Friday, April 20, 2018

A Decade+ Later, Biosimilar Insulin Is Here

More than a decade ago (the article I published on my blog was originally posted on January 8, 2007 although I began research into the subject the preceding summer, see the article at http://blog.sstrumello.com/2007/01/business-of-diabetes-real-story-behind.html for more background), I asked a number of very legitimate questions (some of which were later answered, others were not), with the most notable one being about why so many other diabetes medicines had "generics" but insulin did not (in spite of the fact that its patents had expired years ago).  Unfortunately, in my research, I discovered the some of the sordid inner-dysfunction of the U.S. pharmaceutical market, and now, 11 years later, the pharmaceutical industry still behaves as if it was business as usual, making few (if any) fundamental changes, and some downright sleazy operating practices to try and turn a century-old product into a cash cow (although truth be told, the NET margins for insulin have barely increased over time, but list prices have risen by over 1,000% over the past decade alone).  Catch my recent post on the recent price hikes at http://blog.sstrumello.com/2016/11/changes-in-price-of-insulin-in-graphics.html for a visual -- its simultaneously stunning and sickening.

Patents for recombinant DNA (rDNA) biosynthetic human insulin expired years ago, yet no money-savings generic insulin varieties EVER came to market -- and that's still true even today.  Initially, the drug industry tried to blame others for runaway prices (that has become a recurring pattern with the pharmaceutical industry; it's never big pharma's fault, and the industry ALWAYS blames others for the industry's own failures), claiming that Federal lawmakers failed to pass legislation governing generic biopharmaceuticals (also known as biosimilars and follow-on biopharmaceuticals).

The problems were that:

a) because insulin made via recombinant DNA technology was the very first-ever biotechnology medicine, insulin is grandfathered -- and governed as -- a "small-molecule" drug like aspirin, even while it was made using biotechnology, so that was just an unfounded excuse NOT to bring cheaper versions to market and
b) once Congress finally DID pass legislation to regulate copies of biopharmaceuticals as a provision of the Affordable Care Act (also known as the ACA or Obamacare) in 2010, the drug industry then worked overtime to prevent all generic (biosimilar) competition from ever coming to market with a barrage of frivolous lawsuits over patents, processes, weights and measures, packages, delivery devices, trademarks, etc.

In the end, most of the lawsuits failed, but the industry succeeded in delaying (but not preventing) biosimilar competition from coming to market.  This is a standard industry practice, and the costs are already factored into business plans.  Every delay means millions in pharma profits, so its an established industry practice and most every company in the pharmaceutical industry knows how the game is played very well.

Without getting into the lengthy history of insulin over the last 50 years, lets just say that after more than a decade, biosimilar insulin varieties have FINALLY hit the U.S. market.  This could (not assuredly) bring some relief to people with diabetes in the United States, although the rebate wall that keeps prices artificially high remains firmly in place.  On the latter issue, there have been recent promises from UnitedHealthcare to share some of the rebates with patients (see https://nyti.ms/2H89R0L for the news) and Aetna will do the same (see https://bit.ly/2HgX7tj for more), yet still other big insurers including Anthem and Cigna have not yet moved in the same direction.  However, Cigna is in the process of acquiring pharmacy benefits manager (PBM) Express Scripts (see https://nyti.ms/2FrhLSe for the news on that), whereas Anthem is in the process of starting its own PBM which will start operations next year (see https://bit.ly/2oZjPe7 for the announcement).  Anthem's move prompted the sale of Express Scripts given that its business prospects were shrinking.  Its possible when the dust has settled and the PBM business as we know it has disappeared by being folded into big insurance, we could see some meaningful change on that front, although its far from certain.

Basaglar, First Insulin Biosimilar (of Sanofi's Lantus) Made by Lilly and Boehringer Ingelheim

But the bestselling insulin on the market known as Lantus (U-100 insulin glargine rDNA origin) made by Sanofi would lose its patent exclusivity in 2015, so rival Eli Lilly & Company, Inc. and its partner Boehringer Ingelheim announced they would start selling a biosimilar branded as Basaglar (which is just another version of U-100 insulin glargine rDNA origin).  Note that I use these terms biosimilar and follow-on biologic interchangeably in this post.  News of Lilly's (and Boehringer Ingelheim's) plans to introduce a Lantus biosimilar emerged in 2014 (it was not a secret, the filings for FDA approval made them known to the industry via its infamous Orange Book, and the FDA tentatively approved Basaglar in August 2014).

