Biotechs Get First State Victory Over Biosimilars

For the first time since a nationwide lobbying effort began several months ago, a bill that details new requirements for biosimilar substitution has become state law. Virginia Governor Bob McDonnell signed legislation today that would allow interchangeable biosimilars to be substituted for a biologic, but only if more restrictive conditions are met by prescribing physicians and pharmacies.

The adoption is a victory for biotechs, such as Genentech and Amgen (AMGN), which have been lobbying the states in an effort to thwart rivals from having easy entre to their lucrative markets. Over the past several months, legislators in numerous states have introduced bills that would allow interchangeable biosimilar substitution. So far, though, similar bills have died in five states, although legislation has passed in two others and pending in eight more.

As we reported previously, the key feature of the bills says that a biosimilar must have been deemed by the FDA to be interchangeable with the prescribed medicine for the specified indicated use. However, the various pieces of legislation were crafted even though the FDA has not yet approved a biosimilar or decided whether a biosimilar is interchangeable with a brand-name biologic (here are the Virginia House and Senate bills, which are identical).

As noted in an earlier story, the biotechs want clear lines drawn for substitution, such as giving physicians authority to specify “do not substitute” and that such an option should override any policy from payers or state law that would have substitution be the standard or default practice. "This legislation properly preserves the physician-patient relationship, protects patients, maintains incentives for innovation, and promotes a competitive market for biologic therapies. Furthermore, it is a model for legislation necessary in all 50 states to address vital drug safety measures that accompany this cutting-edge technology," the BIO trade group says in a statement.

But generic drugmakers, pharmacists and pharmacy benefit managers support automatic substitution of interchangeable biosimilars. The bill signed into law by Virginia is "pre-emptive and carries burdensome administrative ‘red tape’ that threatens the positive impact biosimilars will have in Virginia," the Generic Pharmaceutical Association says in a statement. "The time to pass this legislation is after FDA guidance has been issued; and that laws put in place should not create barriers between patients and needed medicines."

There is one wrinkle in the Virginia law - a sunshine provision. As of July 2015, the law effectively expires. This means the effort could be moot if the FDA has not approved any biosimilars by then, a possibility that continues to be debated, given the regulatory hurdles and ensuing scientific and manufacturing challenges. A sunset provision is also contained in a bill that has passed, but has not yet been signed into law, in Utah (see here).

[UPDATE: We are repeating this from a previous story for those who wonder about the Amgen strategy: The legislative push occurs as Amgen accelerates its own strategy for developing biosimilars. In a recent briefing with investors, the biotech disclosed that its targets include some of the biggest-selling biologics, including Roche’s multi-billion-dollar cancer drugs Avastin, Herceptin and Rituxan, as well as Eli Lilly’s Erbitux treatment. The Avastin and Herceptin patents expire in 2019, and the Erbitux and Rituxan patents expire in 2015, according to GrantThornton.

The announcement should not have been surprising, given that Amgen and Actavis – formerly Watson Pharmaceuticals – in late 2011 struck a deal to develop biosimilars, primarily in oncology. The first product, however, is not expected until between 2017 and 2019, by which time the FDA is expected to have established a development pathway. Versions of Amgen drugs are not part of the deal, although Actavis can do so outside the agreement (back story).

The simultaneous efforts to develop biosimlars while also pushing for legislation that restricts substitution may appear contradictory. “The company is clearly straddling two business opportunities that sometimes seem in conflict with each other – a defender of the innovative products and a participant in biosimilar products. That tension is going to continue to be difficult for them to manage,” Sanford Bernstein analyst Geoffrey Porges told Reuters.

Just the same, Amgen continues to rely on its own medicines as a central revenue driver – the patent on its best-selling Enbrel treatment was recently extended to 2028 (read here). At the same time, access to biosimilars can differ in different countries, underscoring the notion that Amgen is looking well beyond the US to exploit copycats to generate sales. The emphasis on biosimilars, by the way, comes as Amgen attempts to lower costs, a move that includes cutting R&D (see this).]