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Generic Biotech

Biotech drugs can cost hundreds of thousands of dollars a year. Cheaper generic versions could save countless lives, but proving their safety and effectiveness is no easy task.
December 1, 2004

Since their inception in the 1980s, biotech drugs based on natural proteins have come to mean the difference between life and death for millions of patients, treating diabetes, cancer, multiple sclerosis, heart attacks, and numerous genetic diseases. They boost the quality of life of millions more, people with conditions such as rheumatoid arthritis and Parkinson’s disease. But such “large molecule” drugs also come with large price tags. Interferon beta, used to treat multiple sclerosis, runs $10,000 to $14,000 a year. Cancer treatments such as Herceptin can cost $20,000 to $30,000. And the prices of drugs for some rare diseases can top $200,000 annually. “People need these drugs for their survival,” says Abbey Meyers, founder and president of the National Organization for Rare Disorders. “If they can’t afford it, they’re dead.”

Patents on the first biotech drugs began expiring three years ago (see “Some Would-Be Biogenerics), but the less-expensive generic versions that typically appear as soon as a drug loses patent protection have yet to hit the U.S. market. If you believe the arguments of pioneering biotech companies like Genentech and Amgen, the problem is the complexity of protein-based drugs – or “biologics” – which makes their duplication extraordinarily difficult. Without exact duplication, generics producers risk introducing drugs that may not work or could even harm patients. “Anything can be reverse-engineered and copied,” Robert Garnick, Genentech’s senior vice president for regulatory affairs, quality, and compliance, told a U.S. Food and Drug Administration panel in September. “However, some things are much safer [to copy] than others.”

But the fact is that several companies already sell generic versions of protein drugs in, for example, China and Latin America. The European Union is likely next. Such “biogenerics” don’t exist in the United States mainly because there is no mechanism for their approval and sale. The FDA has repeatedly delayed promised guidance on what sort of testing biogenerics will need to undergo to obtain approval; even if it does deliver guidelines, it might not have the legal authority to approve generic versions of many biotech drugs. And the biotech industry, of course, has already begun lobbying against biogenerics.

But their time may nonetheless be ripe. As costs for biologic drugs rise, and the number of expired patents grows, patient groups, health-care payers, and generics manufacturers are pressing for change. Few patients can actually afford biologics, and even when insurers cover their costs, the drugs constitute an insupportable and growing burden on the health-care system. Medicare, for instance, spends an estimated $1 billion per year for erythropoietin, a protein used to treat anemia in cancer and kidney failure patients. Kaiser Permanente, the largest HMO in the United States, saw its expenditure on biologics more than triple between 1998 and 2003 and expects that figure to double again by the end of 2005.

This situation, in which some patients’ only hope is a ruinously expensive patented drug, was also characteristic of traditional “small molecule” drugs until the advent of conventional generics – and it helped earn the pharmaceutical industry a reputation for greed. “The biotech industry, by and large, has been spared the negative public image that the pharmaceutical companies have acquired,” says MIT economist Ernst Berndt. “The whole issue of generic entry is putting them in a very uncomfortable position that makes them look like big pharma.”

A growing number of traditional generics makers and upstart biotech companies hope to paint exactly that picture of biotech pioneers. New technologies, they say, allow them to prove that their much cheaper copies of drugs are identical to the originals – and just as safe and effective. Legislators and regulators are taking notice. In June, the U.S. Senate Judiciary Committee held hearings on the issue, and the FDA began a series of workshops in September designed to assess the risks inherent in biogenerics and the technologies available to mitigate them. Though the issues are complicated, more and more experts believe that U.S. patients will eventually have access to biogenerics.

Some Would-Be Biogenerics
Drug Condition Treated U.S. Patent expiration
Insulin Diabetes 2001
Human growth hormone Short stature and muscle wasting associated with AIDS 2003
Interferon beta-1a Multiple sclerosis 2003
Erythropoietin Anemia associated with kidney dialysis or cancer treatment 2004
Alteplase Heart attack, stroke, blood clots in the lungs, and other conditions involving blood clots
Filgrastim Low white-blood-cell count and risk of infection associated with cancer treatment 2006

The Protein Problem

Would-be biogenerics makers face two major obstacles in the U.S. market. The larger of the two is the lack of a regulatory framework governing generic protein drugs. But this problem is bound up with the other: how to prove that a generic biologic is chemically and therapeutically equivalent to the original. For conventional pharmaceuticals such as aspirin, or even state-of-the-art drugs like Lipitor or Viagra, the process is straightforward. These drugs comprise relatively simple, small molecules that generics makers can synthesize directly in the lab and then analyze chemically to ensure that they are pure and identical to the name-brand versions. The FDA approves generics based on this proof, plus small clinical trials that typically include about 30 patients, to show that the body metabolizes the copies in the same way that it does the originals. Since generics companies don’t have to conduct large and expensive clinical trials (or pay for the original R&D), they can sell the drugs cheaply and still turn a profit.

Protein drugs, in contrast, are huge, complicated molecules. Chemists can’t manufacture them cheaply, or in some cases at all, so biotech companies instead genetically engineer bacteria and other cells to do so. The reliance on living cells gives the process a black-box quality; small changes in, say, temperature or purification conditions can have unintended results, affecting how well a drug works or even causing severe side effects. Indeed, says Walter Moore, vice president of government affairs at Genentech, the firm that first produced recombinant insulin, “our products are defined not by their chemical makeup but by the process through which they are made.” To some extent, the FDA seems to agree; the agency approves not only the finished product for biotech drugs but also the production process, which is often subject to separate patents or held as a trade secret.

