Pfizer Takes Risk For Biosimilar Followers

| About: Pfizer Inc. (PFE)

Pfizer’s (NYSE:PFE) upcoming US launch of the Remicade biosimilar Inflectra will be closely watched, as it could provide a template for the debuts of lookalikes of huge targets like Humira, Enbrel and Avastin.

Johnson & Johnson (NYSE:JNJ) has vowed to defend its remaining Remicade patent estate in the courts, meaning that the Inflectra launch will be at risk and, if unsuccessful, could be very costly for Pfizer. The outcome no doubt will be instructive for other biosimilar players like Amgen (NASDAQ:AMGN) and Novartis (NYSE:NVS), who have received US FDA approval for their products but have yet to launch.

Exclusive to 2027?

Inflectra will be launched in November even though Johnson & Johnson is contesting Pfizer’s right to do so in a lawsuit contending that the biosimilar sponsor infringes patents on cell culture media. The patent in question here would potentially extend Remicade’s market exclusivity to 2027, a date far beyond analysts’ expectation of biosimilar competition, so a J&J win would come as a surprise.

The lookalike launch

US sales ($m)

Product

Company

2016e

2018e

2020e

2022e

Remicade

Johnson & Johnson

4,750

4,551

2,756

2,148

Inflectra

Pfizer

3

50

92

113

Source: EvaluatePharma

Click to enlarge
Click to enlarge

In J&J's third-quarter earnings call today, its pharmaceuticals head, Joaquin Duato, said because of the litigation any biosimilar launch should be considered at risk, meaning that if the courts decided that the remaining patent was valid Pfizer could be expected to pay three times J&J’s losses.

Pfizer obviously agrees with the sellside view that the remaining intellectual property is not strong enough to withstand a court challenge, and thus is willing to risk paying potentially hundreds of millions of dollars in damages. That court challenge, assuming it comes, has the potential to set some early precedents for actions taken under the Biologics Price Competition and Innovation Act, for which case law is evolving.

This should gladden Amgen. The launch of its recently approved Humira biosimilar Amjevita will depend on knocking down residual intellectual property that Abbvie (NYSE:ABBV) has vowed to defend.

While the Remicade outcome is not necessarily directly translatable to Humira, it is the case that AbbVie similarly believes that it can string out market exclusivity to 2022 and beyond, even though its main compound patent falls in December 2016 (Read my lips: no Humira biosimilars until 2022, November 2, 2015).

The group believes that it can do so on the basis of formulation, methods of use and manufacturing patents – much as J&J has tried – although analysts today suggest that Amjevita (ABP 501) should enter in 2017 or 2018.

Likewise, Novartis has approval for Erelzi, a biosimilar of Amgen’s own Enbrel. Erelzi’s launch is delayed because of a lawsuit over infringement of patents that Amgen claims will extend exclusivity to 2029, an incredible 31 years after its US launch date.

Leerink analyst Geoffrey Porges wrote last month that he does not believe biosimilars of either Humira or Enbrel will be launched at risk before 2018 because of ongoing litigation over key composition patents.

It’s on

Meanwhile, Pfizer’s decision to set a 15% discount to the wholesale acquisition cost of Remicade – which was $32,700 in 2017 – represents what may be viewed as smaller than expected savings. After discounts, EvaluatePharma calculates the per-patient cost of Remicade at $26,471 in 2015, or a 19% discount; therefore, Pfizer will need to sell Inflectra at a greater discount than it has announced so far to gain payer formulary access.

Today, J&J said it was prepared to compete based on its patient assistance program and broad coverage – 48% of privately insured patients pay nothing out of pocket for Remicade. In addition, it makes the argument that patients already stable on Remicade should not be switched, a pitch aimed at physicians.

Assuming that Pfizer's Inflectra launch is deemed legal, this next phase of the launch, where pricing and access are fought over, will be equally closely watched.