Spending on drugs produced by biotech-nology has been steadily increasing, and is projected by one estimate to account for over a quarter of all prescription drug spending by the year 2010 (REF. 1). Some of these drug products now cost 10–20 times more per daily dose than small-molecule drugs1. Increasing expenditures and the high prices of some branded biotechnology products have highlighted the absence of lower-cost ‘generic’ substitutes for these drugs — usually called ‘follow-on’ protein products (BOX 1, Note 1). In this article, we attempt to explore economic issues in the follow-on protein product debate using three measures: total sales, product complexity and patent expiry.

Basis of analysisWe collected sales and product data for a number of biotechnology-derived therapeutic protein products, including proteins for therapeutic use (enzymes, cytokines and other proteins), growth factors, immunomodulators and mono-clonal antibodies. We excluded from our sample some categories of highly complex protein products, such as vaccines and blood or plasma-derived products (including recombinant and plasma-derived co agulation factors). For all products included in this study, we identified each

product, its proprietary name, regulatory pathway (new drug application (NDA) or biologics license application (BLA)) (BOX 1, Note 2), molecular weight and total prescription sales in the United States. We evaluated IMS Health sales data for 84 therapeutic protein products that had combined retail and non-retail sales of US$39.3 billion in 2006 (REF. 2).

We also organized products into ‘classes’, based on the therapeutic use or the structural similarity of related products, determined an estimated patent expiry based on published reports, and categorized each protein as either a non-glycosylated protein, glycosylated protein, PEGylated protein (BOX 1, Note 3) or monoclonal antibody. These categories were loosely based on the complex protein categori-zation matrix developed by US Pharmacopeia (USP)3, and were used to organize these prod-ucts into general classes of product complexity.

As illustrated in TABLE 1, molecular-weight increases seem to correlate with the complexity of the products, as might be anticipated. Smaller products are often non-glycosylated proteins and the largest thera-peutic proteins are mainly represented by complex monoclonal antibodies. Although molecular weight cannot be expected to fully capture a protein’s complexity, it is an easily quantifiable measure that reflects key aspects of complexity. So, with this simple measure, we can at least make initial comparisons between products and product classes.

Distribution of protein productsThe distribution of sales of therapeutic protein products is highly skewed (FIG. 1). Although the majority of the products in our

O u t lO O k

Economic issues with follow-on protein productsMichael Lanthier, Rachel Behrman and Clark Nardinelli

Abstract | The economic effects of the possible introduction of ‘follow-on’ protein products have been the subject of recent debate. Here, we aim to explore the economic issues surrounding this debate using three measures: total sales, product complexity and patent expiry. Our analysis shows that the sales of therapeutic protein products are concentrated in a relatively small number of branded products, which may be the most attractive targets for follow-on development. For the years 2013–2015, we estimate that products representing US$20 billion in annual sales — approximately half of all sales in 2006 — can be expected to lose patent protection.

Box 1 | Additional notes

Note 1. ‘Follow-on’ protein products refer to proteins and peptides that are intended to be sufficiently similar to an approved product to permit the applicant to rely on certain existing scientific knowledge about the safety and effectiveness of the approved protein product. For further discussion, see REFS 10,11.

Note 2. Protein and peptide products are either approved by the US Food and Drug Administration under section 505 of the Federal Food, Drug and Cosmetic Act (FD&C Act) or licensed as biological products under section 351 of the Public Health Service Act (PHS Act), depending on the nature of the product. There are two abbreviated approval pathways for drug products approved under the FD&C Act at sections 505(b)(2) and 505(j) (21 USC §§ 355(b)(2) and 355(j), respectively). There is no abbreviated pathway for approval of follow-on protein products licensed under the PHS Act analogous to those for drugs approved under section 505.

Note 3. Glycosylation and PEGylation (addition of polyethylene glycol (PEG) groups) represent additional chemical modifications made in the synthesis of a therapeutic protein to improve the pharmacological properties of the product.

