WHAT WILL HAPPEN WHEN BIOTECH DRUGS GO GENERIC?

by Matthew Herper

In a few years, the first blockbusters of the biotech age will begin to face generic competition. Big drugs like Amgen's (AMGN +0.32%) Epogen and Neulasta, Roche and Biogen Idec's (BIIB -0.55%) Rituxan, and Erbitux, from Eli Lilly and Bristol-Myers Squibb (BMY -0.8%), could eventually face cheaper competitors. But they won’t be exact substitutions, because these drugs will be so much harder to make. Most will not be true generics but biosimilars — products with a similar profile that are still seen as slightly different from the original.

So how quickly will sales erode? It will depend on the disease being treated and whether decisions are being made by physicians and patients or by hospital administrators, according to a new analysis by ZS Associates, a global consultancy.

One of the first cases of a biosimilar being launched was when Omnitrope, a form of human growth hormone made by Novartis' generics business, Sandoz, was introduced to challenge Pfizer's PFE +0.15% Genotropin in 2007. Initially, there was little use of Omnitrope, even though Sandoz had priced it at 40% less than branded Genotropin. In the U.S., traditional generics get automatically substituted by the pharmacists unless a physician suggests otherwise. With growth hormone, physicians and patients initially had no reason to switch. What helped Omnitrope gain market share was a series of efforts one would expect in a war between two brands.  Patient assistance programs helped people afford the medicine, rebates to health plans made it cheaper to insurers, and new clinical trials made doctors more comfortable prescribing it. Even with that 40% discount, Omnitrope still has less market share than Genotropin.

In some cases, doctors and patients may not be willing to switch to an alternative. That’s was the case when Shire launched Vpriv in the midst of a shortage of Genzyme’s Cerezyme, for Gaucher’s disease, a rare disorder of the bones and connective tissue.  Doctors and patients switched initially because of the supply problems, but then they switched back — even though Vpriv was 15% cheaper. They were loyal to the original product, and no one forced them to switch on the basis of price, which was handled by insurers and patient assistance charities funded by drug makers. In cases like these, copycat drugs may have trouble making a dent, lowering drug costs for the system as a whole, or hurting established players.

But there’s another case: the launch of the biosimilar version of Sanofi’s blood thinner Lovenox by Novartis and partner Momenta Pharmaceuticals. The biosimilar, enoxaparin, rapidly took most of the branded drug’s market share thanks to its 14% discount to the original brand. That’s because patients don’t choose which blood thinner they get in the hospital. The decision of which to buy was largely made by hospital administrators who saw no difference between the products except for price.

Ganesh Vedarajan, a managing principal at ZS Associates, says that what happens when a generic launches will depend which of these cases the situation most resembles. In oncology, where decisions are made at the hospital level, he expects erosion similar to what happened with Lovenox. Amgen’s drugs, Epogen and Neupogen, could be hit particularly hard. But other medicines, like those for rheumatoid arthritis, may be able to hold on to market share. The most important conclusion may be that the players introducing biosimilars successfully are less likely to be traditional generic companies, who are used to competing on price, but large biotech players like Amgen itself, who know how to manufacture and market new drugs.

Fuente: Forbes

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