Predictably, Sanofi filed a lawsuit (see http://reut.rs/1nbk2nP for the news) accusing Lilly of infringing on seven patents related to insulin and devices used to deliver it.  Just over a year later, on September 28, 2015, there was news that Sanofi had settled its lawsuit against Lilly pertaining to Basaglar (see https://prn.to/2HfAMw8 for the press release).  In my opinion, the lawsuit against was settled pretty quickly because Sanofi was suing a company that knew the insulin business better than almost anyone.  In the end, a settlement of the terms Sanofi wanted and Lilly was willing to pay was the most cost-effective manner to avoid a costly trial in which a judge and/or jury would decide the outcome.

Lusduna Nexvue and Semglee are Other Lantus Biosimilars Pending Introduction Soon

Lilly/Boehringer Ingelheim are not alone in pursuit of Lantus biosimilars.  Two other companies are also seeking to introduce Lantus biosimilars, including one from Merck & Co., Inc. and co-development partner South Korea-based Samsung Bioepis which received tentative FDA approval for another copy of U-100 insulin glargine on July 20, 2017 (see the press release at  https://www.businesswire.com/news/home/20170720005270/en/Merck-Announces-U.S.-FDA-Grants-Tentative-Approval for more) which will be branded Lusduna Nexvue.

Not surpisingly, on October 24, 2017, Sanofi also sued Merck (and Samsung) over Lusdana Nexvue.  The lawsuit isn't identical to the one levied against Basaglar, Sanofi filed a patent infringement suit against Merck/Samsung in the U.S. District Court for the District of New Jersey alleging infringement on 18 patents in its suit related to Lantus (insulin glargine) and the SoloStar pens, so while Sanofi claims that more patents are being infringed upon in this case (mainly for the insulin pens; Lilly has KwikPens that are exempt from Sanofi's patent claims on SoloStar since Lilly's KwikPens are already on the market).

A third Lantus copy from Mylan Pharmaceuticals and co-development partner India-based Biocon to be branded Semglee is also pending introduction after a settlement or court ruling on similar lawsuits filed by Sanofi.  On June 17, 2017, the two co-development partners presented data on their U-100 insulin glargine product from the INSTRIDE studies at the American Diabetes Association's 77th Scientific Sessions in San Diego.  It's worth noting that the Sanofi lawsuits trigger an automatic 30-month stay under the Hatch-Waxman Act which governs insulin, and the litigation could still go to court, although it's unclear whether either will go that far.

Impressive Sales Growth of Basaglar Thus Far

So far, we already saw pretty impressive sales growth last year for Lilly's Basaglar, and that was while it was still new and not sold in all markets.  Sales of Basaglar quintupled in 2017 to $423 million (admittedly, from a low base of $86 million in 2016).  In Q4 2017, revenue more than tripled year-over-year to $154 million, from a very low base of $40 million in Q4 2016. Sequential growth was not quite as positive, with sales rising just 6% from $146 million in Q3 2017, but its still fairly early in the introduction cycle.  The transcript of that call can be viewed at https://seekingalpha.com/article/4141906-eli-lillys-lly-ceo-david-ricks-q4-2017-results-earnings-call-transcript for complete details.

That said, Basaglar already has pretty strong formulary coverage in the U.S. (Lilly has been aggressive in trying to reclaim formulary coverage it lost to Novo Nordisk over the years under Mr. Conterno's leadership), Basaglar is now preferred over Sanofi's Lantus on the CVS Caremark and UnitedHealthcare OptumRx formularies), although Basaglar will face pricing pressure on its insulin franchise in the U.S., particularly as more competing options become available for payers.  It's also worth noting that Lilly is also aggressively pursuing Medicare Part D sales to help offset high rebating in the commercial healthcare insurance channel.  Mr. Conterno cited "increased utilization in Medicare Part D starting January 1" adding, "by the way, we've seen excellent [Basaglar] uptake."