Note 4. Engel and Novitt12 estimate Medicare Part B cost-savings of US$14.9 billion over fiscal years 2007–2016. Express Scripts13 estimates savings to the US healthcare system of US$71 billion over 10 years. Avalere Health14 estimates US$3.6 billion of savings to the federal government between 2008 and 2017. The Congressional Budget Office estimates US$0.2 billion savings in national spending on biologics over the years 2009–2013 and a total of US$25 billion between 2009 and 2018 (REF. 15).

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sample have annual sales under US$250 mil-lion, products in the top 15% of sales capture roughly two-thirds of all therapeutic protein sales. Several of these top-selling products are highly complex proteins, including a number of monoclonal antibodies. Further observations from our analysis include:•More than half of the protein products

with measurable sales have total sales under US$100 million.

•Twelve blockbuster protein products have sales greater than US$1 billion. These

products comprise a considerable portion of the US$39.3 billion in total sales of all therapeutic proteins.

•Half of these blockbuster drugs are the most complex protein products (as assessed by molecular weight).

• Protein products approved as NDAs under the Food, Drug and Cosmetic (FD&C) Act are on average less complex (as measured by molecular weight) than those licensed in BLAs under the Public Health Service (PHS) Act.

overall, just 29 therapeutic protein products (20 approved under BLAs and 9 approved under NDAs) had annual sales exceeding US$250 million, representing over 90% of all sales revenues. The concentra-tion of sales of therapeutic proteins among a small number of products is particularly noteworthy. It suggests that the savings to public and private payers that result from a follow-on protein products programme, at least in the short term, may largely depend on follow-on product development for these few products.

For reasons described in more detail below, follow-on proteins are likely to be significantly more costly to develop than are small-molecule generic drugs. We therefore expect that product sales will be an important factor in determining which protein products are targeted by follow-on developers. For the purposes of our analysis and discussion, we focus primarily on the highest revenue products, which we define as products with annual revenues exceeding US$250 million. We do not exclude the possibility that lower revenue protein products may also attract follow-on versions; however, we find that the US$250 sales revenue threshold captures over 90% of the total sales revenue for protein products in our data, and so will probably capture most of the products of interest to follow-on developers.

Focus on key products and classesThe distribution of protein products by sales and molecular weight lends itself to further groupings of related products that have similar therapeutic use or structural similarity. FIG. 2 shows our suggested groupings. Most products with sales exceeding US$250 million fall into one of the seven product classes: erythropoietins, granulocyte-colony stimulating factors (G-CSFs), insulin, interferon β, human growth hormone (hGH, somatropin), interferon α and monoclonal antibodies. We describe briefly some of the defining characteristics of these seven classes.

Erythropoietins. This class includes three protein products that are among those gener ating the highest revenue in 2006, epoetin α (Epogen), epoetin α (Procrit) and darbo poetin α (Aranesp), a more recently developed, longer-acting agent than epoetin α. These products, which are licensed in BLAs under the PHS Act, stimulate the production of red blood cells and are used in the treatment of anaemia associated with chronic kidney disease and chemotherapy-induced anaemia.

Table 1 | Summary of key therapeutic protein products

Trade name Product Approval pathway

Number of amino acids*

Approximate MW (da)

