Insulin Market Competition: Payers Watching FDA 'Transition' Policy

FDA policies around the upcoming regulatory reclassification of insulins as biologics may impact payers' ability to leverage competition and pricing in the market, Express Scripts suggests.

Payers are watching whether FDA's evolving policy on designating insulins as biologics may inhibit competition from less expensive products and worry that innovator products could gain extended marketing exclusivity as part of the transition.

The government "is considering re-categorizing insulins as biologics, which could extend patent protection in a category that already is experiencing dramatic price increases," Express Scripts Holding Co. Chief Medical Officer Steve Miller said in a July 5 blog post.

The post, which focuses on promoting biosimilar competition, notes the upcoming transition adds "complexity" to prospects for lower-cost competition to insulins. Insulin products have been under significant pressure from payers in recent years and hefty price increases have met with demands for hefty rebates. Average insulin costs increased 7.2% in 2016 and totaled $287.22 per month, according to Express Scripts.

FDA is working on guidance implementing the provision of the Biologics Price Competition and Innovation Act directing that some protein products traditionally approved under the Food, Drug and Cosmetic (FD&C) Act will be "deemed to be licensed" as biological products under Section 351 of the Public Health Service (PHS) Act as of March 23, 2020.

A draft version of the guidance was released in March 2016 and caused consternation across stakeholders. Insulins are the biggest product group that would be affected by the transition. (Also see "Insulin Exclusivity: How Big Will The Fight Be?" - Pink Sheet, 21 Mar, 2016.)

Next steps in the process of implementing the transition are not clear. The guidance is among the FDA actions that the Trump Administration may be considering withdrawing as part of a broad deregulation campaign (Also see "FDA Getting Reg Slashing Directive In Trump Executive Order" - Pink Sheet, 23 Jun, 2017.).

"We support elimination because the guidance is very problematic," a Novo Nordisk AS spokesperson told the Pink Sheet. "But FDA does need to provide new draft guidance in the near future to describe how they will transition products appropriately."

From the perspective of payers, the existing guidance offers both positive and negative outcomes. On the plus side, it proposes that products approved under the FD&C Act before March 23, 2020 would lose any remaining marketing exclusivity – save for orphan drug protection – on the transition date, which could enable competition to reach the market faster. The proposal is strongly opposed by manufacturers.

FDA said transition products would not be entitled to the 12-year exclusivity that biologics receive when initially licensed as standalone BLAs, which would also be reassuring to payers.

Guidance Could Delay Competition

On the other hand, the agency proposes that transition products that have not received final approval by March 23, 2020 would not be approved under the FD&C Act and must be resubmitted as a BLA, which could delay market entry for competitive products that could help payers lower costs.

Groups representing generic drug and biosimilar developers have argued such an approach could significantly disrupt product development timelines and potentially force sponsors to postpone their submissions until after March 23, 2020. (Also see "FDA Biologic Transition Plan Creates 'Dead Zone' For Applications, Sponsors Fear" - Pink Sheet, 23 May, 2016.)

As a result, the proposed policy would create a regulatory "dead zone'' of a year or more between the time that any "rational" sponsor would submit an application for a cheaper copy of a transition drug (because it may not get approved in time) and the first date a biosimilar application could be submitted (March 23, 2020), the generic and biosimilar developers said.

The only insulin follow-on currently on the market is Eli Lilly & Co. and Boehringer Ingelheim GMBH's Basaglar (insulin glargine), which was approved under an NDA and is not a true generic. The product is a copy of Sanofi's Lantus.

Samsung BioLogics/Merck & Co. Inc. and Mylan Pharmaceuticals Inc./Biocon Ltd. have Lantus biosimilars in late-stage development and are expected to enter the market from late 2017 to 2018. Biosimilar versions of short-acting insulins are further behind in development, with expected entry in 2018/2019. Sanofi itself has a biosimilar of Lilly’s Humalog (insulin lispro) in Phase III.