It’s becoming increasingly clear that drug pricing in the U.S. is over the top. The new biological therapies, in particular, are so very expensive that they seem out of reach to most of the patients they are supposed to treat.

For chronic diseases, high prices create an especially difficult situation: Patients with rheumatoid arthritis, for instance, will be taking medicine every day for the rest of their lives (decades, in most cases). Who is going to shell out hundreds of thousands of dollars for Remicade, Enbrel, Humira or other pricey biological therapies? The insurance companies? Not likely.

The cost of cancer treatments has skyrocketed in recent years, as well. But for the newer targeted products, many of which are used to treat terminally ill patients with advanced disease that has failed to respond to all other drugs, the price may be secondary.

Biotech and pharmaceutical companies argue that premium pricing for newer drugs compensates them for the millions of dollars they have poured into developing such drugs – as well as the money lost on experimental medicines that fail during development.

But consumers find this line of reasoning harder to swallow than pills – and their discontent grows by the day.

Costs Associated With Representative Biotech Therapies*

Product Name	Company (s)	Product Description	Indication (Approval Date)	Cost
Vectibix	Amgen (Abgenix)	Fully human MAb that targets EGFr	Metastatic colorectal cancer (3rd-line therapy) (9/06)	$4,000 per infusion ($100,000 per year)
Erbitux	ImClone Systems; Bristol-Myers Squibb	Chimeric MAb that targets EGFr	Metastatic colorectal cancer (+/- chemotherapy) (2/04)	$5,000 per treatment
Elaprase	Shire (Transkaryotic Therapies)	Recombinant human iduronate-2-sulfatase	Hunter syndrome (7/06)	$300,000 per year
Cerezyme	Genzyme	Recombinant glucocerebrosidase	Gaucher disease (5/94)	$170,000 - $200,000 per year
Avastin	Genentech	Humanized MAb that targets VEGF	Metastatic colorectal cancer (+ chemotherapy) (1st line & 2nd line therapy) (2/04; 6/06)	$50,000 - $100,000 per year
Thalomid	Celgene	Thalidomide (thought to act by modulating levels of TNF-alpha)	Erythema nodosum leprosum (7/98); Multiple myeloma (+ chemotherapy) (5/06)	$35,000 per year

* Information obtained from various sources, including analysts’ reports, company literature, newspaper articles and IMS Health.



Some drug sponsors have already taken action to address this issue – but instead of cutting prices to the bone, they’ve set up financial assistance programs for patients who are uninsured, under-insured or unable to meet even the co-payment.

Biotech pioneer Amgen Inc.’s approach is proactive: On the same day that the FDA approved its new colorectal cancer therapy Vectibix, the company announced its financial assistance program (Amgen Oncology Assistance) that will include a “cap” on out-of-pocket co-payments for patients receiving Vectibix. Once a patient reaches the cap, that person is eligible to receive the drug free from the SAFETY NET Foundation.

Moreover, Amgen took a stab at its most direct competitor in this indication – ImClone Systems Inc.’s Erbitux -- by pricing Vectibix at a 20 percent discount to Erbitux. Even so, a single infusion of Vectibix will cost $4,000. Patients need to be dosed every two weeks, meaning that a year’s worth of medicine will cost more than $100,000. (Sadly, very few patients with metastatic colorectal cancer live that long; most succumb to the aggressive disease in a matter of months.)

Amgen is not the only company to offer financial assistance to needy patients, of course. Among others, biotech giant Genentech Inc. supports several programs in the U.S. for patients who don’t have insurance or who can’t afford their co-pay costs. In 2005, Genentech provided about $200 million of free medicine to over 18,000 patients. And Genzyme Corp., which markets drugs for treating rare inherited disorders, sponsors a number of free programs to ensure that patients have access to its medicines.

Patient assistance programs like these are a move in the right direction, certainly, but many critics say that they fall far short of fixing the real problem – which continues to be the jaw-dropping cost of many cutting edge therapies.

Healthcare providers and insurance companies aren’t too pleased, either – and it’s coming to the point where some sort of radical change must occur. To many, the answer is actually quite simple: Switch from branded drugs to generic ones, which cost considerably less. The switch also appears to be a natural, given the fact that patent coverage on many leading biotech therapies is starting to come to term.


