With total spending on U.S. cancer care projected to rise 34 percent from 2015-2030 to $245 billion, biosimilars can play a role in helping reduce those costs. Learn how Biden’s executive order on promoting competition in the American economy will require the FDA's biosimilars approval framework to be clearer and easier to follow.
With total spending on U.S. cancer care projected to rise 34 percent from 2015-2030 to $245 billion, biosimilars can play a role in helping reduce those costs. Biosimilars are newcomers to the pharmaceutical market, and they have already gained a strong footing. While a biologic is a drug that is derived from living organisms or contains components of living organisms, a biosimilar is a nearly identical but organically less complex copy of the referenced biologic.
After specified novel biologics receive FDA approval, manufacturers can develop and submit biosimilars for approval as well. To be successful, the biosimilar manufacturer must demonstrate that its product has no clinically meaningful difference from its referenced biologic in terms of safety and effectiveness. The FDA uses an abbreviated drug approval pipeline for biosimilars that is meant to expedite their market entry and reduce the cost of their development. However, even after obtaining FDA approval, patents for biologics must expire before biosimilars can launch.
Due to their shorter development time, biosimilars are approximately 15-20 percent cheaper than their more commonly prescribed reference biologics. Biosimilars' manufacturers pass a portion of their cost savings on to patients through decreased market costs, and they have potential to save billions in claims. Their presence on the drug market also creates competition with expensive biologics, potentially lowering costs for everyone. And biosimilars can provide treatment alternatives for patients with complex needs who may require timely, accessible, and affordable treatment options that biologics cannot provide. In recognition of this, the FDA expanded the biosimilar category to include 90 additional molecules in March 2020.
Unfair Business Practices
The volume of new FDA-approved biosimilars fell sharply in 2020 to just three approved drugs—a stark contrast from the year before, in which the FDA approved ten new biosimilars. Since 2015, the year in which the first biosimilar earned FDA approval, the number of approvals has risen each year—until 2020. This is likely due at least in part by researchers across the globe turning their attention to vaccine development in the wake of the COVID-19 pandemic.
Besides the pandemic, ongoing lawsuits from referenced biologics manufacturers suing biosimilar manufacturers are having a negative impact on the development and approval of new biosimilars. Biologics pharmaceutical companies have a salient motive to disrupt the entry of new, cheaper treatment options into the market. Small biosimilars manufacturers often do not have the resources of biologics manufacturers to fight frivolous lawsuits. Court-imposed delays and legislative fees are expensive, which can dissuade these smaller companies from continuing working in the biosimilars market. Since much of this ligation is founded on dubious claims and weighed down in bureaucratic red tape, President Biden recently issued an executive order that challenges unfair business practices in the biosimilars market.
Legislative Solutions
Biden’s July 9, 2021 executive order (EO) on promoting competition in the American economy includes a provision that requires the U.S. Department of Health and Human Services (HHS) to make the FDA biosimilars approval framework clearer and easier to follow. What exactly that will mean remains unclear until HHS makes public its specific recommendations in this area. HHS leadership has reported that it will be months before their plan is finalized and made public.
That said, the EO is clear in that it requires HHS to promote the entry of biosimilars into the pharmaceutical marketplace. The order draws its authority from the Advancing Education on Biosimilars Act of 2021 (S.164). The EO echoes this law, which has in effect expanded the regulatory responsibilities of the Secretary of Health and Human Services by mandating the prioritization of biosimilars and enhancing a biosimilars education page on the FDA’s website, which contains comprehensive resources and education for both patients and providers.
In another attempt to promote the use of biosimilars, in April 2021, Reps. Kurt Schrader (D-OR) and Adam Kinzinger (R-IL) introduced into congress the BIOSIM Act (H.R.2816) to increase provider reimbursement for biosimilars, thus making them more attractive for providers to prescribe to their patients. Providers are currently reimbursed for biosimilars based on the average sales price (ASP) of the drug plus 6 percent. This bill would increase reimbursement for biosimilars by 2 percent for five years, giving providers additional motivation to prescribe to their patients less-expensive biosimilars.
Taken together, Biden’s executive order, the BIOSIM Act of 2021, and the recently passed Advancing Education on Biosimilars Act have set the stage for a market that embraces the cost-savings potential of biosimilars. ACCC will continue to advocate for and monitor the policy landscape as it relates to biosimilars.
