Thursday, June 12, 2008

Scoring Follow-on Biologics

When it comes to follow-on biologics, time keeps on slipping. There was a lot of optimism that legislation creating an abbreviated pathway for approving FOBs could slip in by the end of 2007. Not so much. Talk turned to 2008 as the year when a bill gets passed through Congress.

Well, there’s good news and bad news on that prediction depending on where you stand on the issue. Word on the street is the staff of Sen. Ted Kennedy (D-Mass.), who serves as Chairman of the Senate Health, Education, Labor & Pensions, doesn’t expect legislation to move in 2008 because of the high number of other high-profile legislative priorities ahead in the queue and the fact that Kennedy was diagnosed with a malignant brain tumor.

The good news, again depending on where you stand, is the Congressional Budget Office appears to be moving forward in scoring the 10-year savings presented by having follow-on biologics in place. Specifically, CBO is reaching out to stakeholders to determine what impact, if any, the issue of “evergreening” could have in scoring savings over 10 years. The appropriate definition of a “new” biologic threw a monkey wrench into negotiations during the last days when the bill was being considered as part of the drug reform legislation in 2007.

In other words, where is the line drawn between a new, innovative product and one that is incrementally improved, but not “new” per se? The concern among generic hopefuls is that a product that is slightly changed would get another 10 to 12 years of data/market exclusivity (meaning FDA wouldn’t allow a FOBs maker to reference that product in an application to the agency seeking approval).

If the Hatch/Waxman experience serves as a benchmark, you can bet the farm, the car and whatever else you own that whatever lines the legislation draws between “innovative” changes to biologics that merit additional exclusivity and non-protected changes will be the source of controversy and legal actions for many, many years.

CBO officials are understood to be of the opinion that “evergreening” would not wipe out savings during the 10-year scoring period because approvals couldn’t happen that quickly during the study timeframe. Biogenerics stakeholders, however, point to the relatively quick development and approval of Roche’s “next-generation” EPO Mircera as evidence that those types of products can impact savings analyses.

It will be difficult, however, for CBO to identify significant savings over such a short period of time, primarily because follow-ons will be deemed interchangeable on a case-by-case basis and new FOBs entrants will be few and far between.

The law firm Engel & Novitt on behalf of the Pharmaceutical Care Management Association estimated cost-savings from FOBs for the top 200 Medicare Part B-reimbursed therapies would be approximately $14 billion over 10 years. Two other studies, conducted by Howrey/CapAnalysis Group and Avalere Health, estimated considerably smaller savings in the range of $2 billion to $4 billion over 10 years.

We’ve said all along that if CBO comes out with numbers closer to the Howrey and Avalere analyses, that won’t do much to motivate lawmakers to push for the legislation.

There are a number of challenges to getting a bill done in 2008 and beyond that fall outside of the trenches separating the innovators and the biosimilars proponents:

1) Kennedy’s health: Kennedy took the lead on trying to get a compromise bill into the FDA Amendments Act, signed into law in September 2007, but the Senate Biologics Price Competition and Innovation Act (BPCIA) just missed getting through. With Kennedy out of the day-to-day operations in Washington while he receives treatment, it’s unlikely there will be someone to take his place in championing new legislation. Still, most with chips in the pot agree that any law will have the BPCIA provisions at its core.

2) The Medicare bill: The Medicare compromise, which includes the physician payment fix, looks to be the major piece of health legislation that will make it through Congress in 2008. So if FOBs has a chance, then it most likely has to be attached to that legislative vehicle. Well, as of right now, FOBs isn’t in either the Democratic legislation (sponsored by Senate Finance Committee Chairman Max Baucus) or the Republican counter-bill (sponsored by Iowa Republican Charles Grassley). And that means FOBs are almost assured to be left out of any final bill the two sides hash out. No one is going to be interested in tacking on a controversial piece of legislation to a must-pass bill.

3) The Election: As summer comes to an end, the election will heat up quickly, with many key Congressional leaders out campaigning for the Presidential candidates or otherwise indisposed. That pretty much knocks out 2008. Then much of the first half of 2009 will be focused on setting up the new administration. Good luck getting FOBs through in that environment. More on this in my next post.

4) General hatred and disdain between biotech and generic drugmakers: This is a half joke. But like all half jokes, half of it’s true. Both sides appear to be coming around, but the amount of rhetoric put forth by both sides leading up to final negotiations in 2007 clearly damaged their positions. The RPM Report has heard this from numerous staffers and stakeholders. Whether it was extending data exclusivity or how easily understood the science is for developing and approving follow-ons without clinical burden, Senate and House leadership staff, as well as senior FDA officials, were put off by the rhetoric.

5) Making Dingell and Waxman happy: One of the major reasons FOBs didn’t make it into FDAAA was the Senate and House schedules and views of the compromise didn’t match up. House Committee on Oversight and Government Reform Chairman Henry Waxman (D-Ca.) was and still is a key player in the follow-on biologics game, and any compromise will most likely have to have his sign-off as well as that of House Energy & Commerce Chairman John Dingell (D-Mich.); Dingell has expressed interest in getting legislation passed. But there is a lot of ground to cover between the Waxman proposal (the Access to Life-Saving Medicines Act) and the Kennedy bill in the Senate. Most importantly, the issue of data exclusivity.

So when will FOBs happen? We recommend targeting PDUFA V as the vehicle for follow-on biologics.

We expect a compromise to be hammered out over the next year or two and attached to the user fee bill when it comes up for reauthorization in 2012. Sound far away? It really isn’t. The first negotiations to gear up for PDUFA V will start taking place in 2010, and it will be much easier to attach a ready-made piece of legislation to the next user fee iteration then than to try and rush something through Congress that doesn’t meet everyone’s threshold for satisfaction.

It’s possible the follow-on biologics debate could accelerate due to some unforeseen catalyst—anything’s possible in Washington—but the safest bet is that the legislation will move in 2010, with 2012 as the finish line. Is that too safe? I would love to hear your thoughts.

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