With its Remicade biosimilar stymied by the brand, Pfizer sues Johnson & Johnson for 'anticompetitive' dealmaking

Two pharma giants are squaring off a first-of-a-kind lawsuit over the budding biosimilar business in the U.S. Unable to make much headway with its first biosimilar rollout, Pfizer accuses Johnson & Johnson of striking "exclusionary contracts" on its megablockbuster Remicade to quash that competition.

Filed Wednesday in Philadelphia federal court, Pfizer's suit claims J&J's contracting moves are anticompetitive, denying patients access to less expensive treatment options. The result? J&J is triggering wasteful healthcare spending and undermining the intent of federal biosim laws, the lawsuit claims. 

Dubbed Inflectra, Pfizer's Remicade biosimilar launched last October at a 15% discount to the brand. But so far, the discounted option hasn't put much of a dent in J&J's chart-topping Remicade sales, which amounted to $7 billion around the globe last year. Merck & Co. launched another biosimilar at a 35% discount back in July, further intensifying the price war. 

J&J didn't immediately provide a comment on the suit. Ahead of Pfizer's biosimilar launch, executives said they were prepared for the Remicade fight, partly because of their contracting approach. The “U.S. commercial team is ready for a potential biosimilar launch,” Joaquin Duato, pharma group chairman, said on the company’s third-quarter conference call last year.
It’s already an “extremely competitive” market on price, he said at the time, and J&J intends to develop “innovative contracts” to “utilize the full breadth” of its portfolio.

Now, the Pfizer suit says J&J worked to "suppress" price competition by "imposing a web of exclusionary contracts on both health insurers and healthcare providers (e.g., hospitals and clinics) to maintain its stranglehold in respect of an important biologic." Remicade treats chronic diseases such as rheumatoid arthritis, plaque psoriasis and Crohn's disease.

J&J's contracts with insurers, which include discounting on other products, require partners to eliminate or "drastically reduce" their use of Remicade biosimilars, the suit says. Pfizer alleged those deals are not likely to change unless a court intervenes. All told, the strategy has "led to the near total foreclosure of Inflectra with patients across the country," according to Pfizer.

Inflectra originally came out at 15% discount to Remicade but Pfizer has cut the price as the market has changed. A Pfizer spokesman said last week that the product is now priced at a 35% discount to Remicade’s wholesale acquisition cost, which is the same as Merck's biosim's list price. He said starting Oct. 1, Pfizer will drop the average selling price even lower, to $737.91 per 100 mg vial.

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Back in July, Bernstein analysts did their own research to find that J&J used a three-pronged strategy to fight off the Pfizer biosimilar. According to the analysts, the New Jersey drug giant set up exclusive contracts in nearly half the market, bundled drugs and devices together for large hospitals and offered deeper discounts to large infusion centers. That essentially stiff-armed the competition and meant Remicade sales only dipped by 5% in the second quarter, executives reported over the summer

Sales figures on Pfizer's new product bear its argument out. So far this year, the biosimilar has generated just $172 million in global sales, according to the company's second-quarter financial report. It only pulled in $40 million in the U.S. during that time, compared to $2.24 billion in the market this year for J&J's Remicade.

As Drug Channels' Adam Fein noted in a post on Tuesday, three factors have hurt Inflectra and helped Remicade to this point: a limited biosimilar discount at launch, reimbursement dynamics favoring the brand and the fact that many insurers and doctors aren't fully on board with biosimilars.

RELATED: Stay calm, investors. J&J has a 'readiness plan' in place for Remicade biosim launch

Those are reasons why J&J has been confident. Duato said last year that Remicade's “significant long-term safety data, strong advocacy for patients and clear physician preference means that 70% of patients who are stable ... are highly unlikely to switch."

In addition to contracting, J&J had commercial tactics in place as part of its defense. Following Pfizer's launch announcement, Duato said the company has a "focused biosimilar readiness plan" that included legal appeals and dispatching sales representatives to talk up the original medication.