Published on March 10, 2014
2014 GPHA ANNUAL MEETING, 19-21ST FEBRUARY, 2014, ORLANDO, FLORIDA, USA Molly Bowman, Thomson Reuters firstname.lastname@example.org This year marks the 30 th anniversary of the Hatch-Waxman Act, which brought about the abbreviated drug approval pathway as well as the growth of the generic drug industry. Generic Pharmaceutical Association (GPhA) chairman of the board Craig Wheeler, President, Momenta Pharmaceuticals, highlighted that GPhA’s continuing mission of defending and advocating for the generic industry, an industry that has saved the American public over $1.2 trillion over 30 years. The GPhA’s priorities for the year ahead include working on the product approval process, including label changes and biosimilars. Mr Wheeler acknowledged that the industry continues to face challenges such as patent settlements, pricing transparency, and take-back policies. The association needs to find solutions that do not undermine the industry, by advocating through coalition building, and finding allies that can help move policy forward. A record number of approximately 725 attendees listened to expert panels discuss major business, regulatory trends, and issues facing the generic industry. In addition to diverse company perspectives, insights were presented by the FDA and analysts. The three day event also provided attendees with numerous opportunities to socialize and network with key decision makers in the industry. GPHA ACTIVITIES Over the past year, GPhA representatives testified 50 times to assist in defeating initiatives that prevented patient access to medicine. Ralph Neas, President and CEO, GPhA, reviewed the activities of the association in 2013, including the continued support of a sustainable healthcare system, and the assurance of access to affordable medicines for hundreds of people around the world. Mr Neas pointed out that since the enactment of Hatch- Waxman, R&D spending has soared to $50billion/year. Some of the top priorities of the GPhA in 2014 include protecting safe and effective patient access to medicines, working with the FDA to implement all aspects of GDUFA, as well as continuing to work with OGD and other offices to not expand their review requirements. Mr Neas pointed out that the proposed rule to label requirement changes will create confusion that the FDA has sought to prevent. Additionally, the proposed rule could result in fewer drugs coming to market, increased patient spending, as well as impact companies choosing not to enter the markets. Additional priorities for the GPhA include viable options to label requirements, REMS issues, patent settlements, drug shortages, and the increased utilization of generic drugs. The GPhA also continues to promote policies that encourage the development of a biosimilar market in the US, as well as prevent misguided policies that restrict the substitution of biosimilars. BIOSIMILAR OUTLOOK The challenges and issues surrounding the biosimilars market were the focus of a panel discussion led by Ronny Gal, PhD, Senior Analyst, Sanford C. Bernstein & Co. The panelists agreed that the FDA is very involved in the development of biosimilars, in particular they referenced the ongoing development of characterization technologies. Carlos Sattler, M.D. Vice President, Clinical Development & Medical Affairs, Sandoz, Inc, pointed out that the learning experiences in Europe have been invaluable, and that the EMA and FDA are sharing best practices. In some cases, the ongoing technological developments around biosimilars have led to a better understanding of older products than when they were approved. Andrea Miller, J.D., Senior Vice President, Head, Global Complex Products Operations, Mylan, Inc, noted that if companies can get the process right, they can define it; by developing QbD, they know the parameters throughout the process. Continuing the discussion of analytical tools, Dr Sattler explained that companies have powerful tool kits, allowing for a thorough analysis of amino acid sequence, structure, and functionally. Ms Miller added that some of the analytical tools can pick up differences not seen in clinical trial outcomes. Process development requirements and the impact they have on development decisions was also a key discussion point. Dr Sattler pointed out that understanding the end point is one of the most important aspects of getting the
2 molecule right, stressing the importance of highly similar attributes. This has to be considered in addition to developing a process that has a high yield, which requires a significant commitment to manufacturing. Ms Miller commented that there should not be additional hurdles set up regarding expanding indications, explaining that if a company has shown through characterization that the product is interchangeable with the innovator drug, then it should carry through all indications. It was also noted by Dr Sattler, that the first monoclonal antibody was approved in Europe based on two clinical trials and the indications were extrapolated. Dr Gal inquired if either panelist felt there were more barriers on the analytical side or the clinical side of product development. The panel agreed that with the FDA there is more of a clinical barrier, but that they are evaluating on a product by product basis, reviewing comparability protocols, manufacturing process changes, and whether the process is defined by QbD. Dr Sattler noted that regarding the use of a foreign reference product, the FDA lead and the EMA followed to establish biosimilarity. Both panelists felt that biosimilars may be a step ahead in the development of a global regulatory program. CDER