Once people try biomiliars, they are likely to use them again (assuming the price is lower, almost no one is going to pay any more for them), which is a good omen for the U.S. biosimilar industry.  Also, once there are several different manufacturers of the same type of insulin, prices are likely to come down a bit further, although the industry has a problem because it pays enormous rebates to insurance companies through their pharmacy benefits managers (PBM's), so big rebates are expected to get drugs on insurance company formularies; failure to do so means the product is less likely to sell.  The drug industry has convinced itself that incremental improvements are sufficient to drive sales growth going forward, and perhaps if its the correct incremental improvement, they'll be right.


But ... marginal improvements won't guarantee that payers will be willing to buy it for a higher price.  I think those days are over.  Payers are in control, and they aren't falling for bogus tricks pharma used in the past.  Look at Humalog sales as proof.  They are declining in the face of growing price pressure (as have prices for rival products, such as Novolog from Novo Nordisk and Apidra from Sanofi).  With a biosimilar version of Humalog recently launched in the U.S. (more on that in the next few paragraphs), we may not see huge improvements from a margin perspective.  The big insulin makers are hoping that slightly-faster versions including Novo's Fiasp which is a faster version of Novolog has already been introduced, and Lilly promises a newer, faster version of Humalog is right around the corner.  But most of the growth is coming from outside the U.S.

Why Lilly Likely Pursued Basaglar

For Lilly, the biosimilar basal insulin Basaglar filled an enormous void in its insulin portfolio because for nearly 10 years, Lilly sold no basal insulin analogue at all, only a century-old variety that many doctors and patients disliked (OK, the latter hated) using because it could be very unpredictable.  That also resulted in the company not being listed on some insurance formularies, which did not help the company's long-standing insulin business.  Several years ago, Lilly hired an executive named Enrique A. Conterno to run the company diabetes business.  Under his leadership, Lilly is no longer being dropped from formularies in favor of Novo Nordisk insulin varieties, and has even gained share, although a lack of a basal analogue meant payers had to secure those from another company.

Sanofi immediately sued Lilly over Basaglar, but because it was coming from insulin giant Lilly, Sanofi knew what it could and could not get away with.  Whether Merck or Mylan can do the same thing for their Lantus biosimilars remains to be seen.  But I stand with the idea that more competition never hurt consumers (or in this case, patients!).  We know, for example, that Mylan's Semglee is already approved in Australia (see the press release https://www.prnewswire.com/news-releases/mylan-and-biocon-receive-approvals-from-the-european-commission-and-tga-australia-for-semglee-biosimilar-insulin-glargine-300620737.html for details), so it seems as if its only a matter of time before its available at U.S. pharmacies, and the lawsuit is the main impediment right now.  While Mylan is new to the U.S. insulin market, it's no stranger to the legal environment that pharmaceutical sales in the U.S. must contend with.  Ditto for Merck.

Sanofi was probably not happy that a rival insulin-manufacturer Lilly was the first to copy its bestselling Lantus, which had been one of Sanofi's most profitable products for nearly two decades.  But it wasn't competing with a tiny startup, but one of the oldest insulin-manufacturers still in existence, so Lilly was pretty tough to bully in court.  The two eventually settled for an undisclosed amount, and I'm guessing Sanofi will expect future settlements to be comparable in size for the Merck and Mylan versions of Lantus (Lusdana Nexvue and Semglee, respectively), although as more competition emerges, the value of the Lantus product will continue to decline, hence settlements will likely decline, too.  The fact that Medicare cannot negotiate prices is a major problem that pharma wants to continue and may continue under the current Congress and Donald Trump, but at some point, the largess of taxpayer dollars being paid to big pharma will likely be challenged by lawmakers, and then the dynamic could change dramatically.

Next Category of Insulin Biosimilar: Humalog Copy from Sanofi Called Admelog


Sanofi decided it would return the favor and sell a Humalog copy (U-100 insulin lispro rDNA origin) which it secured FDA regulatory approval for on December 11, 2017.  It's slightly less clear to me what the business objective for Sanofi to introduce a Humalog biosimilar, even if its already now on the U.S. market.  However, there's definitely some tit-for-tat going on, and it may what be the industry needs in the absence of innovation.

