As Paul mentioned in the first paragraph of his post, Aubagio recently received positive opinion from the Committee for Medicinal Products for Human Use (CHMP) of the EMA. The committee is recommending the granting of marketing authorization for the treatment of adult patients with relapsing multiple sclerosis, which is by far the most common form of MS. Additional marketing applications for the drug are currently under review globally.

But there is a limitation in the recommendation that may have important consequences in the MS market, and was a very disappointing piece of news for Genzyme (a division of Sanofi). Although CHMP did recommend marketing authorization, they did NOT recommend that Aubagio receive a “new active substance” (NAS) designation. This was based on their opinion that the drug is simply a revamped version of a much older drug. The outcome means that Genzyme gets fewer years of market exclusivity than they would otherwise, which clearly erodes potential profits. Why? Because generics companies won’t have to wait as long as usual to enter the market with a less expensive, bioequivalent version of Aubagio which would result in “generic erosion”, a reduction in potential profits for Genzyme’s sales of the drug.

The relatively quick introduction of generic Aubagio in the European market would not only dig into Genzyme’s sales, it would also likely result in revenue erosion in European sales for MS therapies produced by Genzyme’s competitors. MS therapies are some of the most expensive in medicine, and over the years many of their price tags have actually increased. A lowering of prices in response to an oral generic would be a market first. Ironically, generic Aubagio would likely also erode potential sales of Genyzme’s own MS drug Lemtrada which is currently under review and if approved, would hit the market in 2014.

To keep things simple here, it is fair to say that Genzyme has two choices when considering the European market. They can launch Aubagio and try to earn as much revenue as they can during the relatively short period of market protection, or they can decide not to launch, which would then preclude the entrance of generics in the EU market (generic drug companies cannot market drugs in a country where there isn’t a “reference” drug – in this case Aubagio) which means the company doesn’t have to spend for a rollout, and means that they won’t have to compete with generic Aubagio. The latter is a safe play and is probably what the competition in Europe is hoping for. Biogen-Idec, for example, is expecting EU approval of their first oral MS drug Tecfidera, and would clearly prefer to play in a market space without a competing branded oral and certainly without a generic oral. 

In my opinion, the former approach (marketing) is more likely. Even if Genzyme is granted only one year of market protection, the actual length of this protection is likely to be extended given the usual delays that historically accompany the process of getting generics onto the market. In addition, this window of time will allow the company to develop relationships with MS prescribers across Europe. This latter point is crucial because establishing this network will grease the rails for Lemtrada if approved.

Genzyme is planning to request a re-examination of the NAS decision, and so we’ll have to wait and see what comes of that step. This is an interesting story to be sure, and one that the field will be following very closely as it evolves.

By the way, Biogen-Idec received FDA approval to market Tecfidera in the US today.