announced there could be guidance on interchangeability this year, and Dr Sattler pointed out that discussion between industry and regulators has happened, although there is a higher barrier for interchangeability than biosimilarity. Dr Gal inquired if either panelist felt that the regulatory pathway was moving faster than the patent pathway and wondered whether the industry would be supportive of the creation of a book detailing patents around biologic products, similar to the Orange Book. The panel was supportive of the idea, and pointed to the development of the Orange Book being critical for the development of the generic industry. The panelists were also asked if they have faced issues around limited access to source material. Ms Miller explained that there will be limited access to any product, large or small, if the product is subject to REMS, but that they have not run into any limited access issues. The panelists were in agreement that they would not expect anything different from what happened with generics, such as INN prescribing issues, naming legislation by states, and counter detailing adding to the specter of doubt. However, many of these issues could be met by being able to advocate with truth to patients and physicians. Dr Sattler articulated that competition makes companies very nervous, but that competition has spurred innovation, pointing to Roche’s development of follow-on-biologics, which they are hoping will fill in the gap once biosimilars come into the market. Lastly, the panel was asked what attributes in a company are advantageous in the biosimilar market: a generic specialist or big pharma mindset. Ms Miller explained that this will not be a commodity market, and the industry is going to see barriers between generic versus brand companies become even more blurred. Companies are going to have to provide services and participate in a different environment of patient dialog, in addition to a different kind of manufacturing commitment. Dr Sattler believes companies will need characteristics of both types, being quick and flexible but with tremendous financial investment to commit. Overall, the panel expects partnerships will develop the skill sets that will be most effective, and that it will depend on the market as well as the molecule. GDUFA IMPACTS & UPDATES The GDUFA is the largest piece of legislation impacting the generic drug industry since Hatch-Waxman. During a panel session focused on the legislation, Kate Beardsley, J.D., Principal, Beardsley Law, PLLC, noted that GDUFA is the culmination of the Hatch-Waxman act, and is demonstration of the act’s success. The FDA and OGD are in the practice of implementing processes to ensure the agency meets their goals and the generic industry has stepped up to cope with industry wide issues. The critical issue is the cultural change at the FDA according to Gordon Johnston, R.Ph., M.S., Principal, Gordon Johnston Regulatory Consultants LLC. The panelists agreed that communication between the industry and the agency will be vital, and that both parties have to ensure there are no informational gaps to slow down the approval. Sheldon Bradshaw, J.D., Partner, Hunton & Williams LLP, noted that companies have to be strategic about their submissions, and that the process was set up to incentivize the submission of the most complete applications. The ongoing implementation of GDUFA means increased obligations, commitments, accountability, and heightened quality standards for both the industry and the FDA. Prior to the GDUFA implementation, the average time to approval of an ANDA was 34 months. According to the GDUFA commitments, by the end of FY2017 the agency will review and act on 90% of complete electronic ANDAs within ten months of submission, and will review and act on 90% of PASs within 6 months. Kathleen Uhl, M.D., Acting Director, Office of Generic Drugs, FDA, emphasized that the FDA and industry share responsibility for the success of the GDUFA program. Other OGD performance goals under GDUFA include reducing the backlog of 2866 original ANDAs and 1882 prior approval
3 supplements (PAS). By FY2015, 70% of controlled correspondence will take place in four months from the date of submission, reducing to two months in FY2016, and to 90% of correspondence within two months in FY2017. Dr Uhl acknowledged that industry upheld its GDUFA commitments in year one, including paying required user fees, but stressed that the FDA needs more than money to ensure program success. Substantial process changes are also necessary, as well as IT improvement, and efficient implementation. Some of the industry practices that will help to guarantee GDUFA success include ensuring transparency between business partners, completing site identification forms, ensuring that responses to complete response letters (CRL) address all deficiencies, as well as submitting DMFs six months prior to ANDA submissions. Dr Uhl noted that GDUFA commitments do not apply after the first major amendment to an application, and that companies are encouraged to review the GDUFA commitment letter. US MARKET Some of the notable events in the generic industry over the last year include generic price increases, drug shortages, and an increase in mergers and acquisitions moving many generic players into the brand space. Last year also saw some important court decisions, including the Supreme Court decision that led to the proposed changes regarding generic labeling rules and the FTC vs Actavis patent settlement decision. According to Doug Long, Vice President, Industry Relations, IMS Health, prescriptions were up 2.2% in 2013. This was the best performance