Pfizer, J&J in legal battle that could shape biosimilars market

21 Sep 2017


A legal brawl between two of the world's largest drug companies – Pfizer and Johnson & Johnson - could shape the future of a nascent market of copycat drugs or biosimilars that are intended to bring down the cost of the most advanced and expensive medicines.

Pfizer filed a lawsuit on Wednesday against J&J for using ''anticompetitive'' tactics to quash its cheaper version of a powerful rheumatoid arthritis drug. Johnson & Johnson issued a statement saying the lawsuit had no merit.

The suit in the US District Court for the Eastern District of Pennsylvania alleges that J&J's exclusionary contracts and other anticompetitive practices have denied US patients access to therapeutic options and undermined the benefits of robust price competition in the innovative and growing biologics marketplace for patients.

It further claims that J&J's systematic efforts to maintain its monopoly in connection with Remicade (infliximab) by inappropriately excluding biosimilar competitors violates federal antitrust laws and undermines the principal goals of the federal Biologics Price Competition and Innovation Act (BPCIA).

''By offering highly similar therapeutic options for patients, doctors and health plans, biosimilars foster therapeutic choice and increase access to biologic medicines around the world,'' said John Young, Pfizer's group president, Essential Health.

''For US patients and providers to realise the benefits of biosimilars, new and existing biosimilar entrants should have a fair chance to compete with originator products – now and in the future – based on lawful pricing and access practices. By supporting the availability of biosimilar therapies, we can help ensure that patients have better access to a wide range of lower cost therapeutic options.''

If Pfizer is successful, it could discourage brand name companies from using deals with insurers to limit competition in the emerging biosimilar market, The Washington Post points out. If Pfizer loses, the case could highlight a strategy those companies could continue to use to deter competition.

Pfizer's copycat version, Inflectra, was the second of a new generation of biosimilar drugs to be approved, after the Affordable Care Act paved a regulatory path.

Biosimilars - medicines that are highly similar to biologic drugs that battle cancer, multiple sclerosis, or high cholesterol - are seen as a modern-day version of generic drugs: a way to ensure that medicines at the cutting-edge of science would, after a limited period of time, see the price competition that has historically helped keep pharmaceutical spending in check over the long run.

The US biosimilars marketplace is at a relatively early stage of development compared to other countries such as those in Europe, according to BusinessWire. Since Congress passed the BPCIA, which became law in 2010, three biosimilars approved by the US Food and Drug Administration (FDA) have been launched. Inflectra was launched by Pfizer in the US in late 2016 as the first biosimilar monoclonal antibody (mAb).

But the lawsuit provides a window into company tactics that may make vibrant competition harder to achieve.

''This is the first lawsuit that is challenging anticompetitive behavior in the biologics industry, and that is very important because this is the wave of the future - this is where a lot of the innovation is taking place today,'' Michael Carrier, a law professor at Rutgers Law School, told The Post. ''It really is an uncharted path, in terms of what competition should look like going forward.''

For nearly two decades, Johnson & Johnson has been selling Remicade, an injectable biologic drug that is widely used against rheumatoid arthritis, Crohn's disease and other inflammatory disorders. The drug last year generated $4.8 billion in US sales.

After Pfizer won approval for its biosimilar version in April 2016, J&J attempted to "suppress that competition and deprive society of those benefits ... to maintain its stranglehold," according to the lawsuit.

Remicade carries a sticker price of around $26,000 per year for typical uses, and Inflectra's price is around $21,000. Those list prices do not reflect secret rebates that manufacturers provide.

The lawsuit alleges that J&J entered into anticompetitive, exclusionary contracts with insurers, hospitals and clinics that blocked 70 per cent of commercially insured patients from having access to the drug.

Pfizer alleges that the contracts "coerce" insurers not to cover Inflectra by threatening to withhold the rebates that they would otherwise receive on the price of Remicade.

Pfizer said it offered discounts and rebates as much as 40 per cent off Inflectra's list price and promised many customers to keep the price lower than J&J's drug. However, it noted that its competitor continues to have 96 per cent of the market ''even while maintaining prices far above competitive levels''.

"This is, in our view, a bellwether case - and what we are seeking is for J&J to refrain from using these sorts of exclusionary contracting arrangements with insurers and providers," said Laura Chenoweth, deputy general counsel at Pfizer. "Most importantly, we want to create an open playing field for biosimilars... to bring these drugs to a broader group of patients, at a better price."

Johnson & Johnson dismissed the lawsuit as being without merit and said that competition was working.

''We are effectively competing on value and price, and to date Pfizer has failed to demonstrate sufficient value to patients, providers, payers and employers,'' Scott White, president of Janssen Biotech, a division of J&J, said in a statement.

''Competition is bringing down the overall cost of Remicade, and will continue to bring down costs in the future.''

The lawsuit highlights the differences between the biosimilar and generic drug markets.

For years, brand name companies have fought tooth and nail to prevent generic companies from intruding into their markets by getting generic versions approved.

But once those drugs enter the market, Andrew Mulcahy, a health policy researcher at the RAND Corporation, told The Post that typically, generic companies duke it out with one another on the price of their products. Meanwhile, the brand-name product typically stays at its original price (or gets more expensive) and simply loses market share.

In this case, the brand-name company appears to be trying to compete directly with the biosimilar competition. And one of the biggest effects of such behavior could be to limit future competition.

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