CONTRARY to popular opinion, biologics, a large molecule typically derived from living cells and used in the treatment, diagnosis, or prevention of disease, have been around for a long time and regulations overseeing biologics can be traced back to the Biologics Control Act, 1902 in the United States of America (also known as the Virus-Toxin Law).
This Act was passed after a tragedy in St Louis in 1901 where contaminated antitoxin serum derived from the blood of horses used for the treatment of diphtheria resulted in the death of 13 children.
For most of the 20th century, new vaccines were discovered for diseases such as polio, pertussis, German measles and influenza as well as blood and plasma products for hepatitis screening and subsequently HIV testing.
In the latter part of the 20th Century we saw the development of new therapeutic proteins and monoclonal antibodies that have advanced almost all areas of medicines.
Today, biologics already account for almost 23% of global expenditure on pharmaceuticals and seven out of the top 10 selling pharmaceuticals globally are biologic medicines, including therapeutic proteins, DNA vaccines, antibodies, and fusion proteins.
These are produced through genetically manipulating living cells to create required proteins rather than through the more traditional chemical synthesis.
The regulations for biologics now include the regulation of vaccines, blood and blood components, allergenic patch tests and extracts, human immunodeficiency virus (HIV) and hepatitis tests, gene therapy products, cells and tissues for transplantation, Insulin, protein therapeutics, antibodies and new treatments for the treatment of cancers and other serious diseases.
Nonetheless, biologics adoption in Asia Pacific has been slow, constituting only approximately 12% of total pharmaceutical spend within the Asia Pacific region due to:
● High costs of treatment for biologics
● Inefficient healthcare reimbursement systems
● Relatively poorer logistics infrastructure to manage cold chain
● Patchy Patent Laws resulting in resistance in registering the biologics in some countries
Biosimilars
Biosimilars are biological products that are almost an exact copy of an original product that is manufactured by another company and approved by the relevant Pharmaceutical Regulatory Body. In the case of Malaysia, the competent regulatory body would be the National Pharmaceutical Regulatory Agency (NPRA) under the aegis of the Malaysian Ministry of Health.
Biosimilars differ from small molecule generics in that the end product is highly similar in terms of quality, safety and efficacy but not identical to the originator, requires a full quality dossier supported by comparability data and also requires appropriate pre-clinical and clinical comparability data.
The global market for biosimilars are estimated to be USD24.1 Billion in 2019 but expected to grow to USD48.1 Billion by 2023, effectively doubling within 5 years. While the market in the Asia Pacific region was estimated at USD1.8 Billion in 2016 but expected to grow to USD16.8 Billion by 2025, a growth of almost 10-fold within 10 years.
The main drivers for biosimilar growth are:
● Expiry of patents / data exclusivity
● Clearer regulatory pathways
● Investments by non-traditional Pharmaceutical players
● Innovative manufacturing and analytical platforms
● Increased efforts by Governments to contain Healthcare costs
● Improved Industry convergence with emergence of Contract Manufacturing Organisations (CMO) and Contract Research Organisations (CRO)
Biosimilars are already the next major disruptor within the healthcare landscape.
Innovator response
Given the expiry of patents globally for originator Innovators, the speed of biosimilars being introduced globally is expected to increase and this is putting pricing pressure on the Innovator products with each introduction of a registered biosimilar.
The Patent Act 1983 in Malaysia already provides patent protection of 20 years for Innovators but they have developed strategies to try and extend patent lifetimes or delay the advent of biosimilars into Malaysia. Some of the strategies used by them to extend patents or to maintain exclusivity in the market include the following:
● Ever greening patents i.e. utilising various legal, business or technological strategies in order to extend patents that are about to expire;
● Confusing Patent Regulators who lack experience for example in small molecules, patenting polymorphism;
● Introduction of double labelling or second brand of originator products in order to stratify the market pricing e.g. original product for private sector with a relabelled product for the Public sector. This relabelled product is then sold at a much cheaper price;
● Influencing tender authorities to include superfluous specifications in order to disqualify biosimilars; and
● Influencing Healthcare Professionals that biosimilars are of lower quality.
When all else fails, we then see predatory pricing where the Innovator will drop the price drastically in order to retain its volume position in the market place.
Duopharma Biotech Berhad (formerly known as CCM Duopharma Berhad) (“Duopharma Biotech”)
A publicly listed Malaysian owned Pharmaceutical company, Duopharma Biotech has been involved in biologicals since 2012 with the first joint clinical partnership with Pangen Biotech, Korea to do a Phase III Clinical Trial on Erythropoietin (EPO) in Malaysia and Korea.
It also partnered with Biocon, India for introduction of their human insulin and subsequent monoclonal antibodies range and also engaged in post market clinical surveillance on the products.
