Inching towards the finish line

Inching towards the finish line

It seems with each passing day the FDA is inching closer to developing a path to approve a generic insulin. This past Friday FDA commissioner Margaret A. Hamburg, M.D. provided some additional insight to how this process might play out when she spoke to the attendees of the Annual Meeting of the Generic Pharmaceutical Manufacturers Association. Speaking via webcast Dr. Hamburg stated;

“Biological products are some of our most important and expensive drugs used to treat patients with a variety of serious medical conditions that are often life-threatening and certainly life-altering. But instead of being chemically synthesized like most drugs, these biological products are generally made from living material and are complex in structure…and in their action.

As I think you know, products approved under this new abbreviated pathway can be of two types—they can be “biosimilar” to, or “interchangeable” with, an FDA-approved biological product.”

Dr. Hamburg goes onto state;

“FDA has yet to receive an application for a biosimilar or interchangeable product, but we know there is much industry interest in them.  Our highly-experienced scientists tasked with reviewing biosimilar products have been meeting with manufacturers who are interested in developing such products. As of February 6, 2013, FDA’s Center for Drug Evaluation and Research (CDER) had received 50 requests for an initial meeting to discuss biosimilar development programs for 12 different reference products, held 37 initial meetings with sponsors and received 14 Investiga-tional New Drug applications (or INDs) for biosimilar development programs.”

The full text of the speech can be seen at http://www.fda.gov/NewsEvents/Speeches/ucm340870.htm

Based on this speech and other bits of information gathered by Diabetic Investor it’s becoming clear that while the process will be painstakingly slow and filed with several unknowns, a path will eventually emerge sooner rather than later. As Dr. Hamburg correctly  notes biosimilars are “some of our most important and expensive drugs used to treat patients”. The FDA and generic manufacturers also know that diabetes continues to grow at epidemic rates, meaning there is a viable market for generic insulin. As Dr. Hamburg also notes; “As of February 6, 2013, FDA’s Center for Drug Evaluation and Research (CDER) had received 50 requests for an initial meeting to discuss biosimilar development programs for 12 different reference products, held 37 initial meetings with sponsors and received 14 Investiga-tional New Drug applications (or INDs) for biosimilar development programs.”

Although she did not state that insulin was one of the 12 different reference products, it’s almost certain that insulin, both long and short acting, were among this group.

We mention this for several reasons, first as we have noted previously the major insulin companies Lilly (NYSE:LLY), Novo Nordisk (NYSE:NVO) and Sanofi (NYSE:SNY) would like everyone to believe that the hurdles to a generic insulin are just too high and that the regulatory path is one of those hurdles. While this partially true, the regulatory hurdle will not be overly burdensome. It’s also a complete fantasy to believe that the FDA is unwilling to consider a generic version of insulin, another possibility that’s been floated by the major insulin players.

Looking at the entire text of Dr. Hamburg’s speech Diabetic Investor believes that generic manufacturers will have hurdles unrelated to the FDA regulatory path, as she notes that many physicians view generics as inferior to their branded competition. Interestingly this view is held more widely with older physicians and is somewhat at odds with the fact that generics are widely prescribed today. Diabetic Investor suspects this disconnect  between perception and actually prescribing habits will be an issue for generic insulin manufacturers who will need to reassure physicians that a generic insulin is really no different than a generic version of a drug like Lipitor. The simple fact is insulin unlike a generic pill, can be a lethal drug if used incorrectly.

However, these physicians who are skeptical over whether to prescribe a generic insulin, may have little choice when a generic version actually is approved by the FDA. The harsh reality is payors will likely favor a generic insulin just as they now favor generic pills for the simple fact that generics are cheaper. The physician may prescribe the branded version but end up over-ruled by the patients’ health plan  or the patient who won’t want to pay the higher co-pay for the branded version.

Diabetic Investor believes this will be the first line of defense put up by the major insulin players when a generic does get here.  Understanding that they can’t fight and win on the price issue; they will do their best to convince physicians that a generic insulin does not measure up to their branded products. Basically they will state while the FDA has approved a generic their branded products meets higher quality standards. This will be combined with a push to play up the fact that the branded offering is better because the company has been doing this for years and better not to take the chance on some unknown manufacturer.

Just as physicians could be overruled by payors so to could the major insulin companies. The harsh reality is patients, some of whom will also be skeptical of a generic, will be won over when they see the price differential.  The fact is patients are really no different than payors and eventually the lowest cost option will win out. While this won’t stop the branded players from playing up quality and experience factors, Diabetic Investor believes these efforts will fail over the longer term.

Like so many aspect of healthcare in general, the issue isn’t always about which is the best therapy option rather which is the most cost effective therapy option. With healthcare costs continuing to rise and the costly nature of treating diabetes generic insulin will have many supporters if for no other reason than it cost less.

The reality is it’s no longer a question of if a generic insulin will get here but when and just how much damage will it inflict on the major players in the insulin market. To believe anything else is not just foolish but dangerous. The real question is are the major insulin companies realistic about the future and making plans to deal with it or are they ignoring the obvious. As  Henry Kissinger wrote; “The future must be shaped or it will impose itself as catastrophe.”