Panel Discusses Generic, Biosimilar Marketplace Sustainability

Following the release of a whitepaper on sustainable generics and biosimilars markets, members of a trade association discussed concerning trends for the industry.

In the European Union, public panic over drug shortages caused by the COVID-19 pandemic drove demand for some drugs to 900% above normal, according to Adrian van den Hoven, director general of Medicines for Europe. “That’s not something that you have lying around in stockpiles.”

He spoke in a recent International Generic and Biosimilar Medicines Association (IGBA) panel discussion about trends affecting the generics and biosimilars industry. The occasion was IGBA’s launch of a whitepaper on industry sustainability.

A Finger Snap Won't Do

Governments responded to drug shortages with calls for the pharmaceutical industry to shore up supply chains and geographically diversify manufacturing operations, although IGBA contends this may be expecting too much of the private sector.

“A lot of governments think that by snapping their fingers, this is going to happen, when in reality this will require investment by the private sector, even when there is some support for technology from government programs,” van den Hoven said.

The US government has urged that domestic drug manufacturing be expanded, although there’s a growing recognition among US officials “that we operate in a globalized world,” and part of that is an appreciation for ensuring that the United States and its allies abroad have resilient supply chains, said Jonathan Kimball, vice president, Trade and International Affairs, Association for Accessible Medicines.

Concurrent with this push to expand production capacity is a downward pressure on prices by payers that erodes the margin of return, IGBA contends.

“The real challenge is that the markets are currently designed to drive prices as low as they possibly can go, and of course, that’s not compatible with the diversity [local production] model, so I think we have to have sustainable market models that encourage those investments,” van den Hoven said.

Kimball responded that the pharmaceutical industry can defend against pricing pressure by improving the reliability of its drug supply chains and commoditizing that. “The market drives prices down, but at the same time, there is increased market demand for what is viewed as a diversified, secure supply chain.”

Learning From COVID-19

Meanwhile, there are innovations that were implemented during the pandemic to resolve supply problems, and these could be employed on an ongoing basis to streamline the flow of drugs across borders, panelists said.

Temporary imports and the reimportation of drugs previously exported were some of the resupply measures tried with success during the pandemic, van den Hoven said.

Also, digital systems for expediting international shipments helped improve the allocation of drugs to where they were most needed, and this innovation could be extrapolated for future needs, he said. “The movement of product across countries will benefit the industry significantly, but more importantly, it will reduce the risks of localized knockout in certain countries. You’re able to move products much, much faster.

“Inside the European Union, we still don’t have it perfect, even within what is considered to be a single market,” van den Hoven said.

Over the long term, the generic and biosimilar drug marketplace is going to need support, the panelists said. In the European Union, government entities have slowly recognized the importance of a focus on patient acceptance of biosimilars and not just price, van den Hoven said.

In the United States, patient populations are relatively smaller for biologics than for generics, so the challenge is assembling sufficiently large populations for clinical trials, and after that, there may be only a small market of consumers for an approved biologics, Kimball said.

Patents on originator drugs add to the uncertainty surrounding making reliable projections about how successful a drug development program is going to be, he said.

But patents are a problem “the [US] government’s going to have to address, because they’re spending more and more of their health care resources on these complex products,” Kimball said. He cited a recent report that showed Merck has filed 129 patent applications on pembrolizumab (Keytruda) and the FDA has granted 86 of them, which is a formidable barrier to bringing a biosimilar to market.

Keytruda was originally approved in the United States for advanced melanoma in 2014. Its list of FDA approvals now stretches to more than 30 settings and combinations. Keytruda’s worldwide sales in 2020 were $14.4 billion, according to Merck.

“If you’re a biosimilar producer, you have to feel confident that if you litigate those patents you’re going to be 100% successful, and the originator company just has to be successful in defending one of those patents to forestall biosimilar entry,” Kimball said.

Too much payer emphasis on price reduction may drive producers out of the marketplace, Adrian said.

“I think the challenge we face is that a lot of payers and health ministries are obsessed with the lowest unit price of any molecule. You see it even in the private markets, for example in the United States. This is simply incompatible with the sustainability of the industry. We cannot invest in this kind of framework,” Adrian said.

In the United States, the unsustainability of an emphasis on prices is evident in medicines that are difficult to procure, Kimball said.

“When you look at the list of essential medicines, those that are most critical for health emergencies and for the US health care system, those are the products that tend to be high-volume, low value, low-priced products. Those are the same products where prices have eroded to such a degree that you’re seeing shortages in the marketplace.

“It’s not an issue of does the company want to produce these products. The question is, is it actually feasible for companies to manufacture certain products in certain markets?” Kimball said.

For a summary story on the contents of the IGBA whitepaper, click here.