Arlene Weintraub wrote:

The pharmaceutical world is abuzz over rumors that the FDA is on the verge of releasing its guidelines for how companies should develop generic versions of biotech drugs. Among the folks waiting eagerly for those guidelines is Michael Kamarck, president of Merck BioVentures, who was literally sitting on the edge of his seat when he met with Xconomy at a Times Square hotel recently to talk about the drug giant’s strategy for making such drugs, known in the industry as biosimilars. “We don’t know exactly what the guidelines will say,” Kamarck says. “But we are confident we have a path to move forward and we can succeed.”

Merck (NYSE: MRK) formed its BioVentures unit in 2008 with the goal of developing a portfolio of generic biotech drugs. Kamarck, a veteran of Wyeth, joined Whitehouse Station, NJ-based Merck in December 2009, just after Pfizer (NYSE: MRK) acquired Wyeth. “I had been with Merck two months, when the Biologics Cost Competition and Innovation Act was approved as part of the Obama health care program,” Kamarck recalls. “That was the FDA signaling a pathway for us to bring biosimilars through to licensure.”

Because biotech drugs are large, complex molecules, few people expect biosimilars to be exact copies of the originals. But as their name implies, they will have to be similar enough to be as safe and effective as the drugs on which they are based. That means Merck and other companies developing biosimilars will have to jump through many more hoops than makers of “small-molecule,” chemical-based generic drugs do. “All they have to do is the chemical analysis to show it’s the same drug,” Kamarck says. “We will have to do some amount of clinical study to prove safety and efficacy.”

As they waited for the FDA to release its official guidelines for performing such studies, Kamarck and his team embarked on a multifaceted plan designed to strengthen Merck’s readiness to enter the new market for biosimilars. The company’s goal was to have five or more biosimilars in the pipeline, with some ready to launch in 2016, when patents on the originals are set to expire. “To hit that business target, we looked at areas where we had gaps, and we went out to close them,” he says.

Four deals make up the crux of Kamarck’s plan. The first, which happened 10 months before he joined the company, was Merck’s $130 million purchase of Insmed’s biologics platform. As part of the deal, Merck acquired rights to INS-19 and INS-20—generic forms of filgrastim (Neupogen) and pegfilgrastim (Neulasta), hit drugs from Amgen (NASDAQ: AMGN) that are used to prevent infections in patients undergoing chemotherapy.

Then, in January of this year, Merck formed an alliance with Waltham, MA-based Paraxel International (NASDAQ: PRXL), a contract research organization. “They will be the exclusive arms and legs for us in doing the clinical studies that are required” to get biosimilars approved, Kamarck says.

Deal number three was a bit of a personal mission for Kamarck. During his decade at Wyeth, Kamarck worked closely with etanercept (Enbrel), the $7-billion-a-year drug that Amgen and Wyeth (now Pfizer) market together to treat inflammatory diseases such as rheumatoid arthritis. “We scanned everyone who was working on [biosimilar etanercept] to try to find the best one,” Kamarck says. “We felt to have one of the big ones would help us learn about this new business. We viewed it very much as a linchpin.” But the drug—a molecule known as a “fusion protein”—is complex and not easily duplicated.

Merck found the best biosimilar etanercept, Kamarck says, in an unexpected place—Seoul, Korea. In June, Merck formed a deal with Hanwha Chemical to develop and commercialize its version of the drug, HD203. “They manufactured it, they put it in Phase 1 trials, they shared the data with us,” Kamarck says. “It’s a fantastic copy.”

Kamarck’s team sewed up the fourth element of Merck’s biosimilars strategy on September 21, when it formed a 15-year manufacturing capacity-sharing agreement with Gaithersburg, MD-based MedImmune. “We did a forecast of this business, and suffice it to say, it was clear we needed additional manufacturing capacity,” Kamarck says. “The decision was, did we want to invest $700 million and five years to build a new facility, or did we want to find an enthusiastic partner that already had one populated with expertise? It’s not a tough decision.” The factory, located in Frederick, MD, is already making biosimilars for Merck’s clinical trials, Kamarck says.

Rumors that the FDA would soon release its biosimilars guidelines reached fever pitch on September 23, when Reuters published a story quoting an agency official saying they would be published “as early as the next few weeks, maybe even days.” Kamarck expects the requirements will differ for each molecule, depending on its complexity, but that overall the FDA will allow for the process to be a shortened version of what it requires for entirely new drugs. The FDA hinted at that in a paper it published in the New England Journal of Medicine in August. Says Kamarck of the impending definition of the approval pathway, “Until we try it and are disappointed, we’re going to assume the best.”

One major way biosimilar drugs will differ from standard generics will show in Merck’s marketing plan, Kamarck says. Even though the drugs will be similar to the originals, they will be new products, and therefore marketed like any other branded drug. “They’ll say ‘Merck’ on them,” Kamarck says. “And because of that, we’re going to do our best to make sure that payers, patients, and physicians get everything they need.” That may include setting up a call center for patients to use if they have questions about self-injecting the drugs, or performing cost-benefit studies for payers making decisions about whether or not to cover biosimilars.

All that plus the clinical trials will be expensive, Kamarck acknowledges, but well worth it, in Merck’s view. “We have an opportunity to make the products less expensive, and still capture a decent profit margin,” he says.

Kamarck declines to elaborate on what else is in Merck’s biosimilars portfolio aside from its copies of the three Amgen drugs. But he does say the company has five biosimilars in human trials and is working on many more. And he believes his unit will ultimately help further the company’s overall goal of making cutting-edge medicines affordable enough to be used not only here in the U.S.—where cost-cutting in healthcare is a hot topic—but also in emerging countries. “The challenge of these molecules, frankly, is they’re so efficacious they’re putting a lot of pressure on healthcare dollars,” he says. “Merck’s focus is broadening now, from just being a company focused on innovation to also providing patient access by lowering costs.”