Non-glycosylated protein

Forteo Teriparatide NDA 34 4,118

Byetta exenatide NDA 39 4,187

Humalog insulin lispro NDA 51 5,808

Humulin insulin NDA 51 5,808

Novolin insulin NDA 51 5,808

NovoLog insulin aspart NDA 51 5,826

Lantus insulin glargine NDA 53 6,063

Betaseron interferon β-1b BLA 165 18,500

Neupogen Filgrastim BLA 175 18,800

Genotropin Somatropin NDA 191 22,125

Nutropin Somatropin NDA 191 22,125

Glycosylated protein

Avonex interferon β-1a BLA 166 22,500

rebif interferon β-1a BLA 166 22,500

epogen/Procrit epoetin α BLA 165 30,400

enbrel etanercept BLA 934 150,000

Aranesp Darbepoetin α BLA 165 37,000

PEGylated protein

Pegintron Peginterferon α-2b BLA 165 31,000

Neulasta Pegfilgrastim BLA 175 39,000

Pegasys Peginterferon α-2a BLA 165 60,000

Monoclonal antibody

rituxan rituximab BLA 1,328 145,000

Herceptin Trastuzumab BLA 1,330 146,000

Humira Adalimumab BLA 1,330 148,000

Synagis Palivizumab BLA 1,320 148,000

Avastin Bevacizumab BLA 1,320 149,000

Xolair Omalizumab BLA 1,324 149,000

remicade infliximab BLA 1,308 149,100

erbitux cetuximab BLA 1,326 152,000

Lucentis ranibizumab BLA 445 48,000

*estimated number of amino acids are given for monoclonal antibodies. BLA, biologics license application; MW, molecular weight; NDA, new drug application.

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FD&C Act (n = 25)PHS Act (n = 54)

Aranesp

Epogen

Procrit NeulastaEnbrel

Remicade

Rituxan

Avastin

Herceptin Humira

Lantus

Avonex

Granulocyte-colony stimulating factors. This class consists of the products filgrastim (Neupogen) and pegfilgrastim (Neulasta), a longer-acting PEGylated form of filgrastim. They are used to treat neutropaenia, a condition characterized by a decrease in neutrophils, a type of white blood cells that protect the body against bacterial infec-tions. Neutropaenia is a common side effect of chemotherapy treatments for cancer. These products are also regulated through BLAs.

Insulin. recombinant insulin products for the treatment of diabetes include Humulin and Novolin, which are structurally identi-cal to the insulin produced by the human pancreas, and the more recently intro-duced insulin analogues Lantus, Humalog, NovoLog, Levemir and Apidra. Insulin analogues are structurally modified to alter their properties, making them either faster- or longer-acting than regular human insulin. Insulin and insulin analogues are regulated through NDAs under the FD&C Act.

Interferon β. This class includes the inter feron β-1b product Betaseron and interferon β-1a products Avonex and rebif. These products are used for the treatment of multiple sclerosis (MS) and are regulated through BLAs. Copaxone, a synthetic mixture of four amino acids that is approved under an NDA, is also indi-cated for treatment of MS and competes with these products.

Interferon α. This market is led by two products, peginterferon α-2a (Pegasys) and peginterferon α-2b (PegIntron), which are used to treat chronic hepatitis C, often in combination with ribavirin. Standard inter-feron products that preceded these newer PEGylated products, roferon (interferon α-2a) and Intron-A (interferon α-2b), are also marketed, but are less frequently prescribed for hepatitis C, as studies have shown that combination therapy with PEGinterferon is more effective than com-bination therapy using standard interferon. Standard interferon products are used for other indications, including treatment of certain types of cancer. Interferon α products are regulated through BLAs.

Human growth hormone. This class of recombinant proteins includes several somatropin products, which are used for a number of indications. Genotropin and Norditropin lead this category in sales

and are used to treat growth hormone deficiencies and various conditions associ-ated with growth failure. other somatropin products are approved for different uses, such as Serostim for HIv-associated wasting or cachexia, and Zorbtive for the treatment of short-bowel syndrome. These products are regulated through NDAs.

Monoclonal antibodies. As a class, mono-clonal antibodies have diverse therapeutic applications, including cancer, rheumatoid arthritis, psoriasis and asthma. For our purposes, we consider monoclonal anti-bodies as a single class because of their structural similarity and because they are considered highly complex proteins4. It should be noted that etanercept (Enbrel), one of the top-selling thera peutic proteins, is structurally classified as a fusion protein, but shares a similar mecha-nism of action with the monoclonal anti-body products adalimumab (Humira) and infliximab (remicade). All three products are tumour necrosis factor α inhibitors, and are approved to treat both rheumatoid arthritis and psoriasis.

