Regulators could recognise different 'commercial dynamics' in biologics market, says expert

Life sciences and intellectual property law specialist Christopher Sharp of Pinsent Masons, the law firm behind Out-Law.com, was commenting after the Competition and Markets Authority (CMA) in the UK turned its attention to issues of competition in the biologics market, where the patent rights for many blockbuster drugs have recently ended or are nearing expiration.

The CMA issued a formal statement of objections to pharmaceuticals giant Merck Sharp & Dohme (MSD) over pricing of its Remicade drug, which is used to treat conditions such as Crohn’s disease, ulcerative colitis and rheumatoid arthritis.

Remicade is MSD's brand name for infliximab, which is a biological medicine derived from living material. Biologics are generally super blockbuster drugs and often billion-dollar products commonly used to treat chronic diseases.

Biologics cannot be copied exactly, unlike 'small molecule' medicines, so businesses that develop originator products are generally deemed to hold a strong market position. Near-copycat drugs can be developed to compete with originators. These are called biosimilars. Rival 'biosimilar' drugs to Remicade have been developed and are available on the market.

The CMA has taken issue with a "discount scheme" it said MSD operated for Remicade. Its provisional findings are that MSD "broke competition law by abusing its dominant position" by applying discounting to Remicade that was "likely to restrict competition from ‘biosimilar’ versions of infliximab that were new to the market". However, the CMA said "no conclusion should be drawn that there has in fact been any breach of competition law" at this stage of its investigation.

MSD has a right to respond to the CMA's provisional findings under the competition regulator's formal investigation procedures. In a statement issued in response to the CMA's statement of objections, MSD said it is "cooperating fully with the CMA’s ongoing investigation" and that it is "confident that the proceedings will show that MSD has complied with competition law at all times".

MSD said: "The discounts in question meant that infliximab was competitively priced and offered savings to the UK National Health Service, without hindering competition. The statement of objections sets out the CMA’s provisional views only – it is not a finding that MSD has infringed competition law and MSD welcomes the opportunity to respond. As a company whose products touch the lives and wellbeing of people around the world, we are committed to the highest standards of ethics and integrity."

Sharp said the CMA has been active in assessing drugs pricing issues in the pharmaceuticals market in a number of other recent cases. Those other cases concerned the pricing of small molecules products. Sharp said, though, that "different commercial dynamics are at play" in the biologics market.

Sharp said: "Whereas generic drugs manufacturers can sell an exact replica of small molecule drugs manufactured by the big pharmaceuticals once the patent term on those drugs expire, the situation is different in respect of biologics market. Originator biologics cannot be precisely copied, so biosimilar rivals take longer to develop, and incur significant research and development and regulatory costs, compared to typical generic small molecule drugs. The increased time and costs involved in developing and manufacturing biosimilars, and bringing them to market, is reflected in the fact that relatively few have successfully been brought to market in Europe."

"The commercial dynamics for biosimilars are therefore much different to those that apply in the market for generic drugs. We will need to wait to see if the way regulators assess pricing in the market for biologics reflects the different issues in play," he said.

Sharp said that the CMA case comes at a time when health authorities and commissioning groups in the UK are increasingly looking at the viability of switching patients with chronic diseases from originator biologics products to lower cost biosimilars. Switching patients can be difficult, he said.

"Because biosimilars are not identical to the originator biologic, there is often patient-based stigma," Sharp said. "Patients are understandably concerned that a switch to a biosimilar from an originator biologic drug could disrupt the effectiveness of their sometimes delicate treatment regime, notwithstanding that fact that a biosimilar will only be approved by regulatory authorities after a robust and detailed evidence based assessment."

"However, cost pressures on UK health bodies make switching an attractive prospect where the same effect of using biosimilars has been demonstrated. The challenge is patient education, and for practitioners to convince patients that have been reliant on an originator product to ease their symptoms to give their consent to switching," he said.