Biosimilars, Pharma Prospects Clarified as U.S. Politicians Make Their Move

Taking Stock after "Super Tuesday" and the FY 2009 Budget Release

The results available so far from the presidential primaries in 24 U.S. states on "Super Tuesday" indicate there is no clear winner for the presidential nomination. Republican John McCain increased his lead after winning in New York, Illinois, Oklahoma, New Jersey, Missouri, Connecticut, Delaware and Arizona. He is also projected to have won California. Meanwhile, Democrat candidates Hilary Clinton and Barack Obama are expected to continue neck-and-neck in the race. Although New York Senator Clinton is estimated to have won the big ticket states of New York and California, Illinois Senator Obama has also secured many votes, including some in north-eastern states.

Both Clinton and Obama have indicated in their election campaigns that they favour allowing the government to directly negotiate the price of prescription drugs under Medicare. Clinton is also in favour of creating an approval pathway for biosimilars and allowing the importation of drugs from countries with lower prices. Obama, on the other hand, supports increased use of generics and improving comparative clinical research. John McCain shares Clinton's support for a biosimilars approval pathway and allowing drug importation, but as a gesture to the pharma industry he is also in favour of tort law reforms that would limit excessive damage awards in product liability litigation cases.

As the battle for the presidential nomination rages in the run up to the October election, President George W. Bush appears to have picked up on some of the themes raised in the candidates' election campaigns. In the newly-released FY 2009 budget, his administration appears to endorse the idea that the FDA has the scientific expertise to provide a safe approval pathway for biosimilars (also known as Follow-on Biologics (FOBs) or biogenerics) in the United States. The FDA also said that it is preparing a proposal that should assist Congress in moving forward with legislation on biosimilars approval.

Outlook and Implications

Although there is no clear winner of the U.S. presidential primaries yet, the writing is on the wall for looming changes in the U.S. healthcare system that will have a direct impact on pharmaceuticals. Some of these changes would, in our view, make their way into policy regardless of who wins the presidential election. Companies making biosimilars and generics will be the clear winner. There is support for the creation of an abbreviated approval pathway for biosimilars from both sides of the political spectrum, while the 2009 budget statement indicates that even the current Republican administration is changing its stance. Global Insight's previous outlook has been that if Congress approved a biosimilars bill it would be vetoed by President Bush. Considering the pre-election rhetoric and the latest budget statements, we believe that the current administration could in fact endorse a biosimilars bill—partly in a bid to boost its healthcare legacy and partly to take the steam out of the political vision of the next White House occupant.

Despite this change, Global Insight retains a conservative outlook as to when workable approval guidelines will be introduced for biosimilars. Even if the FDA is given the authority to approve biosimilars by the current White House administration, the agency continues to have reservations about the science behind similarity studies and the safety of biosimilar drugs. Because of these concerns, the drug regulator would, in our view, delay the introduction of meaningful abbreviated approval guidelines for biosimilars until 2009 (see United States: 17 January 2008: Follow-On Biologics: The Evolution in the FDA's Thinking).

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