Recently I had the privilege of speaking at the sixth annual Moscow International Congress on Biotechnology. The big news in Moscow during my visit was that Russian President Dmitry Medvedev hosted the band Deep Purple.

Perhaps the reason the Kremlin chose to make public Medvedev’s getting in touch with his internal groupie was to send the message that Russia is more Western than we in the West give it credit for being. The news item on Deep Purple, after all, wasn’t in the mainstream Russian press, but rather in the English language Moscow Times.

Fascination with rock stars notwithstanding, Russia is not the West. But neither is it dancing bears and balalaikas. It’s Russia. And in 2011 that’s a complicated proposition—even more so when it comes to healthcare issues.

One of the major problems is that its regulatory framework is still quite nascent. With senior government officials entering and departing public service at an alarming pace (and rarely of their own volition), there is a lack of continuity and predictability that makes working with the FDA look like predicting the tides. My presentation, “Biosimilars: Safety or Savings?” addressed this very issue. In many ways, the issues I discussed are as relevant to the debate in the United States and European Union as they are in the Rodina.

The age of the blockbuster is over. Cost concerns are more challenging than ever. And we are struggling with what “personalized medicine” really means.

We are now in the era of post-patent medicine where advances in manufacturing and molecular diagnostics are as important as new molecular entities, and safety is as important (and as improvable) as efficacy.

The era of post-patent medicine is also the epoch of biosimilars. But will biosimilars really be as important an element of change as many believe? Will it be, as we like to say in the United States, a game changer?

I believe the answer is “yes,” but I am not sure whether or not all the changes will positively affect the advancement of the public health. I fear the expectations that biosimilars will radically reduce costs are overstated. I fear that safety concerns are being understated and that the risks to innovation are real.

 

It’s always important to begin a discussion of biosimilars and safety by reminding ourselves that there is no such thing as a generic biologic. Big molecules are more than just a larger version of small ones. Biologics are created from living organisms and are not as simple to replicate as traditional drugs like aspirin and antihistamines. Biosimilar safety means something different than generic drug safety.

In the United States we have recently passed legislation that permits the creation of a regulatory approval process for biosimilars.

To establish that two protein products are similar and substitutable, the sponsor of a follow-on product would need to demonstrate through de novo clinical trials that repeated switches from the follow-on product to the referenced product (and vice versa) have no negative effect on the safety and/or effectiveness of the products as a result of immunogenicity.

In fact, when it comes to biosimilars, the most important issues facing global drug regulators are the scientific and technical factors related to a determination of biosimilarity or interchangeability.

For many follow-on protein products—and in particular, the more complex proteins—there is a significant potential for repeated switches between products to have a negative impact on patient safety and clinical effectiveness. Therefore, the ability to make determinations of substitutability for biosimilars may be limited.

This uncomplicated and indisputable fact is, alarmingly, rarely discussed by healthcare systems that see biosimilars exclusively as a cost-savings mechanism. But the blinders of cost-containment must never be permitted to obscure the twin therapeutic pillars of safety and efficacy.

Other crucial differences between biosimilars and small molecule generics is that they are difficult and expensive to get approved, complicated and challenging to manufacture, and have a short shelf life. The result is that the price differential between innovator biologics and biosimilars will be far narrower than between branded small molecules and their generic counterparts. This more modest cost variance will make it economically feasible for innovator companies to compete with biosimilars.

The European experience demonstrates that the market cost of a biosimilar is roughly between 20 to 30 percent of the innovator price. So, the question becomes, can innovator companies, post patent-expiration, lower their prices accordingly on their brand name products and still have a profitable proposition. The answer is “yes,” and this provides a powerful marketing weapon for the innovator brands.

After all, why would a physician prescribe an unfamiliar biosimilar or healthcare systems prioritize one for payment when the innovator product is available for the same price?

 

These realities will restrict the number of classic generics companies who can play in the biosimilar space. And where there is less competition there is less price competition. This is why people such as Jeff George, the CEO of Sandoz, predict that in the United States and elsewhere, using existing regulatory pathways to bring biosimilars to market may very well be the rule rather than the exception.

We must not allow the era of post-patent medicines to become the dark ages of innovation. And the future of innovation rests on, among other things, the continued protection of intellectual property. It’s important to note that there's no evidence intellectual property protection drives costs higher. On the contrary, shortening periods of exclusivity would likely increase the price of innovator biologics.

Academic research shows that a biologic producer needs more than 12 years of exclusive sales to break even on the development costs of a new drug. If a firm faces competition from biosimilars any earlier, it would probably raise prices for its innovator biologics, as it must recoup its initial investment within a much smaller monopoly window. As a result, cutting-edge medicines for complicated and orphan disease states would become not just less affordable but less available as R&D resources would likely be steered towards less risky therapeutic investments.

In the era of post-patent medicine we must protect sustainable innovation. But protecting intellectual property, whether through patent protection or data exclusivity, does not mean that innovation via biosimilars competition is impossible. Indeed vigorous intellectual property protection can actually promote innovation.

Out of extreme difficulty often comes creative solutions—and an excellent example of this is the development of biobetters. Biobetters are to biosimilars what Apple’s iPod Touch is to its iPod shuffle. Where a biosimilar will be a mere structural imitation, a biobetter will possess some molecular or chemical modification that constitutes an improvement over the originator drug.

Such enhancements may range from a longer half-life, allowing for less frequent dosing, to more potency or less toxicity. That’s innovation driven by the new reality of biosimilar competition. And it shouldn’t be surprising since, among other things, competition drives innovation.

What is the place for Russia in all this? Russia will certainly offer an attractive market for biosimilars and biobetters. With millions of people, and tremendous unmet medical need, we can expect the uptake of quality biosimilar and biobetter products to be substantial, particularly if those products are available at a substantial cost savings, or offer additional therapeutic benefits.

But beyond the market potential, what about the role of Russia as a center for biosimilar and biobetter research and manufacture?

 

I believe that Russia’s strong tradition in science and medicine offers a platform to both develop and produce these medicines—and potentially not only for its domestic market, but also for export.

Such a proposition is not without risks and it will be a complicated decision depending on a variety of local factors. One critical element will be an evolving regulatory framework.

To protect the health and safety of Russian patients and, moreover, if Russia hopes to export these medicines, a 21st century, state of the art, internationally recognized and harmonized regulatory system will be a fundamental requirement.

No patient, whether in the USA, Europe or Russia, should be exposed to low quality, unreliable biosimilars or unproven biobetters. And no payor—whether private or government—should spend one kopek on uncertain products.

I understand that the Russian Health Ministry is looking at revising Russia’s biosimilar regulations to meet the highest international standards and I can think of few things that would be more in the interest of Russian patients or more firmly guarantee Russia’s investments and economic aspirations in this area.

Simply put, a good regulatory system is good for the public health and good for business. Biosimilars and biobetters offer the very real possibility of quality alternatives—and even enhanced treatments—at better prices, but it all depends on a transparent, predictable, competitive marketplace, underpinned by strong intellectual property and regulatory systems.