None of this, however, rules out copying protein drugs. Multiple patented versions of erythropoietin, insulin, human growth hormone, and interferon beta are sold in the United States. But each version varies slightly from the others and has gone through the full gamut of clinical testing required of a new drug – a qualification that some biotech innovators insist every protein drug, unique or copy, should have to meet. “This trade association would be uncomfortable with a process that didn’t include clinical trials,” says Sara Radcliffe, managing director for science and regulatory affairs for the Biotechnology Industry Organization. Such a requirement would effectively bar generic competition.

Emerging technologies, however, could improve the precision of protein characterization, helping to divorce biotech products from the processes used to make them – and perhaps reducing the amount of clinical testing necessary. Generics companies such as Israel’s Teva and GeneMedix in England, for instance, use ever improving analytical techniques and computational methods to accurately characterize the three-dimensional structures of proteins. Those structures – the products of exceedingly complicated series of twists and folds as the proteins are being manufactured in the cell – profoundly influence the molecules’ efficacy, potency, and side effects.

Startups such as Momenta Pharmaceuticals in the United States and U.K.-based Procognia have developed technologies to scrutinize another source of proteins’ fickleness: the sugar molecules that are often attached to them during their manufacture. The enzymes in mammalian and human cells that add these sugars to proteins follow rules that seem to vary with the cells’ growth conditions, so figuring out the number and types of sugars attached to a particular protein has proved especially challenging. Momenta has combined proprietary enzymes, traditional analytical techniques, and unique computational algorithms to precisely map such sugars. Procognia uses sugar-detecting arrays, analogous to gene chips that analyze gene sequences or activity, to do the same thing. “From a technical standpoint, I believe it’s possible to completely characterize a protein,” says Alan Crane, Momenta’s CEO. “If you can show it’s all the same, what are the arguments for not allowing a generic?”

Biogeneric Bureaucracy

Technical arguments aside, many contend that the FDA doesn’t even have the authority to approve most biogenerics. When U.S. generic-drug laws were passed in the 1980s, the brand new, complex biotech drugs were not under discussion. “At the time they were debating, it didn’t occur to anyone that technology would advance to the point it would be possible to create generic biologics,” says Janice Reichert, a senior research fellow at the Tufts Center for the Study of Drug Development. As a result, existing generics legislation applies only to small-molecule drugs, not biologics.

During a 2003 push to improve patient access to drugs, the FDA announced plans to issue guidelines that would begin to define an approval process for generic protein drugs, but they have so far been delayed twice – perhaps because of the agency’s uncertainty over its legal position. Even those guidelines, regulators have indicated, would apply only to a few biologics: relatively simple, well-defined proteins such as human growth hormone and insulin. (In fact, Sandoz, the generics arm of Swiss drug company Novartis, has already submitted an application for a generic version of human growth hormone in the belief that the FDA has the authority to approve it.) The easiest solution would be an extension of existing generics laws to cover all protein-based drugs, and Senators Orrin Hatch and Patrick Leahy seem primed to take that action. The pair sponsored hearings on biogenerics within the Senate Judiciary Committee in June, and Leahy’s staffers say he hopes to introduce legislation in 2005 that would apply the framework for small-molecule generics to biologics.

Biotech companies will inevitably fight such legislation, just as traditional drugmakers opposed the advent of small-molecule generics. Many of the current arguments parallel those made two decades ago. Companies assert, for instance, that copycat proteins will cut into revenues so severely that the expensive research needed to develop new lifesaving drugs will slow or even halt. The pace of innovation in small-molecule drugs, however, suffered no such deceleration. Indeed, generics have forced pharmaceutical companies to develop improvements, such as time-release or longer-acting formulations, in an effort to maintain market share.

In the meantime, the FDA has begun a series of public workshops designed to assess the available technology and get feedback from stakeholders. The first session, held in September and designed to help regulators assess scientific arguments, became a highly polarized back-and-forth between biotech pioneers and biogenerics makers. The agency has so far remained silent about the form any rules might take and has planned a second workshop for early 2005.

But even when biogenerics do appear in the United States, patients and insurers might not see the same cost savings they have with traditional generics. “The prices may not go down as much,” says Momenta’s Crane, “because the hurdles are higher in the first place.” The lower prices of generic drugs – typically 50 to 66 percent those of the originals – stem from their abbreviated approval process and from the fact that many states mandate generic substitution at pharmacies, so manufacturers can dispense with costly marketing. Biogenerics will almost certainly face stricter preapproval testing requirements than small-molecule generics, at least until the FDA gains confidence that copycat proteins can be analyzed well enough to prove that they are identical to the originals. And most biologics are administered in hospitals rather than dispensed at pharmacies; since generics companies may face an uphill battle convincing doctors of the safety and efficacy of their drugs, this means more spending on marketing.

Still, says Carole Ben-Maimon, president of biogenerics developer Duramed Research, a back-of-the-envelope calculation shows that in the long run, biogenerics – particularly self-administered drugs such as insulin and human growth hormone – may reach the half-off mark. John Langstaff, CEO of Canadian biogenerics company Cangene, similarly believes that a 40 percent price drop is possible for some drugs. Others see decreases of 10 percent to 20 percent as more realistic. Though not ideal, even a 10 percent discount would be significant for drugs costing thousands of dollars each year.

Biogenerics are almost certain to make their U.S. debut within the next five years: costs will compel it, technology will enable it, and politics will delay it. In the most optimistic vision of the biogeneric future, diabetics will be able to control their condition for the cost of a daily latte, and cancer sufferers will be able to fight their disease without bankrupting their families. Lower costs could also make insurers, including federal and state agencies, more willing to cover biologics, further expanding their availability. As the number of invaluable protein drugs swells, biogenerics will become not just helpful but essential – driving a new sort of biotech revolution.

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