There’ll be No Follow-On Biologics in the US at All...

...At least not if anything close to the Eshoo bill—one of two versions of biosimilar legislation currently before the House of Representatives—gets approved, according to Hannes Teissl, head of Sandoz’s Biopharmaceuticals unit.

Speaking to The IN VIVO Blog late last week, Teissl warned that if US biosimilar legislation, which he and many others expect will be enacted in some form or another this year, looks too much like the BIO-supported, innovator-friendly Eshoo bill, “biosimilars will not be a viable business” to pursue.

Not that he expects that to be the case: “I think we’ll see something much closer to the Waxman bill in the end,” he opines. Wishful thinking? The Waxman bill is, after all, by far the most generics-friendly: it doesn’t require biosimilar applicants to run clinical trials, has a broad, rather flexible definition of ‘comparability’, and mandates that comparable generics have the same name.

This last point on naming, along with Waxman’s position on interchangeability, are the two main advantages of the Waxman bill, according to Teissl. Europe took a while to resolve the issue of whether biosimilars could share the same International Non-proprietary Name (INN) but they now can, which goes a considerable way to proving generic makers’ case for scientific equivalence.

But not all the way. The main sticking point for biosimilars in Europe has been, and remains, interchangeability—whether a drug can formally be expected to produce the same clinical result as the reference product in any given patient. This is also closely linked to—but not the same as--substitutability, whether pharmacists may automatically substitute a branded drug with its cheaper generic equivalent, as in some countries they are mandated to do in the case of small molecules. The European regulator EMEA has passed the buck on both these issues, saying that individual member states should decide. Several, including France and Spain, have decided against allowing automatic substitution.

The Waxman bill doesn’t say biosimilars should be substitutable with their reference drug. But it includes in its wording “at least the potential for interchangeability,” opines Teissl. He sees it that FDA would “make a scientific statement that there is no clinically meaningful difference” between a biosimilar and its reference drug. (Eshoo’s bill would theoretically allow that too, but only after higher hurdles have been met.) Beyond that, it’s still up to individual states to decide whether to allow substitution, but Teissl reckons an FDA-stamp of biosimilarity will help.

And so, he adds, will Waxman’s decoupling the patent litigation process from the regulatory process. That will mean generics companies can launch at risk, which is critical to the viability of biosimilar businesses since patent litigation can drag on for years.

Teissl doesn’t underestimate the Eshoo-supporting innovator lobby but he thinks cost-savings will win in the end. “The US government wants these products, just as FDA wants more competition,” he says.

Roche-Genentech: A Defensive Play on Follow-On Biologics

If a generic competitor was waiting in the wings with an improved version of Genentech’s Avastin, how much less would the company be worth in the eyes of Roche?

Probably a lot, you’d say. Probably a lot less than $44 billion, which as everyone on the planet knows by now, is what Roche bid to acquire the remaining 44% of Genentech earlier this week.

We’re not suggesting there is anyone waiting in the wings to undercut Avastin at this very moment. And when it comes to analyzing Roche-Genentech, FOBs probably isn’t the first thing that jumps to mind. (Which is why, incidentally, we’ve already blogged on the deal here and here. And why we’re planning all kinds of great coverage in this week’s issue of “The Pink Sheet.”)

Indeed, there are lots of other questions: Does Roche’s price justify the quality of the R&D portfolio it would acquire? Is the timing of the deal more about financial strategy than innovation, as Roche claims? And does any of that matter if the acquisition results in a massive walkout in South San Francisco?

But given where follow-on biologics are headed these days—and how much money is at stake for a company like Genentech—the impact of follow-on biologics on the timing of the deal is worth considering. So here’s our take:

There’s no doubt these are hard times for pharmaceutical companies—low approval rates, a stalled R&D engine, payor pressure and the risk of health care reform. And while that’s hit across Big Pharma and Big Biotech, biotechnology companies have enjoyed one major upside: infinite product exclusivity.

That honeymoon is about to be over.

We’re just not talking about Congress authorizing a regulatory pathway for follow-on biologics. Or even competition from generic companies. The biggest threat to the biologics industry may come from within Big Pharma itself—a group that is incredibly experienced in manufacturing products, has money to invest, and is desperate for a few more dollars on the bottom line.

As we’ve written in The RPM Report, Big Pharma companies haven’t been shy about their interest in developing “me-betters” that get around IP issues with existing follow-on biologics.

Indeed, some of the biggest names in Big Pharma have acquired technology platforms that could be used create ther own versions of existing large molecules: GSK (Domantis); Bristol (Adnexus); Wyeth (Haptogen); and Teva (Cogenesys). And some executives (like JP Garnier and Jeff Kindler) have acknowledged plans to do just that.

So what does that all have to do with Roche-Genentech?

It’s clear FOBs are a major threat to biologics IP. Even if Congress doesn’t pass legislation authorizing a follow-on biologics pathway, FDA will continue to approve “me-too” large molecules on a case-by-case basis. And if the technology platforms Big Pharma has been snapping up lately is any indication, we’ll start to see the March Of The “Me-Better” Biologics—and the pricing pressure that follows.

For Roche, staying ahead of that curve means finding a way to make biologics faster and cheaper. And the best way to do that is through post-merger synergies. So contrary to the message Roche is sending to investors, the timing of the deal probably has less to do with “innovation” and more to do with squeezing out savings.

At the very least, it’s another sign that that Big Pharma companies are thinking about follow-on biologics in dealmaking—either by acquiring companies with the technology to make me-betters, or by positioning themselves in a way to compete with any competing large molecules that may come down the pike.

It's one more pressure that will make biologics less profitable in the long run—and one more reason for Roche to head it off at the pass. Genentech created Roche’s pipeline—and propelled the company to the number-one growth stock despite what is arguably the worst R&D in the industry. Now it needs to protect that investment.