Pfizer is taking its fight with J&J over a blockbuster drug to court

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Pfizer is taking its fight with J&J over a blockbuster drug to court

Pfizer CEO Ian Read

REUTERS/Adam Hunger

Pfizer CEO Ian Read

Two of the world's largest drugmakers are heading to court over a blockbuster arthritis treatment.

Pfizer on Wednesday filed a complaint against Johnson & Johnson, claiming the world's largest pharmaceutical company was taking anticompetitive steps to block the sale of a drug called Inflectra.

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Inflectra is Pfizer's version of J&J's blockbuster drug Remicade - which treats autoimmune diseases like rheumatoid arthritis and Crohn's disease. Approved in 1998, it generated $4.8 billion in sales for J&J.

Because Remicade is made from living cells instead of chemicals, like an antibiotic or a birth-control pill, it doesn't have a generic. Instead, companies like Pfizer built alternatives called "biosimilars."

Pfizer and its partner Celltrion got its biosimilar version of Remicade, called Inflectra, approved in April 2016. The two drugs are both versions of infliximab, but for now the drugs can't be used interchangeably the way you might be able to pick up a generic antibiotic instead of a brand name version at a pharmacy counter.

When it came out with the drug Pfizer priced Inflectra at a 15% discount to Remicade's list price of $1,113 a vial. A second biosimilar, made by Samsung Bioepis, got approved in 2017 and priced at a 35% discount.

Even with the discounts, Pfizer said in the lawsuit, Remicade still retains 96% of the market.Pfizer alleges that's because of contracts between J&J and health insurers that require Remicade - as opposed to Inflectra - to be used first before trying other treatments for new patients.

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And, as part of that contract, insurers had to commit to not reimbursing for Inflectra, making it harder for the drug to be used instead of Remicade. Because insurers won't cover Inflectra, the hospitals that deliver the medication don't want to keep it in stock, Pfizer said.

"Given that it was charging a lower price for Inflectra than J&J was charging for Remicade, Pfizer was optimistic that it would have an opportunity to compete, to secure a reasonable share of the business, particularly for new patients, and to bring the benefits of price competition to consumers, providers, insurers, and the U.S. government," the company said in its complaint. "However, due to J&J's exclusionary conduct, competition has been foreclosed. J&J maintains its monopoly and has continued to capture over 96 percent of infliximab sales even while maintaining prices far above competitive levels."

Johnson & Johnson did not respond to a request for comment.

Biosimilars haven't saved the billions of dollars they were expected to

While there has been a lot of hope that biosimilars will help save the US healthcare system billions on costly, biologic drugs, it's taking longer than expected to get to that point.

"We believe that biosimilars will capture meaningful market share, but the disappointing commercial success so far with less than $2 billion annual sales illustrates that the bar is high," Morgan Stanley analysts said in a report published in April. That's in large part because of the economic challenges that biosimilars face, the report said.

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The biologic medicine market is roughly $200 billion, according to Morgan Stanley, which makes that $2 billion a bit lackluster.

The biosimilars haven't come at much of a discount to their branded counterparts (between 15% to 30% discounts to the branded drug's list price, compared to generics that can typically charge 80-90% off the branded version). As a result of the still relatively high cost, many people haven't transitioned over to biosimilars in the same way people have observed with generic drugs.

"While we acknowledge that biosimilars could represent a real sales opportunity, we believe that the economics of biosimilars remains challenged," the note said.

Get the latest Pfizer stock price here.