Will authorised biologics deter biosimilars? Utilising JFTC’s expertise in drug pricing

Issue: Report of the Japan Biosimilar Association

On May 16, 2017, the Japan Biosimilar Association submitted a report titled “The Impact of Authorised Biologics (provisional name) on the Development and Promotion of Biosimilars (Report)” to the director of the Economic Affairs Division, Health Policy Bureau, at the Ministry of Health, Labour and Welfare (MHLW).

It reports as follows: “Authorised biologics significantly impact the R&D and penetration of biosimilars and may ultimately hinder further development of the whole industry of biological medicinal products.”

It continues: “If authorised biologics, considered identical to originator medicinal products, are authorised while biosimilars have not yet progressed their wide understanding and penetration, such authorisation will have a serious impact on the penetration of biosimilars, which may lead to a loss of growth opportunities not only for biosimilars but also for the entire biologics industry, which may lead to stagnation of innovation.

“As a result, these impacts will negatively affect the public because of dependence on foreign countries for the stable supply of biological medicinal products, persistently high prices of medicines, and lack of progress as a whole in improving patient access to treatments with biological medicinal products.”

Is the concern of the Japan Biosimilar Association reasonable? How should we consider the impact of authorised biologics on biosimilars from the perspective of competition policy and health policy?

The situation in the US

In 2011, the US Federal Trade Commission (FTC) issued its Final Report, concluding that the consumer benefited from the introduction of authorised generic drugs (AGs) in the market, including paying lower prices from additional competition, and that patent challenges by generics have actually increased in the relevant period. The FTC Final Report is evaluated to have concluded that AGs are pro-competitive.

While this debate may have worked on the assumption that AGs would be small molecule drugs, with the passing of the Biologics Price Competition and Innovation Act in 2009, and a recent increase in biosimilar activity in the US, the same debate has started to enter the fledgling biosimilar space, leading commentators to ask how authorised biologics might affect biosimilars.

Because the market penetration for biosimilars has not been as quick as for small molecule generics, there may be little market incentive for originator companies to join the biosimilar market in the form of an authorised biologic. Since this interchangeable designation brings with it the ability to substitute the biologic for an interchangeable product at the pharmacy counter without the prescriber’s involvement, authorised biologics will likely be realised after the Food and Drug Administration (FDA) approves interchangeables.

The situation in Europe

According to Annex I.1 of the 2011 Commission note on the Handling of Duplicate Marketing Authorisation Applications, the first introduction of a generic product by the holder of the reference medicinal product (the originator medicinal product) can also improve the availability of a medicinal product. This is because the first entry of a generic into the market impacts availability, as it usually increases accessibility.

While the 2011 Commission note did not include specific considerations regarding biological products and/or biosimilars, the granting of duplicate marketing authorisations as generics in the case of biological medicinal products has raised concerns from the generic industry about the likely impact on the biosimilar market.