In the U.S., anyway, the regulatory path for generic drugs is quite straightforward, enabled by the Hatch-Waxman bill of 1984. Under this bill, companies can market generic versions of drugs by demonstrating structural identity and pharmacological equivalence. A generic drug must contain the same active ingredients as the innovator drug upon which its abbreviated new drug application (ANDA) is based. It also must use the same dosage form and route of administration. However, the generic version does not have to prove its worth in costly and lengthy clinical trials.

But that landmark legislation covers chemically based drugs. It does not address biological therapies, which are much more difficult to manufacture: So difficult, apparently, that there can never be a generic biologic, according to biotech firms. Those in the generics sector, on the other hand, think generic biologics (a.k.a. bio-generics or follow-on biologics) are eminently feasible – and, in fact, some can be approved under existing statutes.

That’s because the FDA actually has approved a bio-generic, although the agency calls it a follow-on protein product. In late May 2006, Novartis AG’s generics division Sandoz garnered approval for Omnitrope, a recombinant human growth hormone (hGH) that the firm says is similar to Pfizer Inc.’s Genotropin (which the FDA approved in August 1995).

Sandoz waited a long time for this approval, and even then had to force the agency to make a decision through a federal court order. (Sandoz originally filed its application on the growth disorder therapy in July 2003.)

The FDA, however, made it quite clear that Omnitrope was not therapeutically equivalent to Genotropin (in the manner of a generic version of a chemically-based drug), and that its decision to approve the product does not “establish a pathway” for the approval of other follow-on biologics. Moreover, the FDA stated that Congress must enact new legislation before it will be able to approve almost any other so-called copies of recombinant biotech therapies.

The Generic Pharmaceutical Association (GPhA) doesn’t agree. In a statement issued upon Omnitrope’s approval, GPhA president and CEO Kathleen Jaeger said, “FDA’s Omnitrope decision clearly demonstrates that sound science exists to support the approval of generic biopharmaceuticals despite assertions from special interests to the contrary.” That stance applies especially to products “with relatively low to modest complexity” (like hGH).

“We believe that the FDA does have the ability to approve certain generic biologics which are well characterized and understood, such as insulin and human growth hormone,” added Andrea Hofelich, GPhA’s director of media relations. “We recognize that for more complex products, more testing will be required… and that some products will require more testing than others.”

Thus, even the GPhA is backing legislative change to “codify FDA’s authority to approve generic biopharmaceuticals under section 351 of PHS [under which biological products such as vaccines, blood products, monoclonal antibodies and others are licensed],” Jaeger said. These changes will “permit the approval of more complex products as the science evolves.”


So, which existing law allowed the FDA to approved Omnitrope? By some quirk, biologics such as insulin and hGH are regulated differently than the others, and this classification does allow for the FDA to approve follow-on versions of these particular products. Specifically, Omnitrope’s approval came under section 505 (b)(2) of the Food, Drug and Cosmetic Act, which allows for the approval of new or improved formulations of previously approved products by referring to studies supporting the original approvals. But this section of the FDCA really refers to drugs, not biologics.

So what steps will generic drug makers need to take in order to market biologic therapies, which fall in a different category? Biotech companies argue that protein-based medicines are more complicated than chemical entities: They are larger, not as well characterized, and are manufactured by cultured cells under closely guarded proprietary processes.

Insulin and human growth hormone may be simple, easily characterized proteins, but most biotech therapeutics are considerably more complex. For instance, it’s well known that a vial of a protein-based therapy such as Epogen actually contains a heterogeneous mixture of recombinant proteins, with different sugar groups or glycoforms, for instance – making it all the more difficult to duplicate.

According to this logic, espoused by biotech firms and the Biotechnology Industry Organization (BIO), generic manufacturers would have to test their products in clinical trials anyway, which would probably erode the price differential between a branded drug and a generic one.

Generic manufacturers, unsurprisingly, claim that they can make safe and effective drugs without having to repeat all the original work, by depending heavily on various analytical methods to prove that their products are sufficiently similar to the branded ones.


