Generics cos. turn to biosimilars as patent cliff approaches
With the patent cliff and subsequent innovation drought moving closer, generic drug makers are looking to move up the value chain and pursue new sources of revenue, and of all the piles of pay dirt out there, biosimilars represent one of the closest things to an El Dorado, though regulations won’t take their final form for a while.
Currently, follow-on biologics manufacturers are restricted to a small group of companies making them for the European market — namely Sandoz, Teva Pharmaceutical Industries and Hospira — as well as companies making them for other markets, such as Dr. Reddy’s Labs. But other drug makers with piles of cash are looking to get in on the action, and it’s a lot more complicated than simply building a new lab and hiring a few more people.
Watson Pharmaceuticals announced last month a deal with Amgen to develop follow-on biologics. The deal would combine Amgen’s expertise as a biotech drug maker and Watson’s deep industry connections as a generic drug maker. Under the deal, Watson will contribute $400 million in co-development costs with Amgen and take responsibility for marketing and commercialization.
Also last month, Baxter and Momenta announced a deal to develop biosimilars for cancer, autoimmune disorders and other chronic conditions, with Baxter using its expertise in clinical development and manufacturing of biologics, sterile injectables and global commercialization and Momenta using its experience in high-resolution analytics, characterization and product and process development.
FTC, drug cos. clash over patent settlements
It has become a perennial issue, and one that is likely to crop up at least once this year: patent settlements.
The Federal Trade Commission has repeatedly assailed patent settlements between branded and generic drug companies, branding many of them as “pay-for-delay” deals and alleging that they cost the healthcare system billions per year by delaying the entrance of generic drugs onto the market. Meanwhile, the drug companies say that the deals — which result from attempts by generic drug companies to gain Food and Drug Administration approval for a drug after the branded drug’s market exclusivity period has expired, but before its patent expires — usually ensure that generic drugs reach the market well ahead of patent expiration.
Where these deals attract the FTC’s ire is when a generic company agrees not to launch its drug immediately in exchange for a “payment” from the branded drug company, which can come in the form of cash or, more often, a pledge by the branded company not to launch its version of the drug under its generic name at a reduced price — also known as an authorized generic — during the generic drug’s 180-day market exclusivity period.
Members of Congress have attacked the deals as well. In November 2011, Sen. Jeff Bingaman, D-N.M., introduced the Fair Generics Act, which would revoke the 180-day exclusivity period for a generic company that enters such a patent settlement deal. “The Fair Generics Act is an important step in addressing the root cause of the growing cost of health care — the delay of generic drugs entering the market,” Bingaman said, according to the Congressional Record.
Lipitor’s patent loss signals future for other top drugs
If the patent cliff were a sports team, Pfizer’s cholesterol- lowering drug Lipitor (atorvastatin) would be its mascot. Because it’s the top-selling drug, well, ever — with 2010 sales well in excess of $7 billion in the United States alone — Lipitor’s loss of patent protection on Nov. 30, 2011, didn’t start or end the patent cliff but in many ways symbolized it.
“We’ve never had an $8 billion drug go off patent before, and you don’t know whether it’s a one-off or not a one-off,” IMS Health VP industry relations Doug Long told Drug Store News. “And I think only time will tell.”
This year, several more top-selling drugs will lose patent protection. These include Bristol-Myers Squibb’s and Sanofi’s blood-thinning drug Plavix (clopidogrel), the No. 3 drug, with $6.1 billion in U.S. sales in 2010, according to IMS; AstraZeneca’s antipsychotic and antidepressant Seroquel (quetiapine), with sales of $4.4 billion; and Merck’s allergy and asthma drug Singulair (montelukast), with sales of $4.1 billion.
But a couple of factors have entered the mix: One is Pfizer’s efforts to protect Lipitor beyond patent expiration, which included an authorized-generic deal with Watson Pharmaceuticals to compete with Ranbaxy Labs’ generic version and a deal with pharmacy benefit managers to require dispensing of branded Lipitor instead of the generic, though this deal attracted some scrutiny from Congress. Another tactic Pfizer is pursuing is an OTC switch for Lipitor, though the outcome of this remains far from certain, as previous attempts by other companies to sell statins over the counter have proven unsuccessful.
Later in the decade, after the patent cliff ends, Long foresees an “innovation drought” that could adversely affect the generics industry. Drug companies will concentrate on specialty drugs instead of primary care drugs, forcing generic drug makers to step up their pursuit of newer sources of revenue like follow-on biologics.