Plus, Admelog COULD lead to cannibalization of Sanofi's own rapid-acting insulin analogue (which still enjoys patent protection, though its less likely able to command a premium given that both Humalog, and very soon Novolog will no longer have U.S. patent protection) known as Apidra (U-100 insulin glulisine rDNA origin), but it might help the company secure coverage on a few insurance company formularies.

Unlike Lilly and Novo, it does not sell all insulin varieties that it could be selling ... the company refuses to sell its old biosynthetic 'human' insulin regular and isophane sold under the brand name Insuman (I referred to that insulin brand in 2015, catch that post at http://blog.sstrumello.com/2015/01/2014-observations-in-type-1-diabetes.html for more) and I stand with my original thoughts on that.  For Sanofi, the formulary game is one the company has utterly failed at doing for anything other than Lantus.  Its more recent, higher-concentration (U-300 varieties) and combo insulin-GLP products simply aren't sufficient anymore.  Right now, it continues to offer HUGE rebates to pharmacy benefits managers (PBM's) and insurance companies to keep Lantus on many formularies.  Right now the company is selling it with discount cards, and while the price is somewhat lower than Humalog itself, its only marginally less expensive IMHO.  But when the primary means of selling it is via discount cards, then the longer-term business strategy is unclear to me.  Maybe it's just to compete with Lilly since Lilly has also lost patent protection for its only analogue?

As I noted already, it's somewhat less clear to me what the business objective for Sanofi is by introducing a Humalog biosimilar.  After all, offering Admelog COULD cannibalize Sanofi's own rapid-acting insulin analogue (which still enjoys U.S. patent protection, for the time being, anyway) known as Apidra (U-100 insulin glulisine rDNA origin), but it might help the company secure coverage on some insurance company formularies ... although the company still does not sell its old biosynthetic 'human' insulin regular and isophane sold under the brand name Insuman (noted above), which may be an impediment to getting on insurance company formularies.

As for the prospects of additional biosimilars, that is unclear right now.  I suspect that as patents expire for Novo Nordisk's Novolog (U-100 insulin aspart rDNA origin) which will be the next patent to expire, we could see biosimilar versions of that from both Lilly and Sanofi.  Merck and Mylan could decide to pursue copies as well.  We could potentially see biosimilars come from Novartis' Sandoz business unit, and while Israel's Teva is also a possibility, that company has some bigger management issues to resolve in the short-term.

But, as I wanted to see in 2006 (when I first started researching the issue), the era biosimilars is finally here.  The market dynamics are very different today from 10 years ago.  I would remind my readers that biosimilars are actually very different from non-medical switching (such as an insurance company forcing a patient who uses Novolog to switch to Humalog, which is NOT the same insulin).  In fact, so far, the incidence of complaints about biosimilars have been more about poor communications and patient confusion with patients asking if they have to switch from Lantus to Basaglar, for example, when they are really the same insulin.

Biosimilars are not generics and some patients may have issues with them.  For example, they use different vectors in culturing them, such as how Novo Nordisk uses yeast whereas Lilly uses bacteria in making insulin.  Also, each manufacturer may use different preservatives in their insulin formulations which can cause allergies in some patients, and they use different ampoule/vial shapes and/or stoppers), and the packaging colors may be different.  But the products are likely more similar than different insulin varieties are.

So far, I have NOT heard of as many reports of patient problems switching to/from biosimilars as I have with non-medical switching from one insulin variety to another.  Unfortunately, price cuts are also not as big as we've seen with traditional, generic small-molecule drugs.  But non-medical switching may be a tinderbox waiting to explode (see more at http://diabetespac.org/dpac-statement-non-medical-switching/ and http://www.keepmyrx.org/issues/non-medical-switching/ for detail) will be an ongoing debate and challenge, but I suspect (and sincerely hope) there will be fewer issues with the emerging market for insulin biosimilars.

1 comment:

Bob Fenton said...

Scott, Thank you for posting this. I have been trying to follow some of this, but your links really helped. It is still hoped that prices will be forced down, but Congress refuses to act. Bob