1. Key Issues Impacting The Future of Biosimilars Foley & Lardner Life Sciences Transactions Conference San Diego September 30, 2009 Michael A. Swit, Esq. Vice President

2. Standard Disclaimers  Views expressed here are solely mine and do not reflect those of my firm or any of its clients.  This presentation supports an oral briefing and should not be relied upon solely on its own to support any conclusion of law or fact.

3.  Biosimilars  Overview of Current Situation in Europe  Regulatory and Scientific Issues  Product Development Issues  U.S. Legislative Options  Waxman/Schumer  Eshoo 2 Agenda

4. Biosimilars in Europe: The story so far... Guidances  1998 – Concept paper: Development of a CPMP Guideline on Comparability of Biotechnology – Derived Products  2005 – General / Introductory guidance  2006 – Similar Biological Medicinal Products..... Quality Issues  2006 – Similar Biological Medicinal Products..... Non- clinical & Clinical issues  2006 – First specific guidances issued 3

5. 4 Biosimilars in Europe: The story so far... Guidances  Somatropin- Non-clinical & Clinical  G-CSF - Non-clinical & Clinical  Human insulin - Non-clinical & Clinical  Erythropoietins - Non-clinical & Clinical (under revision)  Interferon alpha - Non-clinical & Clinical (draft)  Low Molecular - Non-clinical & Clinical Weight Heparins

6. 5 Biosimilars in Europe: Current Approval Status  Somatropin - 2 “Biosimilar Products”  Erythropoietin Alpha- 3 “Biosimilar Products”  Erythropoietin Zeta - 2 “Biosimilar Products”  Filgrastim- 6 “Biosimilar Products”

7.  Europe is the only major territory with formal guidance for the development and approval of Biosimilars  Commitment to post-marketing safety studies  Market is developing slowly  Interchangability -- not awarded at EU level  National rules on substitution e.g. France, Spain  National rules on pricing and reimbursement  EMEA: “… the decision to treat a patient with a reference or Biosimilar medicine should be taken following the opinion of a qualified healthcare professional” Biosimilars in Europe: Current Regulatory Status 6

8.  Biologics approved under Public Health Services Act – no abbreviated pathway  Precursor? -- Comparability Guidance, April 1996  NDAs -- for few biologics (e.g., HGH, insulin) – were approved  No set criteria on appropriate data set to support approval  Evaluated on a case by case basis FDA Hasn't Defined the Processes 7

9. Equivalence  Lynchpin to traditional generic process – depends on:  Pharmaceutical “equivalents” – active ingredient, dosage form, strength, etc., must be SAME  Highly unlikely with Biosimilars –  Characterization – still a challenge even for the innovators – clinical trials may be needed to show comparability after process changes  Chances of “equivalence” conclusions faint as even a single amino acid can throw off conclusion (e.g., HGH)  Lovenox – only 70% characterized (but, is under an NDA)  Janet Woodcock, Director, Center for Drugs (before Congress, March 2007):  “there is general recognition that the idea of sameness, as the term is used in the generic drug approval process under the Federal Food, Drug, and Cosmetic (FD&C) Act and applied to small molecules, will not usually be appropriate for more structurally complex molecules of the type generally licensed as biological products under the Public Health Service Act.” 8

10. Equivalence …  Lynchpin to generic process – depends on:  Bioequivalence study (occasionally clinical studies with efficacy endpoints – e.g., topicals) –  Accurate predictability also allegedly an issue with Biosimilars  Biosimilars – even under an abbreviated pathway, will most likely more resemble an NDA than an ANDA – clinical studies to show efficacy and monitor immunogenicity concerns likely  Omnitrope® -- Sandoz’s HGH product – rumored to have cost tens of millions of dollars to develop 9

11. Substitutability  Substitution -- core of classic Generic Industry Business Model  Depends on therapeutic equivalence  Allows for minimal sales forces  Price drivers  Multiple generics common – drives price to commodity status  Biosimilar world –  Substitution – aka “interchangeability” -- may evolve, but on a very, very limited basis  Woodcock – must be able to handle repeated brand/follow-in switching without adverse events  HHS – June 2007 letter to Senate HELP Committee – no interchangeability  Thus, business model will not be multiple generics & not a commodity  Without interchangeability, the Generic’s Biosimilar IS really a branded drug 10