It appears that BIO and GPhA will never be able to agree on this subject, but that hasn’t stopped legislators and government officials from trying to draft effective rules that will satisfy everyone’s needs. (For details of the current political climate, see the Turn Signal article, “The Bio-Generic Regulatory Debate.”)

While politicians and lobbyists mount their arguments regarding legislation, some drug companies are already gearing up to take command of the up-and-coming bio-generics market.

Sandoz, for instance, is far ahead of the pack. In late July 2006, it signed a deal with Momenta Pharmaceuticals Inc. that is intended to fill its pipeline with follow-on biotech drugs and complex generics (chemical entities). The alliance, valued at up to $263 million, covers the use of Momenta’s complex product characterization technology on four follow-on versions of marketed therapies – one late-stage compound from Momenta’s pipeline, two late-stage compounds from Sandoz, and one co-marketed product candidate (M-Enoxaparin). The new deal expands the parties’ existing U.S. partnership on M-Enoxaparin (a generic version of Lovenox, a complex low molecular weight heparin for treating deep vein thrombosis and several cardiovascular conditions) to include the European Union.

Momenta’s technology, developed at MIT, enables the rapid, precise and thorough sequencing of complex sugars, which reside on the surfaces of most protein molecules. The method involves breaking up the large sugar molecules into smaller fragments with special enzymes, sorting the pieces with high-pressure liquid chromatography, and then characterizing the individual units within each fragment with mass spectroscopy and NMR. With the help of sophisticated computer algorithms, Momenta’s technology is capable of deriving the full sequence of the original complex. The company said that its technology is also able to characterize complex mixtures that do not contain sugars.

Steven Brugger, Momenta’s SVP of strategic business operations, said that the company looks at the development of M-Enaxaparin as the “beginning of a continuum” in its drug development program. Branded Lovenox, he explained, is actually a heterogeneous mixture of sugar chains – and all of them “must be considered the active ingredient” when designing a generic version. “We have to define these [sugar chains] and show that our generic has the same active ingredients” as the branded product. That holds whether or not all the elements actually are active, he added. In the case of Lovenox, 15-25 percent of the linear sugar chains actually contain the structure of anti-coagulation factor, Brugger said. “To be generic, a drug has to be exactly the same, imperfections and all.”

Biologics, most of which are glycosylated proteins, are also heterogeneous mixtures of sugar moieties – and Momenta’s plan is to define the variability for each product. “Our approach is the same as it is with drugs,” Brugger said.

In the end, then, Momenta believes that it can develop generic versions of existing complex drugs – including therapeutic proteins, antibodies, vaccines and antibiotics – by a thorough analysis of their exact compositions. And it’s betting on the fact that the FDA will come to rely on such characterizations as it builds a regulatory framework for bio-generics.

According to Ajaz Hussain, Sandoz’ VP and global head for biopharmaceutical development, “Our collaboration with Momenta Pharmaceuticals is intended to establish a quality-by-design approach to facilitate development and registration of biotechnology and biologic drugs.”


As far as generics manufacturers are concerned, then, the era of bio-generics has already begun – and many of them are executing strategic moves to ensure their place is secure. Sandoz, as we’ve mentioned, has grand plans to become a major player in bio-generics, a key part of its growth strategy.

As well, Teva Pharmaceutical Industries Ltd., the world’s biggest generic drug-maker, has bought manufacturing plants in Mexico and Lithuania through its 2004 acquisition of Sicor Inc., enabling it to produce bio-generics overseas. Recently, the Israeli firm struck a deal with Procognia Ltd. covering the use of the latter’s glycoanalysis technology on two biopharmaceuticals. This move should add at least some of the analytical expertise that Teva will need to prove equivalence of its biogenerics.

And generic drug maker Barr Pharmaceuticals Inc. is positioning itself in this space by bidding for Pliva d.d., a Croatian company capable of manufacturing bio-generics. The two companies already have a partnership to develop and market in the U.S. and Canada a generic version of G-CSF (granulocyte colony stimulating factor, the basis of Amgen’s white blood cell booster Neupogen).

Biotech innovator companies still have some time before the patents on their blockbuster medicines start to expire. It’s a sure bet they are making plans of their own to fend off the coming onslaught of generic biopharmaceuticals, plans that must take into account its inevitability.