Biosimilar competition is supposed to be a big, hulking $110 billion threat to pharmaceutical companies. But in the near term, it’s looking rather kittenish.
That's especially true after the U.S. patent office on Thursday rejected Amgen's effort to knock out two patents on AbbVie's global anti-inflammatory bestseller Humira. Amgen hoped to get its Humira competitor to market by 2017. Its failure is rough news for its biosimilar comrades -- and more.
"Biosimilars" are generic versions of biologic drugs, which are medicines created from living organisms, as opposed to those made more traditionally, using chemicals. They are vastly more expensive to research, make, and get to market than regular generic drugs. It's a regulatory nightmare, further complicated by the web of patents firms use to keep their drugs exclusive on the market for as long as possible.
Humira's main patent expires this year, but it has 70 others that run to 2027. Amgen wanted to use an accelerated legal process called Inter Partes Review (IPR) to invalidate some of the most important ones without a prolonged court battle. The patent office declined to even conduct a review, saying that Amgen had little chance of success.
This is yet another speedbump for companies trying to get biosimilars on the market in the U.S. The first such drug approved here, a competitor to Amgen's Neupogen, launched in September only after a series of delays and a lengthy legal battle. Others will likely be slow to follow.
AbbVie shares have gained more than 7 percent since the news broke. Amgen's failure helps eliminate the biggest near term threat to Humira's sales, which made up 63 percent of AbbVie revenue in 2014 and are expected to hit $14 billion this year. Analysts had expected that biosimilar competition would hurt sales by 2018. Thursday's news bolsters AbbVie's repeated assertions that sales will grow through 2020 to more than $18 billion and that its patent protections will last until 2022 in the essential U.S. market. It also gives AbbVie more time to find successors to Humira and build on its big bet on cancer drugs.
The effect on Amgen is somewhat mitigated by the fact that the company is playing both sides of the biosimilar fight. It has more than $10 billion in annual biologic sales that it's vigorously defending against biosimilar competition, even as it works on its own set of copycats. Other companies working on U.S. Humira biosimilars, including Novartis, Coherus, Mylan, and Baxter, now face a more difficult legal obstacle course and a longer timeline in getting their versions into the U.S. market.
More broadly, the news signals that big drugmakers are pretty darn good at these patent extension fights and that IPR isn't quite the potent tool for knocking out patents that generic drugmakers had hoped. Insurers and pharmacy benefit managers, who have high hopes for the ability of biosimilars to reduce prices, won't be happy at the prospect of continuing to pay top dollar -- about $2,500 a month -- for this wildly popular drug and others.
AbbVie's win is much more than just an Amgen loss.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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