The FDA recently launched a first-ever plan to speed up the approval of biosimilar drugs in the U.S. as part of the health care overhaul proposed by President Obama over two years ago. The new initiative represents another effort to bring down the astronomical costs of healthcare. Biosimilar drugs are drugs that are cheaper versions of expensive, complex medicines that are made from biological matter, i.e. biologics. Biosimilar drugs are like generic drugs; the latter are copies of much simpler medicines.
These more complex drugs include Erythropoietin for anemia, Remicade for rheumatoid arthritis and Herceptin for cancer. These complex drugs are quite expensive, costing the federal medical system billions of dollars, thus providing a compelling reason for the FDA to institute guidelines for the facilitation of cheaper alternatives.
The new plan creates a shorter approval process by relying on existing information and data provided by the previously-approved more expensive drugs. In other words, the companies creating the biosimilar drugs piggyback on the experience of the manufacturers of the pre-existing, more expensive versions.
The U.S. is not a trailblazer in this regard, however. The European Union already has several biosimilar drugs available for sale.
The FDA’s new initiative will have far-reaching results since biologics are some of the biggest-selling medicines today. Two years ago, almost half of the top selling drugs in the U.S. were biologics. Erythropoietin has $3.3 billion in U.S. sales alone. The market for biosimilar drugs is astronomical. In eight years it is expected to reach $8 billion. Their sales are expected to outstrip that of generic versions of simpler drugs because biosimilar drugs cost only 10% to 20% less than the original versions to manufacture, whereas generic versions of simpler drugs are up to 90% cheaper to produce. As for the patents now existing on the biologics, they are set to expire in another eight years.
Drug makers are not sitting on their hands in light of the FDA’s new initiative, though. Instead, companies like Merck & Co., Pfizer and Novartis are developing biosimilar drugs in order to take advantage of the great demand for these drugs. Amgen recently announced that it was going to develop biosimilar drugs along with Watson Pharmaceuticals, a generic drug maker.
The biggest challenge facing makers of biosimilar drugs is that biologics are more complex than other drugs, so making an identical generic version is not possible, at least for now. The technical side of the drugs’ creation is not the only challenge facing drug manufacturers. The manufacturers must also deal with financial and commercial concerns. Specifically, drug manufacturers must acquire the skills necessary to market lower-cost medicines to hospitals, health insurers and others. Also, manufacturing biosimilars is by no means cheap, and drug manufacturers will have to find innovative ways of generating the necessary capital, including partnering with already-existing generic drug manufacturers.
Also, on the technical side, the biosimilar drugs will be comparable to the drugs they seek to copy, but they will not be identical. Therefore, a pharmacist could not simply switch out the copycat for the original drug. Hence, the manufacturers of biosimilars will have their work cut out for them convincing doctors that their copies are effective—something which is less of an issue with generic versions of simpler drugs since the latter are more competitive from a pricing standpoint.
Although, the FDA’s latest action is designed to make certain drugs cheaper, drug manufacturers are figuring out ways to profit from the new plan. It will be interesting to see the changes this initiative creates to the landscape of drug manufacturing in the years to come.