Duopharma Biotech is the first domestic local manufacture to set up a dedicated pharmaco-vigilance unit and also clinical study unit and a pioneer in halal initiatives and received the World’s First Halal Certification for prescriptive medicines and also biologics.
“We have been involved in trying to bring biosimilars into Malaysia for over seven years and have witnessed, first hand, the strategies adopted by Innovators to either extend patents on products that have gone off patent globally or alternatively to retain monopolies on supply of these products by utilising predatory pricing to stop development of biosimilars,” said Leonard Ariff Abdul Shatar, Group Managing Director of Duopharma Biotech.
“The high price of biologics was one of the main drivers for Duopharma Biotech to focus on bringing into Malaysia, biosimilars which were much more affordable to patients in Malaysia,” he added.
Duopharma Biotech is currently the largest in terms of volume and second largest in terms of value sales of pharmaceuticals in Malaysia.
Actual examples
Before Biocon announced its intention to set up a human insulin facility in Malaysia in 2010, human insulin was priced at RM42/box in the government sector and RM104/box in the private sector. Biocon, through Duopharma Biotech, was awarded a three-year contract to supply human insulin in late 2016 at a price that was 24% cheaper than the prices back in 2011 even though the Malaysian ringgit has depreciated markedly during the period. This represented a RM32 million savings to the government per year.
Another Biocon Biosimilar product, Insulin Glargine has caused the prices to fall from what was originally RM198/box in 2011 by 16% in 2019. During the latest government tender submission, Biocon’s product would provide savings to the government of at least RM6 million yearly compared to prices in 2011.
“Biocon, through Duopharma, introduced its first monoclonal antibody, Trastuzumab which caused prices to fall by over 50%, representing an RM11mill savings to the Malaysian government.
“Before Duopharma Biotech announced its development of biosimilar EPO in 2011, EPO supply to the government was RM25/dose. During the latest Government tender submission, Duopharma Biotech’s biosimilar EPO submission price was a drop of over 40% compared to the prices in 2011. This represents another RM9 million savings to the Malaysian Government.
“In total, the Malaysian government would benefit approximately RM58 million per annum with the introduction of just four biosimilars compared to prices in 2011 before the advent of the biosimilars. And that does not include the savings for patients in the private sector” said Leonard.
Issues
The advent of biosimilars into Malaysia has definitely meant more patients are now able to avail themselves of cutting edge treatment modalities at a more reasonable cost.
Accessibility to these new products has improved, led by the NPRA, that have assisted in order to ensure early confirmation of safety and efficacy and subsequent registration of these biosimilars even though Innovators have been working overtime to disparage and attempt to slow down registrations.
However, from a government purchasing point of view, there does not seem to exist a mechanism that would encourage the development of biosimilars in Malaysia.
“We saw this clearly when the Innovator overnight dropped the price of Trastuzumab by 52% in a recent government tender and was still awarded the tender even though the biosimilar had quoted a 50% drop in price. To put this into perspective, for the same volume of Trastuzumab, the contract price is now RM21 million over two years relative to RM43 million under the previous contract price before the introduction of the biosimilars.”
The Government would not have enjoyed such a marked drop in price if not for the biosimilar. Nonetheless, biosimilar does not enjoy any part of the contract because it is a policy to award to the lowest bidder. Even though that same bidder has been taking advantage of their monopoly for many years before hand,” said Leonard.
Apparently, this is not an easy issue as the Malaysian government’s primary concern, on one hand, is to ensure quality medication at a reasonable price to assure accessibility by patients but at the same time, the Government needs to also ensure that competition survives to provide the counter balance.
“It’s important that the government balances its requirement for cheaper drug prices by creating an ecosystem where biosimilars are encouraged to seek registration to increase the level of competition which will invariably lead to more patients gaining access to these important biologics.
“Policy ambivalence towards the predatory pricing we are witnessing today in the biologics space, either by way of dropping prices to stop competitors registering biosimilars or drastically dropping prices once a biosimilar has achieved registration, will only provide short term gains at the expense of creating a more competitive environment,” said Leonard.
Malaysia definitely has the unique opportunity to create a competitive biologics landscape to improve accessibility of these treatments to patients who would not have ordinarily been able to afford these treatments. Some countries in Europe, where Biosimilars have been growing at a very fast pace, have even gone so far as to allow for interchangeability of Biosimilars with Innovator products.
The government policy has to be crafted to encourage this competitive landscape and not create an ecosystem that discourages introductions of biosimilars as all the Innovator need do is drop prices drastically to keep the biosimilar out of the public and private health space.
A more long-term strategy is required to encourage competition and put a stop to the predatory pricing that we are witnessing today. Let us create a market place that allows more patients to be treated at a much lower cost with quality biosimilar products. Biosimilars – a case of more for less.