12. Marketing Challenges  Classic Generic – substitutability pushes sales  Biosimilar  “Generic” – will have to go out and detail  Costs higher  Not their sweet spot traditionally  Will they run into greater resistance on “substitution” from doctors and patients?  Innovator – may need to distinguish vs. its “generic”  Internal and external pressure for outcomes studies 11

13. Active Ingredient Issues  Classic Generic – many sources of API  Biosimilar  Technological barriers to API development greater; fewer sources  Foreign sources – particularly from China – will be under great scrutiny from FDA, even more so after Heparin scandal  Immunogenicity concerns are very high –  FDA -- on record that immune response is “impossible to predict”  see Dr. Janet Woodcock, FDA Deputy Commissioner, Congressional Testimony, March 26, 2007 12

14. Small vs. Large Molecule Realities  Small Molecule  Therapeutically equivalent  Same molecule  Substitutable  Price drives– and multiple generics drive price down  Insurance coverage follows ANDA approval  Marketing – cost sells; little need for formal sales & marketing staff  Legal Pathway – clear under Waxman-Hatch Act  Biosimilar  Not therapeutically equivalent  Not same molecule  Not substitutable  Price difference to brand likely smaller  Separate coverage likely needed for the Biosimilar  Will require professional sales and marketing staffs to drive utilization vs. “Brand”  Legal Pathway –  505(b)(2) – case-by-case  PHSA -- nonexistent 13

15. Generics:  Physicochemical identical to innovator drug  Healthy subject pharmacokinetic equivalence to innovator Biosimilars:  Physicochemical characterization: similar to innovator  Variable extent of preclinical data  Extensive clinical database  More like new drug application (NDA) than abbreviated new drug application (ANDA) Extensive Data Packages Needed 14

16. Biosimilar: Extensive Data Package 15 Data Omnitrope® (vs. Genotropin®) Valtropin® (vs. Humatrope®) Physicochemical characterization, purity  Nonclinical pharmacodynamics  Nonclinical toxicology  Standard BE pharmacokinetic study  Additional human pharmacodynamics  Clinical studies -- in growth hormone deficient children  Additional immunologic data 

17.  Torti Letter – September 2008 – concise statement of FDA’s then (Bush Admin.) views on Biosimilars  “Highly similar” active ingredients are sufficient standard for determination of “sameness” to allow some reliance on innovator’s approval (but so far only for NDA’d products)  Similarity can be established without reference to proprietary chemistry and manufacturing data of innovator  Identical manufacturing process is not required  Formulation differences may be allowable if they don’t impact critical features (e.g., product stability, immunogenicity)  Current medical knowledge of potential drug risks may deem certain animal toxicology studies necessary, others unnecessary  Interchangeability –possible, but very unlikely  FDA – switching should not occur and, when it does, must be approved by patient’s doctor FDA Perspective – Somewhat Clarified through Public Discussion 16

18.  Terminology -- “generic biologic” or “biogeneric” replaced by “biosimilar” – other aliases:  Follow-on protein products (FOPPs) – one U.S. version  Follow-on biologics (FOBs) – one U.S. version  Subsequent entry biologics (SEBs) -- Canada  Subsequent entry protein products (SEPPs) -- Japan  “Abbreviated” biosimilar development programs have been extensive in CDER  Data sets much closer to that of innovator drug than generic Lessons Learned 17

19. Lessons Learned …  Substitution based on therapeutic equivalence – the driver of small molecule generic utilization – highly unlikely  FDA pathway likely to be highly iterative … and slow  Consumer cost savings -- modest:  Evidence suggests discount may only be 20-25%  Utilization slow – only about 1% of somatropin Rxs were filled with Omnitrope in 2007 (source: Torti letter)  Senate Finance Committee – 9/24/09 – backed an amendment to Baucus Health Care Reform to reimburse doctors for prescribing biogeneric or biosimilar drugs at an additional six percent over the competitive rate.

