Academic journal article American Journal of Law & Medicine

The Legal and Regulatory Status of Biosimilars: How Product Naming and State Substitution Laws May Impact the United States Healthcare System

Academic journal article American Journal of Law & Medicine

The Legal and Regulatory Status of Biosimilars: How Product Naming and State Substitution Laws May Impact the United States Healthcare System

Article excerpt

I. INTRODUCTION

In the wake of the Supreme Court's highly anticipated decision in National Federation of Independent Business v. Sebelius,1 the implementation of the Patient Protection and Affordable Care Act (ACA)2 is now well underway by the federal government, states, employers, and insurers. While the initial debate over the ACA focused chiefly on the constitutionality of the individual mandate and the severability of the Medicaid expansion provision, the ACA also introduced a challenging new paradigm for regulation of biologics by the Food and Drug Administration (FDA). Nestled within the expansive ACA, the Biologics Price Competition and Innovation Act (BPCIA)3 spanned only three sections of the legislation, yet it vastly altered the face of the Food, Drug and Cosmetic Act (FDCA)4 by setting forth an abbreviated pathway to market for "biosimilar" and "interchangeable" biosimilar biological products.

The inclusion of the BPCIA was in part motivated by widespread cost reduction in the generic drug realm, coupled with the increasingly high costs of biologics. American consumers, insurers, and payors have reaped the financial benefits of generic drugs for the last thirty years. The United States Government Accountability Office has estimated the savings to be one trillion dollars in the last decade alone.5 The Federal Trade Commission (FTC) reports that the first generic drug to enter the market typically offers a price 25% lower than that of the reference drug, rising to 80% cost savings with multiple generics on the market.6 For example, 2012 data compiled by Blue Cross Blue Shield of Michigan suggests that, on average, a thirty-day supply of the brand-name cholesterol drug Lipitor costs $141.60, while the same supply of the generic drug, atorvastatin calcium, costs $22.50.7

In comparison, the costs of biological products (commonly known as biologics) are often astronomical, averaging twenty-two times the price of traditional drugs,8 with many treatment regimens exceeding $100,000 per year.9 The PricewaterhouseCoopers Health Research Institute reports that biologics spending increased 18% in 2012 and is projected to rise by 22% in 2014,10 reaching 45% of national prescription sales in the United States by 2017.11 FDA approvals of biologics accounted for over 50% of new approved therapies in 2012, projected to reach 60% in 2014.12 According Aetna's Vice President, Harry Travis, the rising cost of biological products "could soon undermine the economics of the United States health care system."13

Fueled by both the failures and successes of the Drug Price Competition and Patent Term Restoration Act of 1984 (also known as the Hatch-Waxman Act),14 the BPCIA unveils a panoply of regulatory tasks for the FDA. The Hatch-Waxman Act created the generic drug approval process and incentives for drugs deemed therapeutically equivalent to a reference brand drug. In a similar manner, the BPCIA authorizes the FDA to implement an abbreviated pathway to market for biologics, setting forth definitions, basic requirements, patent processes, and periods of exclusivity for particular products. However, the statute delivers a mere skeletal vision of how the outcomes are to be achieved by the FDA and fails to address several core issues that are currently being debated at both the federal level by the FDA and the state level by legislators. As industry and the FDA spar over the details of this new abbreviated regulatory pathway to market, two equally important aspects of the BPCIA implementation are subject to recent scrutiny: how to name the resulting biosimilar and interchangeable biologics, and whether automatic substitution of biological products is appropriate. Each issue will also have a significant impact on the United States health care system.

Since enactment of the Hatch-Waxman Act of 1984, generic drugs in the United States are assigned an international nonproprietary name (INN) and, typically, an identical United States adopted name (USAN), connoting that the active ingredient of the generic drug is an exact copy of the active ingredient of the reference brand drug. …

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