in the last 5 years, and while generics in 2013 grew in prescriptions, brands did not. Generics saw 63% of dollar growth in 2013, with 83% of all prescriptions being generic. The leading therapy classes in 2013 include oncology, antidiabetics, mental health, respiratory, and pain. Mr Long noted that it is expected that $94 billion will be exposed to generic competition by 2019 excluding biologics. Over the past 10 years, the US has seen new molecular entity approvals average 26 drugs per year, with most in specialist driven therapies. Since 2007, the market share of specialty drugs has increased 6%, with a 27.6% increase in the share of pharmaceutical sales. Mr Long explained that 10% of US healthcare dollars are spent on pharmaceuticals, but it is rare to see cost containment policies enacted on other aspects of healthcare spending. Medicaid consumes 11% of the federal budget, and 24% of state budgets. Some of the cost containment opportunities that Mr Long pointed to addressed issues such as frequent re-admission, coordination of care, and patient adherence. Some of the major considerations for the US generic market in the coming years include more commoditization, fewer small molecule opportunities, and fewer solitary exclusivity periods. Many generic companies are moving up the value chain with portfolio optimization. Mr Long drew attention to opportunities such as follow-on-biologics and biosimilars, noting that incremental improvements in innovation are no longer valued but the quality of innovation is improving. The key things to watch in 2014, according to Mr Long, include generic labeling rules, FDA guidance on biosimilars, the impact of consolidated global generic purchasing, and the expectation of more mergers. GLOBAL BUSINESS CONSIDERATIONS The global economy is being redefined, although the US is returning to growth, sustainability through 2020 is uncertain and emerging markets are experiencing a slowdown. Erik Peterson, M.A., Partner and Managing Director, Global Business Policy Council presented a look at some of the major changes around the world. Many countries have seen shifting social structures, including a redefined age distribution, for these countries it is only a matter of time before age-related expenditures crowd out public investment for younger generations. Mr Peterson pointed to the onset of hyperurbanizations, where cities continue to assume ever higher levels of political, economic, and commercial importance. Additionally, there is a global energy reset being induced by the shale fracking revolution, and a shifting global energy demand. This is occurring in conjunction with looming global water constraints having a growing economic impact. According to Mr Peterson, water scarcity could translate into a cost of more than $2 trillion in global output by the year 2020. The rising resource volatility, global demand for food, water, and energy is outpacing the increase in the population. The International Energy Agency reported that current global trends in energy supply and consumption are patently unsustainable - environmentally, economically, and socially. At the same time, technologic advances are expanding deep and pervasive computing. Mr Peterson noted that big data enables a massively quantified world; the capacity to engage in ever more hyper computation will open up
4 vast new possibilities in modeling and other applications. With connected sensors, behavioral data and real time analytics will become all-pervasive creating a radically quantified world. Furthermore, Mr Peterson presented that the ongoing hyper-automation and growing robot revolution will have profound implications for the economy. Industrial robot sales are expected to increase by 9% in 2014, in medical, commercial and science frontiers. Mr Peterson explained that there are numerous opportunities for those leaders who formulate and implement strategic approaches to addressing change. CEO PERSPECTIVES The second day of the conference opened with a panel session led by Dr Gal and Randall Stanicky, Managing Director, Equity Research, RBC Capital Markets. The panel was asked how GDUFA’s plan for parity of inspections will impact the industry. Allan Oberman, President and CEO, Teva Americas Generics, pointed out that there was indeed a non-level playing field, noting that this was explained in the first GDUFA report. The FDA documented that it was in US manufacturing facilities every few years, while in Indian facilities every 7-10 years. Tony Mauro, President, Mylan North America, noted that quality is a global challenge for the industry, and that having facilities in countries that are close to your customers is necessary. In agreement, Jeff Watson, President, Apotex Corp, North America, added that it has to be a cultural core competency. The panelists all articulated a desire to see the FDA continue to drive for quality standards, in addition to more transparency. Mr Wheeler pointed out that companies in China and India are incredibly fast at adapting, with very different cost structures. Panelists also discussed the barriers around the biosimilars pathway, including the patient and payer acceptance in the market, noting that pressures on the healthcare system will make these adapt rapidly as the market has a need for these products. Mr Wheeler noted that there is a need to work on the approval process, and that the GPhA members have the opportunity to shape that process. Mr Oberman outlined that companies have to ask for more dialogue regarding complex products, and whenever there is a way to position the dialogue, they need to find the right platform to explain why