As shown in FIG. 2b, more than 80% of protein product sales in 2006 were from products in these seven classes, making it reasonable to assume that much of the activity we can expect in follow-on protein develop-ment will occur in these classes5. It should also be noted that although 2006 figures show similar sales levels of monoclonal anti-bodies and erythropoietin products, sales of

erythropoietins have been declining, whereas sales of monoclonal antibodies are currently showing rapid growth5.

Patent expirations for marketed productsAlthough assessing sales and complexity might begin to reveal products that could attract the greatest interest from follow-on product developers, such products can be marketed only after patent protection for the innovator product expires. Determining a definite patent expiration date for a pro-tein product can be extremely difficult, as they are usually covered by multiple patents, with patents covering not only the product itself but also the manufacturing processes. Expert opinion differs on when certain protein products will lose their patent protection, and unpredictable legal and legislative events could influence how follow-on developers navigate through the existing patent landscape6. We have catalogued information gathered from public sources, including news and other published reports, public statements and reports by innovator companies, to esti-mate when certain products are most likely to lose patent protection. Based on these sources, we conclude that patent protec-tion for the largest-selling branded protein products in the US market is unlikely to expire before 2012 (FIG. 3).

only a handful of protein products are currently off-patent, and several of those are approved in NDAs under the FD&C Act. over the next 4 years very few additional

Figure 1 | Therapeutic protein products displayed by us sales and molecular weight. This figure shows selected therapeutic protein products displayed according to sales in the US in 2006 and their molecular weight. The regulatory pathway (Public Health Service (PHS) Act or Food, Drug & cosmetic (FD&c) Act) under which each product was approved by the US Food and Drug Administration is also indicated. Source: REF.2

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b

a

Approved under NDA

Biologic products:US$39.3 billion

Total US prescription drug sales 2006: US$274.9 billion

Erythropoietins

Monoclonal antibodies

hGH

Insulins

G-CSF

IFN-β

IFN-α

Other: BLA

Other: NDA

2006

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Aranesp

Erythropoietins US$10.1 billion

Epogen

Procrit

Fusion protein US$3.1 billion

Remicade

Rituxan

Avastin

Herceptin Humira

Synagis

XolairErbitux

Lantus Avonex

IFN-β US$2.2 billion

hGH US$1.0 billionFD&C Act (n = 9)PHS Act (n = 20)

Monoclonal antibodies US$10.6 billionG-CSFs US$3.9 billion

IFN-α US$0.7 billion

PegIntron PegasysLucentis

Insulins US$4.0 billion

Neupogen

Enbrel

Neulasta

products are expected to come off patent. Although there is substantial uncertainty about when individual protein products will lose patent protection, if our assessment of patent expirations holds true, during the years 2013–2015, products representing over US$20 billion of market value — roughly half of protein product sales in 2006 — can be expected to go off patent.

Challenges for follow-on productsBecause of the complex methods used to produce therapeutic proteins, the time and cost required to develop a follow-on product

are expected to be significantly greater than for generic small-molecule drugs. once a reference product is selected, a follow-on developer will need to establish an expres-sion system that will produce the follow-on product and develop a commercial scale manufacturing process that will involve a closely monitored process of purification, formulation and testing of the product7. According to one estimate, the develop-ment time for a follow-on protein product could range from 5–8 years compared with as little as 1–2 years for a generic small-molecule drug8,9.

The US Food and Drug Administration (FDA) has acknowledged that there are important differences between protein drug products and small-molecule drugs, and agency scientists have outlined some of the complex scientific challenges facing follow-on protein products10,11. Current and future technical and scientific advances may help address these challenges, and experience gained outside the US — in particular, in Europe, where the first ‘biosimilar’ products are beginning to reach the market — might also influence development in the US. Still, establishing follow-on status to a reference protein product will probably be more com-plex and time-consuming than meeting the approval standards under the FD&C Act for generic small-molecule drugs.

