs – known as biosimilars — is in full swing. The potential is huge. The eight biggest biotech products that have or will be losing their patents between 2015 and 2020 most recently had annual sales amounting to €42 billion, or $44.5 billion.

And that is only in the five biggest European Union markets and the United States, a study by the market research firm Quinteles IMS Health finds. An attractive growth opportunity is opening up for the producers. So it is little wonder that many companies want to get involved.

This doesn’t only include generic drug manufacturers like Teva or Sandoz (Novartis), but also original drug producers with biotech know-how like the U.S. companies Amgen and Pfizer, as well as the German firm, Boehringer Ingelheim. In Germany alone, biotech products with a sales volume of over €1 billion will be losing their patent protection in the coming three years, an analysis by the researchers at Insight Health shows. For the bulk of them that will be in 2018.

“We recommend biosimilars because they are equally effective while being cheaper in price than the original products.”

Wolfgang-Axel Dryden, Association of Statutory Health Insurance Physicians Westphalia-Lippe

On the other hand, expensive biotech products have become an ever larger cost factor for health insurance companies. At the German health insurers, Barmer GEK, for example, the expenses for biopharmaceuticals have risen by more than 40 percent between 2010 and 2015. At a current €1.2 billion, they account for 21.3 percent of expenditure, as was evident in the Barmer GEK’s medicinal products report published this summer. The drug Humira, at €127.7 million, was included as the medicinal product the health insurer had spent the most money on in 2015.

“At Barmer GEK alone, half a billion euros in unnecessary expenses can be prevented over the next five years by a systematic prescribing of biosimilars,” Barmer GEK’s chief executive, Christoph Straub, said this summer in a push for the use of copycat generic products.

Statements like these are welcomed by the manufacturers of biosimilars, many of whom have been producing the drugs for years now. It has already been a decade since the first biosimilar, the growth hormone Omnitrope from Sandoz, was approved for sale in Germany.

Although 20 different products are now on the market, at 1.8 percent their share of the total volume of prescriptions remains very small. “Biosimilars are far from reaching their full potential in Germany,” says Andreas Eberhorn, chairman of the umbrella group Arbeitsgemeinschaft Pro Biosimilars, who is also a board member at the firm Hexal. “Although biosimilars are classified by licensing authorities as absolutely the equivalent of the original product, many doctors still hold back in prescribing them,” he said.

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The industry sector was hoping for a boost last year when Remicade from Johnson & Johnson became the first billion-dollar biotech product without a patent. Two copycat generic products were immediately on the market that were 20 to 25 percent cheaper than the original – one from the generic producers Hospira, now owned by Pfizer, and the other from the family-owned business, Mundipharma.

As it turned out, the biosimilars were only able to gain a market share of around 30 percent within a year, while the original product continued to dominate 70 percent of the prescriptions.

This is due to a certain type of rebate agreement a majority of the health insurers have concluded. With these so-called open house contracts, all suppliers of a drug can take part provided they are prepared to give a certain percentage of rebate on their products. For original producers, this is an opportunity to continue to stay in the business. For biosimilar producers, who allow the discount on their already cheaper product, it is the only possibility of doing business with the health insurers.

“The health insurers’ open house contracts don’t promote biosimilars,” says Bork Bretthauer, managing director of Pro Generika, the German Association of Generic Manufacturers. “In most cases the doctor chooses the original since it is considered economical due to the contract with the insurer. And yet biosmiliars are significantly cheaper than the originals under those same contracts.”

To resolve the dilemma, the Pro Biosimilars group is now looking to the work of the German National Association of Statutory Health Insurance Physicians. “There are instruments that help to tap unused potential,” says Mr Eberhorn, pointing to the target agreements and targeting information for doctors like that used by the Association of Statutory Health Insurance Physicians (KV) Westphalia-Lippe. In that region, at 57 percent, the rate of prescriptions for the latest biosimilars is significantly above the national average.

Wolfgang-Axel Dryden, the chairman of KV Westphalia-Lippe, is sold on the generic biotech products. “We recommend biosimilars because they are equally effective while being cheaper in price than the original products. That means with an effective biotech product we can treat more patients for the same amount of money,” he says. His association has been setting guidelines for the prescribing of medicines in its region for years by giving the physicians clear recommendations on which drugs they should prescribe for certain illnesses.

The guidelines are based on the scientific evidence of the drugs’ effectiveness, says Mr. Dryden. These recommendations are accepted by the doctors, he adds. Moreover, the KV has provided extensive information on biosimilars.

In Germany, at least, a lot of convincing still has to be done so that generic biotech drugs actually do develop into the much-touted attractive business field in the pharmaceuticals market.

Other countries like Denmark, for example, were quicker off the mark. It launched major discount bidding and now has reached a biosimilar prescription rate of close to 100 percent. But biosimilar manufacturers in Germany do not really want to see a situation in which the lowest-priced supplier wins the bidding. After all, the industry is already suffering from competition through undercutting the prices of classic generic drugs.

 

Maike Telgheder covers pharma and health industries. To contact her: telgheder@handelsblatt.com 

 

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