Emboldening Biosimilars

With Americans increasingly concerned about drug prices and the Trump administration’s drug-pricing blueprint supporting free-market pathways, the overriding question is: How do we inject more competition into the system by which drugs are purchased and dispensed?  Food and Drug Administration Commissioner Scott Gottlieb has already moved to accelerate generic drug approvals, and now he wants to repeat that success by galvanizing the market for biosimilars, where products could be priced between 20-30 percent lower than their innovator brand cousins.   

Biosimilars are safe, effective and here to stay. They deserve a prominent seat at the therapeutic table. The potential payoff could be enormous, both in lower prices and increased access for millions of Americans. A study from RAND shows that increased access to biosimilars could cut U.S. health care spending by as much as $54 billion over the next decade. Consumers, insurers and government-funded health programs will benefit.

Unfortunately, there are a lot of issues in getting from “where we are now” to “where we should be.” Biosimilars have only been on the market in the United States for two years, but the results thus far are disappointing and counterintuitive. They are, indeed, less expensive, but aren’t capturing market share. What’s wrong with this picture?

First, there are still a number of product-related regulatory issues, and Gottlieb is aggressively accelerating the pace of getting those resolved. These are not quality concerns but rather marketplace issues. Prescribers and formulary setters need firm, practical rules about nomenclature, pharmacovigilance, substitutability, interchangeability, label extrapolation and the relationship between reference products and multiple biosimilars in the same therapeutic class.  These are key questions that directly and powerfully impact marketplace behavior in investment and contracting, formulary development, physician confidence, patient access and cost. And they must be addressed by the FDA now.

There are many who believe that the United States is behind Europe in advancing biosimilars. Not so. We’re learning from their mistakes and doing it better. It’s not about lowering standards to accelerate biosimilars — it’s about creating better standards. The stakes are too high, both in policy and patient outcomes, to cut corners or cave in to rhetoric about whether we are falling behind. Further, a lot of these product-related issues are central to the confidence of prescribers in using biosimilars, and our physicians are rightfully given far more say in these matters than in Europe.

Second, there are a number of structural market issues that reflect misaligned incentives in the pharmaceutical marketplace. Gottlieb has a less-charitable term, attributing the problems to industry “shenanigans.” Interestingly, the industry here isn’t just Big Pharma, but also “Big Payer.” For example, the insurance industry and prescription benefit managers engage in a dance called “exclusionary contracting” that often blocks a less-expensive product from replacing a costlier one on a patient’s insurance plan.

Biological medicines (both brand and biosimilar) are purchased via a “buy-and-bill” process, where providers purchase medicines and then bill the payers (both private or public) once the medicines have been administered to the patients. The net result is a “cost plus” payment system, where providers lose money when they prescribe a lower-cost product. The current system also incentivizes payers to prefer medicines that carry higher rebates rather than lower list prices. The result is that patients do not directly benefit from the significantly lower prices of biosimilars.

How can the FDA drive biosimilar innovation and competition? By being creative, predictable and practicable.

Creative because we needn’t just copy the experience of others; we must learn from their successes and mistakes and then improve on the process. Through more 21st-century pharmacovigilance strategies and tactics; validated real-world evidence collection and analysis; helpful labeling information; patient and physician education; and more regular and intense collaboration with developers, the FDA can, must and will become the global standard for innovative biosimilar regulatory science.

Issues related to the particularities of biologics (sources, process, quality requirements, nomenclature and safety profiles) require sophisticated new thinking. The agency must work toward predictive models of potential “hot spot” products, base ingredients and suppliers.  Consequently, biosimilar pharmacovigilance will have to evolve at the same time as new medicines are launched into this space.

Predictable because it’s regulatory predictability that drives a developer’s desire to invest and compete. And it mustn’t be rhetorical prophesy — but practiced policy.

Predictability is power in pursuit of the public health, and nowhere is that more acutely felt than in the evolving regulation of biosimilars. Without regulatory predictability, investment in a still-evolving commercial marketplace will remain quiescent. A predictable FDA process facilitates speedier marketplace competition. When it comes to health care, clarity is better than confusion, especially when it comes to drug safety — the sine qua non of medicine regulation.

Practicable because that’s where the rubber meets the road. We don’t need more biosimilar theory — we need more biosimilars. Developers need earlier, regular and swifter access to good advice.

The agency must be both regulator and partner in advancing the development and review of biosimilars. Minus that, nothing happens. This is not an academic exercise. As Gottlieb correctly surmises: “There is no silver bullet here that will make the biosimilars market go gangbusters. It’s going to be a slow build.”

But build we must.

Herbert Hoover said that “Competition is not only the basis of protection to the consumer, but is the incentive to progress.” The FDA can accelerate that incentive.


Peter J. Pitts, a former FDA associate commissioner, is president of the Center for Medicine in the Public Interest.

Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.