Potential savings from follow-on productsrecently, several published analyses have attempted to estimate the potential for savings to insurers and the federal govern-ment that might be derived from the avail ability of certain follow-on protein products. These include analyses by Engel and Novitt, Express Scripts, Avalere Health and the Congressional Budget office, which estimate savings ranging from US$3.6 billion (to the federal government) to US$71 billion (to health insurers) over the next 10 years12–15 (BOX 1, Note 4). This broad range of estimates highlights the question of where the realistic expected savings for a follow-on protein product programme might fall. Having identified the seven key markets in which follow-on products are most likely, we see several reasons for initial conservative estimates of savings in the near-term. •revenues for therapeutic proteins are

concentrated in a small number of branded products, which suggests a limited number of attractive follow-on product candidates.

•roughly one quarter of therapeutic protein sales are for products in the mono clonal antibody class, which are larger than most other therapeutic proteins and are glycosylated unless modified. The majority of monoclonal antibody products do not begin coming off patent until 2015, and are unlikely to attract follow-on products in the early stages of a follow-on review programme.

•The erythropoietins and G-CSF class of products have high sales and moderate protein size, but are reported to have patent protection for their first-generation products until at least 2013. Both markets also include a competing longer-acting

Figure 2 | selected therapeutic protein products by product class. a | Selected products with annual sales exceeding US$250 million displayed according to US sales and molecular weight, and grouped in seven product classes. b | Sales by product class and as a fraction of total US prescription drug sales. BLA, biologics license application; FD&c, Food, Drug and cosmetic; G-cSFs, granulo-cyte-colony stimulating factors; hGH, human growth hormone; iFN, interferon; NDA, new drug application; PHS, Public Health Service. Source: REF. 2.

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patent2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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InsulinsErythropoetins

hGHMonoclonal antibodies

IFN-βG-CSF

IFN-αOther product classes

HumulinNovolin BetaseronNutropin

Genotropin

Enbrel

Epogen/Procrit

Avonex

Remicade

Neulasta

Rituxan

Lantus

Herceptin

Aranesp

HumiraAvastin

PegasysSynagis

PegIntron

NovoLog

Neupogen

HumalogRebif

Byetta

second-generation product within the class (Aranesp and Neulasta, respectively) that has additional years of patent protection, which could add an additional barrier to entry for a follow-on to the first-generation product.

• In the 1980s, somatropin and insulin were among the first recombinant DNA products to be approved by the FDA, and were approved under the NDA approval pro cess. recently, omnitrope (soma-tropin) became the first recombinant hGH product to be approved under an abbreviated approval pathway10. Insulin has similarly been approved as an NDA, but has not yet been approved under an abbreviated mechanism. Insulin ana-logues, which have been gaining a share of the diabetes market, are reported to have 5 or more years of patent coverage remaining.

• The leading interferon α products PegIntron and Pegasys are reported to have patent coverage until 2015.

•Betaseron is the only approved BLA with sales over US$250 million that appears to be facing patent expiry in the next 5 years. However, it has far lower sales than the newer interferon β products Avonex and rebif, which are estimated to have patent protection until 2013. Copaxone, which was approved under the FD&C Act, is facing patent expiry in 2014. If follow-on products referencing Copaxone were approved, they could compete in this market.

Summaryour analysis shows that the sales of thera-peutic protein products are concentrated in a small number of branded products. Many of these products are complex proteins that are reported to have patent coverage for several more years. However, if reported patent expiration estimates hold, in the not-too-distant future, a significant number of important protein products with large current sales will lose patent protection. The majority of these products were licensed under the PHS Act, which lacks an abbreviated pathway for approval of follow-on products, creating uncertainty for potential developers of follow-on products.

Michael Lanthier, Rachel Behrman and Clark Nardinelli are at the US Food and Drug

Administration, 5600 Fishers Lane, Rockville, Maryland 20857, USA.