these products are important to the public. The panel was also asked to weigh in on the importance of vertical integration, Thomas Moore, President, Hospira noted that although they are limited in the API manufacturing space, there was interest going forward into vertical integration. Mr Oberman noted that vertical integration allows for a cost structure to work with customers, although it is not always an advantage, it can become an important element. The acceleration of consolidation within the industry was also discussed, which Mr Wheeler noted was forcing changes in the industry that were previously unseen. According to Mr Mauro, consolidation provides an opportunity to partner in new ways, as well as increase the breadth of offerings in scale and ability to supply customers. Mr Oberman pointed out the increasing pressure on the generic industry, and that more customers are going global, therefore it is important to look for synergies. LABELING CHANGES The FDA’s recently proposed rule to unilaterally change generic drug labels to include new warnings and safety information was examined by Robert Pollock, M.S., R.Ph., Senior Advisor and Member of the Board, Lachman Consultant Services, Inc. Currently, sameness of labeling is a statutory requirement, and ANDAs rely on the safety and efficacy information of the RLD. This avoids confusion in the marketplace for patients, physicians, and healthcare providers. Mr Pollock noted that one of the underpinnings of Hatch-Waxman was consistent labeling to ensure that generic drugs are as safe and effective as brand name drug counterparts. If branded drug manufacturers need to make changes to labels, they can use the changes being effected (CBE) labeling regulation. However, CBE changes are not available for generic drug applicants and if any changes are necessary, the FDA and OGD must review any supplements. Mr Pollock noted that OGD has informed the industry that the number of PAS has increased to 150 per month for labeling alone. The proposed rule would significantly increase the number of submissions, and require resources in order to review these submissions that would likely take away from GDUFA goals. Additionally, healthcare professionals would have to decide what label to rely on, although the safety profiles of the generic and the brand the same, the labels would be different. Mr Pollock pointed out that currently pharmacists and healthcare professionals have clear guidance, they understand what the labeling means and that it will be consistent, this rule creates exceptional confusion for them and for their patients.
5 The industry cost will also be enormous, as companies defensively change their labels to reduce their liability exposure. Mr Pollock polled generic companies and found that FDA mandated safety warning label changes can range between $50,000-400,000 depending on the product. Therefore, this rule will likely increase the cost of generic drugs significantly. According to Mr Pollock, there needs to be consistent labeling to avoid confusion and chaos in the marketplace, and the rule should not be enacted in its current form. In order to ensure patient safety, the FDA needs to be the clearing house for generic drug label changes. Mr Pollock articulated that this is one of the biggest issues since Hatch-Waxman and GDUFA, asking GPhA members, generic companies, and industry stakeholders to participate in the discussion. The policy perspective on the FDA’s proposed label changes was presented by Scott Gottlieb, M.D., Resident Fellow, American Enterprise Institute for Public Policy Research. Noting that this regulation seems to have had the purpose of obviating the Supreme Court decision, and implementing through regulation what the administration tried to previously through legislation. In explaining the public health rationale, Dr Gottlieb looked at a systematic analysis of label changes to generic drugs. The majority of label changes were not around new safety profiles of older drugs, but instead about a known side effect requiring more prominence on labeling. Dr Gottlieb noted that individual companies aren’t equipped to make those decisions about the prominence of safety information, and that the FDA should assume the responsibility to take that kind of action. Additionally, when making this recommendation the FDA based their expectations of label change submissions on the brand business, which is naïve in assuming the labeling decisions of branded products world would carry over to generic drugs. Some of the policy alternatives that have been discussed include the PAS process as a reasonable alternative to the labeling change process. Dr Gottlieb believes that while it may be a more efficient and reasonable alternative, it pre-supposes generic drug companies bear an increased responsibility of pharmacovigilance, and agency reporting. Instead, the FDA needs to take upon itself the responsibility to do this. Dr Gottlieb outlined an ideal construct, which would see the agency create a program of systematic reviews of old labels and determine when updates are necessary. The FDA is currently creating a data warehouse, and could use this to create processes as well as make judgments about label changes. The largest risk Dr Gottlieb sees is for smaller companies, who cannot tackle pharmacovigilance costs or take on liability risks. Once these companies leave the market there will be reduced competition in the marketplace as well as increased costs to consumers. The website for the event can be found here: http://www.gphaonline.org/events/past-events/2014-annual-meeting
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