A Regulatory Approval Pathway for Biosimilars

1. A Regulatory Approval Pathway for Biosimilars April 2009

2. America’s Biopharmaceutical Companies Have Made Significant Contributions to the Health of Americans Companies in the vibrant biopharmaceutical sector choose to headquarter their operations in the U.S., in part, because favorable public policies enable their success. Many federal and state policies help biopharmaceutical companies achieve a greater level of innovation, including intellectual property protections and an ability to provide returns to investors. Emerging health threats and an aging and increasingly sicker population drives the critical need for further innovation.

3. New Medicine Development is Lengthy, Costly, and Risky New medicine development is a lengthy process: The average development time has increased to between 10 and 15 years.1 “ It is virtually impossible to find other historical examples [outside of the biotech sector], at least at the industry level, for which such a large fraction of new entrants can be expected to endure such prolonged periods of losses and for which the vast majority may never become viable economic entities.2 — Gary Pisano, Harvard Business School The R&D process is very risky: For every 5,000 to 10,000 compounds tested, just 5 will make it to clinical trials and, of those, only 1 will eventually receive FDA approval. R&D expenditures for each new biologic averaged $1.24 billion in 2006.1 “ Only 2 in 10 approved medicines bring in enough revenue to recoup the average cost of development. Individual company returns reflect the high risk and long lead times inherent in drug discovery and development. Sources: 1DiMasi, JA and Grabowski, HG. “The Cost of Biopharmaceutical R&D: Is Biotech Different?” Managerial and Decision Economics 469-79 (Jun. 2007); PhRMA. “Drug Discovery and Development: Understanding the R&D Process.” (2007). 2Pisano, GP. “Science Business – the Promise, the Reality, and the Future of Biotech.”

4. Biopharmaceutical R&D Creates Economic Growth and High Value Jobs Biopharmaceutical research companies are leaders in today’s knowledge-based economy, in which growth and productivity are driven by investments in innovation and R&D. “ Expanding GDP by Investing in R&D [T]he pharmaceutical and biotechnology industry, … expands GDP by at least $27 billion annually, on a permanent basis, for every one-time R&D investment of $15 billion.2 Scientific & Engineering Jobs In 2004, biopharmaceutical research companies employed 400,000 people, and generated economic growth responsible for employing 2.4 million additional people in other industries.1 In the pharmaceutical industry, the number of science and engineering jobs increased nearly 86% from 2000–2004, compared to a 16% increase for all manufacturing industries.1 “ “ High Value Added per Employee Pharmaceutical firms generated an average $425,529 in value added per employee compared to $130,218 for all manufacturing. 2 “ Source: 1DeVol et al., “Biopharmaceutical Industry Contributions to State and U.S. Economies,” Milken Institute, October 2004; 2R. Shapiro, et al., Economic Effects of Intellectual Property-Intensive Manufacturing in the United States, July 2007.

5. The Growing Importance of Biotechnology Medicines Biotechnology medicines have been proven to be safe and effective with an excellent record of patient satisfaction and safety. Biotechnology has produced more than 125 medicines including for some of the most serious and intractable diseases. In 2008, there were 633 biotechnology medicines in development, including 254 for cancer and related conditions and 162 for various infectious diseases. Developing a biologic’s full therapeutic potential can take time. New treatment advances are often realized from biologics that have been on the market for some time, but which were not known until additional research was conducted. Source: Biotechnology Research Continues to Bolster Arsenal Against Disease with 633 Medicines in Development. PhRMA, 2008.

6. The Complexity of Biologics Leads to Unique Challenges for Biosimilars • Development and manufacturing process is more complex than that for small molecule drugs: • Requires growing and harvesting the product from living cells • Can take many months to produce • Biologics are often dozens to thousands of times larger than • chemical drugs • Traditional generic drugs must be shown to be the same as the reference drug; however, with modern science, follow-on biologics or biosimilars can only be similar to the reference or innovator biologic

7. In Establishing a Regulatory Pathway for “Biosimilar” Products, It Is Critical to Appropriately Consider Scientific and Safety Aspects • Biosimilars will be highly similar to existing, approved biologic products—not the same as • Biosimilars must demonstrate safety and efficacy through clinical trials America’s biopharmaceutical research companies support the establishment of a science-based, biosimilars regulatory approval pathway with substantial incentives for innovation that ensures patient safety and does not hinder the development of future medicines.

8. Points to Consider for Establishing a Regulatory Approval Pathway for Biosimilars Biologics are complex molecules with the potential for critical medical advances. Research and development for biologics is long, costly and risky. A regulatory approval pathway for biosimilars must include adequate measures for assuring patient safety. At least 14 years of data exclusivityor data protection must be part of any biosimilars legislation to provide the certainty necessary for continued R&D investment leading to needed medical advances.

9. Regulatory Process for “Biosimilars” Should Include Adequate Measures for Assuring Patient Safety Because follow-on biologics may be similar but not the same as the reference product, biosimilars could have different safety and therapeutic profiles than the innovator product. Regulatory pathway must: • Require clinical trials to demonstrate safety and efficacy • Require clinical trials for each indication unless otherwise scientifically justified • Recognize that current science does not permit automatic substitution of one biologic product for another • Different biologics may have different clinical and therapeutic effects in patients; switching should be a conscious decision made by physicians in consultation with their patients

10. Innovator Products Need At Least 14 Years of Data Exclusivity • Patent protection in the context of biosimilars is less certain than for traditional small molecule drugs. • Competitors may be able to get around patents while relying on the innovator company’s data for FDA approval • Economic analysis of the time required for a portfolio of biologics to break-even on their R&D investment indicates data protection for biologics should between 12.9 and 16.2 years.1 • Data exclusivity or data protection of at least 14 years is necessary to provide the certainty to ensure continued R&D investment in this sector based on economic analysis and the unique aspects of biologics, including the high costs and time required to build specialized facilities, the higher costs of capital and dependence on venture capital and other private sources of capital, and the robust research and development that continues after approval leading to medical advances in often very different disease areas. Source: 1 H. Grabowski, Data Exclusivity for New Biological Entities, Duke University Economics Department Working Paper, June 2007, http://www.econ.duke.edu/Papers/PDF/DataExclusivityWorkingPaper.pdf.

11. Writing an Effective Letter to Congress on Biosimilar Legislation

12. America’s biopharmaceutical companies support health care reform that expands access to high-quality, affordable health care for all Americans, preserves patient and provider choices, fights chronic disease and advances medical innovation for the benefit of our nation’s health and economy.

13. DISCUSSION