Correspondence to M.L. e-mail: michael.lanthier@fda.hhs.gov

Disclaimer: this article was prepared by the authors in their private capacities. No official support

or endorsement by the US Food and Drug Administration is intended or should be inferred.

doi:10.1038/nrd2636 Published online 25 July 2008

1. Express Scripts. Press release 25 April. Biotech Drug Spending Increases 21 Percent Even as Growth in Rx Expenditure Slows. Express Scripts web site [online], <http://phx.corporate-ir.net/phoenix.zhtml?c=69641 &p=irol-newsArticle&ID=989907&highlight=> (2007).

2. IMS Health. IMS National Sales Perspectives: Retail and Non-Retail Combined Purchases, January–December 2006 (2007).

3. Bhattycharyya, L. et al. Equivalence studies for complex active ingredients and dosage forms, matrix of protein types. AAPS J. 7, e786–e812 (2005).

4. Sheridan, C. First generic biologics finally approved. Nature Rev. Drug Discov. 5, 445 (2006).

5. Aggarwal, S. What’s fueling the biotech engine? Nature Biotech. 25, 1097–1104 (2007).

6. Manheim, B. S. Jr, Granahan, P. & Dow, K. J. ‘Follow-on biologics’: ensuring continued innovation in the biotechnology industry. Health Aff. 25, 394–404 (2006).

7. Biotechnology Industry Organization (BIO). A Brief Primer on Manufacturing Therapeutic Proteins. BIO web site [online], <http://www.bio.org/healthcare/pmp/factsheet1.asp> (2002).

8. Grabowski, H. G. Statement before Committee on Oversight and Government Reform (COGR), United States House of Representatives. COGR web site [online],<http://oversight.house.gov/documents/20070416132526.pdf> (2007).

9. Grabowski, H. G., Cockburn, I. & Long, G. The market for follow-on biologics: how will it evolve? Health Aff. 25, 1291–1301 (2006).

10. Woodcock, J. et al. The FDA’s assessment of follow-on protein products: a historical perspective. Nature Rev. Drug Discov. 6, 437–442 (2007).

11. Woodcock, J. Statement before Committee on Oversight and Government Reform (COGR), United States House of Representatives. COGR web site [online],<http://oversight.house.gov/documents/20070326104056-22106.pdf> (2007).

12. Engel & Novitt, LLP. Potential Savings That Might Be Realized By the Medicare Program From Enactment Of Legislation Such As The Access To Life-Saving Medicine Act (H.R.6257/S.4016) That Establishes A New cBLA Pathway For Follow-On Biologics. A Report To Pharmaceutical Care Management Association (PCMA) Based Upon A Preliminary Assessment Of Available Data. PCMA web site [online], <http://pcmanet.org/assets/2008-03-25_Research_EN%20Paper%20on%20Follow-on%20Biologics%20Jan.%202007.pdf> (2007).

13. Miller, S. & Houts, J. Potential Savings of Biogenerics in The United States. Express Scripts web site [online], <http://www.express-scripts.com/industryresearch/outcomes/onlinepublications/study/potentialSavingsBiogenericsUS.pdf> (2007).

14. Ahlstrom, A., King, R., Brown, R., Glaudemans, J. & Mendelson, D. Modeling Federal Cost Savings from Follow-On Biologics. Alvare Health web site [online], <http://www.avalerehealth.net/research/docs/Modeling_Budgetary_Impact_of_FOBs.pdf> (2007).

15. Congressional Budget Office Cost Estimate. S. 1695 Biologics Price Competition and Innovation Act of 2007. CBO website [online], <http://www.cbo.gov/ftpdocs/94xx/doc9496/s1695.pdf> (2008).

Figure 3 | current sales and estimated patent expiry of selected pro-tein products. Selected therapeutic protein products with annual sales exceeding US$250 million displayed according to US sales, estimated

year of patent expiry and product class. G-cSF, granulocyte-colony stimulating factor; hGH, human growth hormone; iFN, interferon. Source: REF. 2.

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