The most significant advances in medical treatments are being made with biological products that are significantly more expensive than traditional small molecule drugs. This is placing significant upward pressure on the cost of publicly funded medicines. For example, in the US, biological medicines accounted for 40% of all prescription drugs spending and 70% of the increase in healthcare spending in the five years to 2015.
The additional cost associated with biological medicines is largely due to the complexity of the products. Unlike small molecules that are chemically synthesised, biological medicines are usually complex proteins produced by living cells, such that differences may exist between different batches of the same biologic. Safety and effectiveness can also be affected by small changes in manufacturing, packaging and storage conditions.
In order to minimise pressure on health spending, regulators around the world are increasingly looking to promote the availability of ‘biosimilars’ - biological products that are highly similar to their reference biological product (notwithstanding that there are minor differences in clinically inactive components) and that have no clinically meaningful differences to the reference biologic in terms of safety, purity or potency. Biosimilars can usually be supplied at a price that is 20-40% lower than the reference biological.
Public funding of biological medicines in Australia
In 2017, biological medicines accounted for six of the top ten most expensive publicly funded medicines in Australia, at a cost of over AUD1.25 billion. The Australian government is increasingly looking to ways to encourage cheaper biosimilar medicines onto the market to compete with these biological products.
The encouragement of biosimilars entering the market has been accompanied by concerns about the safety of switching between a reference biological product and a cheaper biosimilar alternative where long-term efficacy, safety and immunogenicity of switching has not been established. Despite the Pharmacy Guild of Australia’s stated confidence in the regulation of biosimilar medicines, only 29% of pharmacists in Australia are confident substituting a patient from a reference biological product to a biosimilar and as little as a third are prepared to dispense biosimilars to new patients.
To try to address this reluctance on the part of pharmacists to switch patients from a biological product to a biosimilar, the Australian government launched a biosimilar awareness campaign in May 2015 that included a commitment of AUD 20 million over three years to improve the uptake biosimilar medicines. In 2017, the Australian Government and the Generic and Biosimilar Medicines Association (GBMA) also entered into a Strategic Agreement to implement two key ‘uptake drivers’ designed to increase patient access to biological treatments and reduce cost by increasing substitution of biosimilar products:
- including a note in the Schedule of Pharmaceutical Benefits to the effect that new patients should be prescribed a biosimilar product rather than a reference biological brand; and
- providing a streamlined authority process to permit prescribing of biosimilar products without having to formally apply for approval (and in some cases provide diagnostic test results relating to eligibility criteria that apply to the reference product) that would be required to prescribe the reference product.
These uptake drivers have been applied to infliximab, follitropin and etanercept in Australia.
Procedural change to PBS applications for biosimilars
However, in mid-September 2018, the Pharmaceutical Benefits Advisory Committee (PBAC), the statutory committee tasked with assessing and recommending medicines for subsidy under the PBS, announced that it will stop accepting applications for PBS listing of new biosimilar medicines through the TGA/PBAC parallel processing arrangements.
The PBAC introduced the parallel processing arrangements in 2011 to enable the PBAC’s assessment of major submissions, such as those for new listings on the PBS, to be undertaken at the same time as the TGA’s assessment for ARTG registration. These arrangements circumvent the need for a concrete TGA decision to be officially released before a PBS listing application can be started, thereby avoiding lengthy delays between the two assessments.
Nonetheless, a spokesperson for the Department of Health has been quoted as saying that the PBAC had revisited its position on the process of listing biosimilar medicines on the PBS and determined that the outcome of the TGA’s consideration of a biosimilar is essential to the PBAC’s consideration of any biosimilar submission for PBS listing. As a result of the change, sponsors of biosimilar medicines will need to wait for the TGA to release its regulatory decision to register the biosimilar on the ARTG before applying for PBS listing. Applications for PBS listing of biosimilars will then need to be made through ‘minor submissions’, which require a TGA statement of bioequivalence to accompany the application. The change will take affect after 31 October 2018, the cut-off date for the March 2019 PBAC meeting.
The push to support biosimilar medicines in the US
The United States Food and Drug Administration (FDA) is responsible for implementing laws that support the introduction of low-cost generic and biosimilar alternatives to innovative products.
Generic competition in the US that was facilitated by the 1984 Hatch Waxman Act resulted in USD 1 trillion in savings to the US health care system over a decade and generated USD 265 billion in savings in 2017. In 2010, the US Biologics Price Competition and Innovation Act 2009 (Biologics Act) established an abbreviated pathway for the registration of biologics that was intended to strike the right balance between promoting innovation and rewarding investment in new therapies by providing a period of exclusivity for manufacturers of reference biologics (12 years from the date on which a reference product is first approved) while at the same time introducing a pathway that enabled the efficient launch of competitive biosimilar products in the same way the Hatch Waxman Act sought to establish a balance between investment in new small molecule drugs and generic competition.
As is the case in Australia, in the US, where biosimilarity is established, the biosimilar may usually be substituted for the reference product without the supervision of the doctor who prescribed the treatment.
11 biosimilar products have been approved in the US and it has been estimated biosimilar competition will reduce spending on biological products by $54 billion in the period 2017 to 2026.
A further nudge in the US
The Biosimilars Action Plan (Action Plan) which was recently released suggests that the FDA intends to further increase its focus on promoting cost–saving biosimilar medicines.
The Action Plan indicates that the FDA intends to:
- modernise regulatory policies to make biosimilar product development and regulatory approval more efficient;
- look to new ways of educating clinicians and funders of medical treatment (that is, public funders and insurance companies) about biosimilar products, the interchangeability of biosimilars with reference products and the regulatory process that is undertaken when biosimilar products are evaluated;
- increase the availability of public information about the FDA’s evaluation processes for biosimilars so that sponsors better understand how the FDA will evaluate comparative clinical studies that are conducted to demonstrate biosimilarity;
- strengthen relationships with other regulatory authorities to increase efficiencies across jurisdictions and explore data sharing agreements that may provide more post marketing safety and efficacy information;
- create an Office of Therapeutic Biologics and Biosimilars to coordinate activity and policy development; and
- provide additional clarity in relation to the FDA’s requirements for demonstrating interchangeability by way of further guidances (for the benefit of biosimilar product developers).
The FDA has also indicated it intends to investigate whether sponsors of reference biological products are using regulatory requirements inappropriately to defer or preclude the approval and launch of competitive biosimilar products. The FDA has expressed an intention to reduce “gaming” of current regulatory requirements, particularly in relation to refusal to sell samples of biological products that are necessary for competitors to develop a substitutable biosimilar.
The future of publicly funded biological medicines
US sales of biosimilar products are significantly lower than in Europe. 36 biosimilars have been approved in Europe where biosimilars penetrate as much as 30% of the market for the reference biologic and where in 2017, the market was valued at USD 2.5 billion, with expected growth to USD 4 billion by the end of 2018. In contrast, the US market is flat with only 3 of the 11 approved biosimilar products actively marketed (with the balance either waiting for patent expiry or tied up in patent disputes).
US regulators will be increasingly focusing on ways to promote the use of biosimilar medicines in place of biological reference products to reduce the load on public healthcare budgets.
In Australia, where the European approach to regulatory approval of biosimilars has been largely adopted, substitution of biosimilars is likely to more closely approximate the European experience than the US experience. However, as the Australian government increasingly focuses on reducing healthcare expenditure, policies and plans that promote the efficient development and approval of biosimilar medicines will continue to be important and we are likely to see further regulatory changes.