Diabetes crisis draws challengers for global US$22b insulin market

[HONG KONG] In the hyper-polarised world of US politics, there's an issue that unites Democrats and Republicans: the high cost of insulin.

While millions of Americans with diabetes depend on injections of the hormone that regulates blood sugar, many are skimping on dosages because prices have soared.

At Congressional hearings last month, lawmakers criticised companies for not doing enough to contain prices. The Food and Drug Administration, which is holding a hearing Monday in Silver Spring, Maryland, on insulin prices, is pushing regulatory reform to create more competition for the three companies that dominate the global US$22 billion market: Eli Lilly, Novo Nordisk and Sanofi.

The change in political climate promises to bring some relief for millions of Americans living with diabetes, including all sufferers of type-1 for whom access to insulin is literally a matter of life and death.

For drugmakers, it's creating opportunities to team up with low-cost newcomers from China and India to make biosimilars, nearly identical versions of branded biological products, to slash the US$15 billion that Americans spent on insulin in 2017.

'CAVALRY IS COMING'

"The cavalry is coming," said Tim Crew, chief executive officer of Lannett, a Philadelphia-based producer of generic drugs. "We think it's a great opportunity."

Lannett is working with Chinese partner YiChang HEC ChangJiang Pharmaceutical on an inexpensive version of insulin that, when it's ready, could cut prices in half, he said.

Turning to Asian partners makes sense, given the experience companies have working in global markets.

China and India together supply two-thirds of the active ingredients used to manufacture pharmaceuticals, according to ICICI Securities.

Spending on insulin averaged US$5,705 per American patient in 2016 from US$2,864 in 2012, the Washington-based Health Care Cost Institute said in a report in January.

The increase has driven users like Gail deVore, a 58-year-old Denver woman with type-1 diabetes, to dilute one of her insulin prescriptions, which costs US$346.99 a bottle per month, so she can go longer between refills.

"There is no way I can afford to use it the way my prescription is written," she testified at a House Energy and Commerce Committee hearing on April 2.

Generic pharmaceutical manufacturer Sandoz announced in December an agreement with Beijing-based Gan & Lee Pharmaceuticals to commercialize three types of insulin. Gan & Lee is conducting late-stage patient studies on insulin glargine - similar to Sanofi's Lantus, the world's bestselling long-acting insulin analog - in Europe and the US, the Chinese company said in a written response to questions.

COMPETITIVE THREAT

"We will increase competition," said Stefan Hendriks, global head of biopharmaceuticals for Sandoz, a unit of Switzerland's Novartis. "That will definitely bring prices down."

Generics producer Mylan NV announced in November the UK launch of a biosimilar of Lantus that it co-developed with India's Biocon. Regulators have approved the drug in more than 40 countries including Japan and Mexico, and Mylan is targeting releasing it in the US by March next year, Julie Knell, a company spokeswoman, said in an email.

PATENT DISPUTE

As part of that process, Mylan announced in December that it won a victory after the US Patent and Trademark Appeal Board invalidated several of Sanofi's Lantus patents. Since 2017, Pittsburgh-based Mylan has been fighting a patent infringement lawsuit that Sanofi filed in a New Jersey court.

The loss of patent protection has been driving down global insulin revenue since it peaked at US$24.4 billion in 2014. Eli Lilly said in March that it would offer a half-priced "authorized generic" of its rapid-acting insulin Humalog.

The introduction of Mylan and Biocon's Lantus biosimilar next March will mean a further discount. Still, without any additional entrants on the horizon the companies may have little incentive to push prices substantially lower than what Lilly is offering for its generic, said Surya Patra, an analyst who tracks Biocon's stock at brokerage PhillipCapital in Mumbai.

"Next to Biocon-Mylan, it will be a decent time gap before anyone else can come," he said.

PRICES DOUBLED

That's not soon enough for many insulin users. Prices have doubled since 2012, after nearly tripling in the previous decade, according to the Congressional Diabetes Caucus.

The FDA will simplify the approval process next year for proposed replicas of branded insulins by putting them in the same category as other biosimilar drugs.

"We believe the biosimilar pathway will enable a more robust route for developing lower-cost copies of insulin, including products that are fully interchangeable with branded insulins," said Scott Gottlieb, who stepped down as FDA commissioner last month, in an April 2 statement.

Lower-cost insulin from Asia may eventually be part of the solution, according to Elizabeth Pfiester, founder and executive director of T1International, a British non-profit that focuses on insulin access and other issues related to type-1 diabetes.

NO QUICK FIX

"We are hopeful that Chinese and Indian companies can help in the long-term," Ms Pfiester said in an email. "But it is not an immediate or fast solution to the emergency."

Lannett's long-delayed attempt to crack the market shows why advocates like Ms Pfiester aren't expecting speedy relief.

When Lannett announced the Chinese deal in 2016, the American company said its insulin product was in "late stage development" - and it still is. The first human study will finally begin this year, delaying its potential release in the US for several years, Mr Crew said.

"These things just take time," he said. Insulin "is not a simple oral tablet; it's a complex, substantive, large molecule that is not something you make with simple chemistry".

MERCK WITHDRAWAL

The high cost of producing the most popular types of insulin has spooked at least one Western drugmaker that had planned to join with an Asian partner to compete with the Big Three. Merck & Co. terminated an agreement last October with Samsung Bioepis to develop a Lantus biosimilar, a project the companies announced in 2014.

The American drugmaker took a US$423 million charge related to the termination of the agreement, including an asset abandonment charge of US$137 million.

Some patients may have doubts about taking low-cost Asian-made insulin compared to other inexpensive products because of the critical and complex nature of the drug, said Juliana Chan, director of the Hong Kong Institute of Diabetes and Obesity and a professor at the Chinese University of Hong Kong.

"It's not like buying a shirt," she said.

China's pharmaceutical industry has endured multiple safety scandals, including a prominent case last year involving a biologics manufacturer punished by the government for fabricating data for a rabies vaccine while also selling low-quality versions of vaccines for infants.

That shouldn't cloud access to lower-cost imported insulin, according to patient advocate Pfiester.

"Patients should always be careful what they are putting in their body and be sure that insulin from any manufacturer is safe," Ms Pfiester said. "We've yet to come across a study or experience that supports the idea that biosimilar insulin producers are riskier."

BLOOMBERG