20. Legislation The Future?

21. Will It Happen This Year? Top Democrat pushes for action on biotech drugs By MATTHEW PERRONE – 18 hours ago (June 8, 2009) WASHINGTON (AP) — As the Obama administration renews its health care reform effort on Capitol Hill, a top Democrat is calling for speedy action on a years long effort to create generic competition for costly biotech drugs. President Barack Obama used his weekly radio address on Saturday to call on Congress to act on his proposal to overhaul the nation's health care system. In a letter Monday, Rep. Henry Waxman, D-Calif., reminded the president of his stated commitment to lower the price of biotech drugs, high-tech injectable medications that cost more than $40 billion per year.

22. The Current Bills  Waxman Bill – HR 1427 & Schumer Bill – S 726 -- “Promoting Innovation and Access to Life-Saving Medicine Act”  Original Eshoo Bill – HR 1548 -- “Pathways for Biosimilars Act”  Eshoo Health Care Reform “mark” – HR 3200

23. Key Issues in Debate  “Biosimilar” – How Defined?  How similar must Biosimilar be to Reference Product (RP)?  How to handle heterogenicity, impurities  What kind of studies must be done to show extent of similarity?  Analytical  Animal?  Clinical  Must mechanisms of action be same?  Can any requirements be waived?  Interchangeability – allowed?  How proven  Guidances needed?  Naming of Biosimilar Actives

24. Key Issues in Debate …  Exclusivity  Types:  “Data” – can not even submit BP application  “Market” – can not get approval, but FDA can review BP application  Length: Major area of dispute – 5 to 14??  Exclusivity for First Interchangeable Biosimilar  Possible?  Likely?  Figment of imagination?

25. Key Issues in Debate …  Authorized Generics  Waxman – bars them  Eshoo – silent  Patents and Litigation – two very different and complicated systems for learning about patents and notifications  Guidances –  Waxman – not needed before FDA may approve  Eshoo #1 – arguably essential (like EU) before approval  Eshoo #2 – not needed before FDA approval

26. Call, e-mail, fax or write: Michael A. Swit, Esq. Vice President The Weinberg Group Inc. 336 North Coast Hwy. 101 Suite C Encinitas, CA 92024 Phone 760.633.3343 Fax 760.454.2979 Cell 760.815.4762 michael.swit@weinberggroup.com www.weinberggroup.com Questions?

27. About your speaker… Michael A. Swit, Esq., is a Vice President at THE WEINBERG GROUP, where he develops and ensures the execution of a broad array of regulatory and other services to drug, biologics and medical device/diagnostic clients seeking to market products in the United States. His expertise includes product development strategies, compliance and enforcement initiatives, recalls and crisis management, submissions and related traditional FDA regulatory activities, labeling and advertising, and clinical research efforts. Mr. Swit has been addressing critical FDA legal and regulatory issues since 1984. His multi-faceted experience includes serving for three and a half years as corporate vice president, general counsel and secretary of Par Pharmaceutical, a prominent, publicly-traded, generic drug company and, thus, he brings an industry and commercial perspective to his work with FDA-regulated companies. Mr. Swit then served for over four years as CEO of FDANews.com, a premier publisher of FDA regulatory newsletters and other specialty information products for the FDA-regulated community. His private FDA regulatory law practice has included service as Special Counsel in the FDA Law Practice Group in the San Diego office of Heller Ehrman White & McAuliffe and with the Food & Drug Law practice at McKenna & Cuneo, both in the firm’s Washington office and later in San Diego. He first practiced FDA regulatory law with the D.C. office of Burditt & Radzius. Mr. Swit has taught and written on a wide variety of subjects relating to FDA law, regulation and related commercial activities, including, since 1989, co-directing a three-day intensive course on the generic drug approval process and editing a guide to the generic drug approval process, Getting Your Generic Drug Approved. A former member of the Food & Drug Law Journal Editorial Board, he also has been a prominent speaker at numerous conferences sponsored by such organizations as RAPS, FDLI, and DIA. A magna cum laude graduate of Bowdoin College, he received his law degree from Emory University Law School and is a member of the California, D.C. and Virginia bars.

28. For more than twenty-five years, leading companies have depended on The Weinberg Group when their products are at risk. Our technical, scientific and regulatory experts deliver the crucial results, using sound science, to get products to the market and keep them there. Washington, D.C. ♦ San Francisco ♦ Brussels ♦ Edinburgh