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Humira Drug Substitute Falls Short of Biden Aim to Lower Costs (1)

Oct. 19, 2021, 8:08 PMUpdated: Oct. 20, 2021, 1:28 PM

The FDA’s approval of a cheaper, swappable version of AbbVie Inc.‘s blockbuster drug Humira may fall short of promising widespread savings, even if it spurs more alternatives to costly biologics.

The designation of Boehringer Ingelheim’s Cyltezo biosimilar as an interchangeable with AbbVie’s anti-inflammatory drug is a historic move by the Food and Drug Administration, marking the second time ever the agency has deemed a biosimiliar a direct substitute for a biologic drug. It paves the way for pharmacists—pursuant to state rules—to dispense to patients the low-cost alternative without requiring a prescription.

Legal and pharmaceutical experts say the move illustrates a government desire to bolster greater competition in the complex drugs arena and encourages other biosimilar makers to ask the FDA for interchangeable status. But other obstacles stand in the way of a lower-cost marketplace, including the complexities involved in making biosimilars, patent deals with drugmakers to delay market entry of certain products, and other tactics that some lawmakers have called anticompetitive.

“It’s an important step forward that the FDA has signaled a willingness to grant interchangeability status, but the most important thing upstream from that is the ability of these products to enter the market,” said Ameet Sarpatwari, assistant professor of medicine at Harvard Medical School who researches biosimilars. “If they can’t, the interchangeability status is sort of a moot point.”

Biologic drugs are among the most costly on the market because they’re difficult to make, using living cells to treat serious conditions like cancers. Over time, biosimilars—versions of biologics that mimic the originals—are expected to save insurance companies, governments, and patients billions of dollars.

But in AbbVie’s case, litigation settlements prevent other drugmakers—including Boehringer Ingelheim—from bringing biosimilars to market until 2023. AbbVie agreed to grant Boehringer licenses for its Humira-related intellectual property starting in 2023, and said in a release that it won’t make any payments to the company.

Another barrier to competition is drugmakers’ layers of IP protections, known as patent thickets, around complex drugs.

Interchangeability “does seem to offer a bit of an advantage if your product has it,” said Tahir Amin, executive director of the Initiative for Medicines, Access & Knowledge. “If this is what we’re hanging our hats on in terms of cost savings, then we’re not solving the problem.”

Problem of Profits

Interchangeability status is seen as an important step to creating a broader biologic marketplace for lower cost drugs. This option has been around since 2010, but it took almost a dozen years for the first interchangeable product to become available. The FDA in July approved its first swappable biosimilar, Viatris Inc.'s Semglee insulin product, a move health experts think will help drive down costs.

FDA watchers say a Humira substitute naturally follows on its heels.

“It makes sense and it was expected that they would file for these drugs that have a high sales volume,” given that “the trials to prove interchangeability are somewhat expensive,” said Inma Hernandez, associate professor at the University of California San Diego, who studies drug pricing.

Insulin and Humira have “a big market so it’s profitable to be the new biosimilar,” Hernandez said. Yet other “companies may not apply for interchangeability because it may be less profitable.”

Humira came out in 2003 and now marks one of the world’s best selling drugs, with around $20 billion in 2020 revenue.

“When you’re talking about a market that’s going to be billions, you don’t care how much it’s going to cost” to push for an interchangeable biosimilar, said Yaniv Heled, a Georgia State law professor focusing on biomedical technologies.

That isn’t the case for many biologics. Heled said there’s less likely to be interchangeables in the biologic space, and that even if there were, there wouldn’t be enough to “lower the cost to generic levels.” The bulk of savings come after a handful of generics enter the market, he said.

“The universe of these companies is small, and they’re not all going to pursue everything at once. It’s not like you’re going to now have a whole bunch of companies around the world who say, ‘Hey these molecules are really easy to make. Lets go into pharmaceuticals,’” Heled said.

Pharmaceutical Research and Manufacturers of America, the trade group for the brand-name drug industry, lauded the FDA’s approval of a second interchangeable biosimilar and said that introducing more of these products could help boost competition and eventually lead to lower prices.

PhRMA added that reauthorizing the Biosimilar User Fee Act, which is set to expire in September 2022, will be vital to getting more interchangeable products to market. Under that law, industry-funded user fees help finance the FDA, and in return the agency agrees to meet certain performance goals.

Patents and Competition

The FDA’s interchangeable approval comes as the agency steps into a government-wide fight to lower drug prices. Lawmakers from both sides of the aisle and President Joe Biden have expressed support for legislation to boost pharmaceutical competition and drive down costs, and a handful of bills have advanced through committee.

Patents are playing a part in this dispute. The FDA in September asked the U.S. Patent and Trademark Office for assistance in curbing drug prices.

The FDA asked the PTO whether it’s considering ways to limit drug companies from creating patent thickets. Some legal experts say AbbVie abused this practice to stop competition, leading to the litigation settlement that prevents Humira biosimilars from hitting shelves until 2023.

“AbbVie’s example has shown for biologics that amassing an intellectual property fortress around your project is quite an effective strategy, and it pays dividends,” Sarpatwari said.

“There is no doubt that every biologic company has studied carefully the AbbVie playbook to use patents to effectively forestall competition,” he added.

The FDA’s interchangeable approval should still be seen as a positive, but left unaddressed is “the underlying issue that allows the branded companies to hold the market for much longer.”

(Updates Oct. 19 story with additional information on the AbbVie settlement in the sixth paragraph. An earlier version corrected that paragraph to reflect that the settlement wasn't a payment deal.)

To contact the reporters on this story: Ian Lopez in Washington at ilopez@bloomberglaw.com; Celine Castronuovo at ccastronuovo@bloombergindustry.com; Jeannie Baumann in Washington at jbaumann@bloombergindustry.com

To contact the editor responsible for this story: Alexis Kramer at akramer@bloomberglaw.com

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