Andrew Thompson

Senior Editor

Loyola University Chicago School of Law, JD 2023

As discussed previously here and here, patent evergreening and patent thickets are key drivers of prescription drug prices that also operate as a barrier to entry which blocks generic manufacturers from placing lower-cost alternatives on the market. This post will examine how newly updated U.S. Food and Drug Administration (FDA) guidance on generic drugs and biosimilars have shifted the regulatory landscape.

FDA guidance on biosimilars

A particularly promising area for improving access to affordable prescription drugs is the biosimilar approval process. A biosimilar is an FDA approved compound that is evaluated for similarity and clinical equivalence with respect to an approved biologic in the same way a generic drug is evaluated with respect to a brand-name drug. A biologic is a compound that is derived from living cells which cannot be produced from a chemical reaction, such as hormones and vaccines.

Currently, a biosimilar must undergo “switching studies” which require a biosimilar to be highly similar to the reference drug and have no “clinically meaningful differences” in order to be gain FDA approval. Unfortunately, switching studies often are time consuming and place a significant cost burden on biosimilar manufacturers since switching studies requires a cohort large enough to yield robust data and costs millions of dollars per study. Looking to cost barriers, a report from McKinsey found that “a typical biosimilar costs $100 million to $300 million to develop and takes six to nine years to go from analytical characterization to approval.” A literature review analyzing 19 clinical studies concluded that “switching studies seem difficult to perform and unnecessary with the body of evidence suggesting no real problems in practice coupled with stringent regulatory requirements.” The paper went beyond comparing biosimilars to reference drugs, with 10 of 19 clinical trials included in the review focusing on the performance of biosimilars when switching between biosimilars compared to switching from a reference drug to a biosimilar. By including both switching and alternating studies, the literature review presents credible data supporting the conclusion that switching studies should be phased out since they are not an effective means for evaluating biosimilar performance.

Legislation aims to streamline biosimilar approval

Recently, the Biosimilar Red Tape Elimination Act (BRTEA) was introduced in the Senate. The bill draws on data published by the European Medicines Agency, which concluded that “once a biosimilar is approved in the EU it is interchangeable, which means the biosimilar can be used instead of its reference product (or vice versa) or on biosimilar can be replaced with another biosimilar of the same reference product.” Passage of the BRTEA would align EU and US standards for biosimilar approval by allowing biosimilar manufacturers to gain FDA approval without performing switching studies. This proposition enjoys support from Dr. Sarfaraz K. Niazi, a member of The Center for Biosimilars Advisory Board, who stated that since “biosimilars have no clinically meaningful difference with their reference product . . . they should be interchangeable without the extensive switching and alternating studies in patients.” Interestingly, of the four FDA approved biosimilars with interchangeable designations, three were granted interchangeability designations without completing the normally required switching studies.

FDA guidance on biosimilars may conflict with the BRTEA

However, the biosimilar market will be impacted by new, and potentially conflicting, FDA guidance on biosimilars. The FDA releases product-specific guidance (PSGs) offering non-binding statements of what the FDA will consider when evaluating a product that manufactures can look to as a checklist for complying with FDA regulations. The FDA explains PSGs “are intended to assist the generic pharmaceutical industry with identifying the most appropriate methodology and evidence needed to support a specific generic drug’s approval.” The FDA notes a “critical revision” of the PSGs includes “additional bioequivalence (BE) studies or evidence recommended that is necessary to establish BE and support FDA approval reflecting a change in the safety or effectiveness of the drug product.” Importantly, the FDA points out “the critical revision has a potential impact on all ANDAs including the approved applications.” The FDA also flags a “major revision” that applies the requirement of additional BE studies on in vivo and in vitro BE studies. Worth noting is that the FDA’s additional BE requirements do not explicitly conflict with the intent of the BRTEA, but may result in a conflict of law and agency guidance if the required additional BE studies included switching or alternating studies.

Updated FDA guidance on BE studies for generic drugs

The FDA broadly refers to studies evaluating generic drugs with respect to reference drugs as “sameness evaluations.” The FDA provides sameness “is used to describe the requirement that a drug product proposed in an ANDA have the same active ingredient as the drug product it references.” Similar to how switching and alternating studies compare the performance of a biosimilar to a reference biologic, generic drug products must undergo studies to show the active ingredient in the generic drug is “the same” as the reference drug.

Since the FDA retains discretion to determine whether pharmaceutical manufacturers have submitted information in their Abbreviated New Drug Application (ANDA) sufficient to demonstrate “sameness” the FDA is empowered to allow manufacturers more flexibility in showing “sameness.” Pharmaceutical manufacturers often voluntarily comply with FDA guidance, as guidance docs from the FDA set out the agency’s expectations for a specific regulatory issue. Updated FDA guidance on requirements for manufacturers filing an ANDA directs manufacturers to consider FDA-provided examples of what methodologies will yield data the FDA will deem sufficient to yield sufficient data for the sake of a “sameness determination.” Essentially, the guidance explains that manufacturers may choose from a number of methods for analysis of a drug product or meet with FDA officials to craft a product-specific plan for completing studies required of ANDA subjects. Interestingly, comments from FDA Commissioner Robert Calif at the FDA’s September 2022 workshop on “Advancing Generic Drug Development: Translating Science to Approval” indicate sameness determinations may be streamlined in the near-future. Similar to calls for eliminating unnecessary switching and alternating studies for biosimilars, Commissioner Calif stated the FDA is evaluating alternative methods for evaluating BE that would allow for the reduction or elimination of human study requirements for drug products submitted through the 505(j) pathway, also known as the ANDA pathway.

Insurance coverage of biosimilars and generic drugs

Humira, a leading pharmaceutical manufacturer, anticipates placing seven biosimilars on the market in 2023. OptumRx recently announced its intention to include three of Humira’s biosimilars in OptumRx’s formulary in 2023. This is notable, since OptumRx is the third largest pharmacy benefit manager (PBM) in the US, OptumRx’s choice of what drugs to include in their formulary will likely influence other manufacturers. However, the accessibility of biosimilars and generic drugs remains limited in part by insurance reimbursement, as reimbursement factors heavily in determining what drugs will be included in a PBM’s formulary. When a biosimilar is interchangeable, pharmacists may substitute the biosimilar in place of the brand-name biologic, subject to state law. If a biosimilar is not deemed interchangeable, pharmacists cannot substitute a lower cost biologic in lieu of the more expensive brand-name biologic, which in turn makes a biologic less likely to be placed on a formulary since insurance is more likely to cover an interchangeable biologic. Given the connection between interchangeability, insurance coverage, and affordability, eliminating unnecessary switching and alternating studies for biologics will support manufacturers placing lower cost biosimilars on the market.

Following FDA approval, coverage through CMS is typically a necessary step for a drug being covered by an entity such as OptumRx. As discussed here, CMS coverage decisions affect the accessibility and affordability of new medications, given that a restrictive coverage decision from CMS on Medicare or Medicaid reimbursement will stimy the efforts of the pharmaceutical manufacturer to secure reimbursement from commercial insurers.

A recent piece of bipartisan legislation intends to curb the influence of CMS on Medicare reimbursement by limiting the scope of CMS regulators’ authority. Introduced by Representatives Vern Buchanan (R-FL) and Nanette Barragan (D-CA), the Mandating Exclusive Review of Individual Treatments (MERIT) Act would require CMS to render coverage decisions based on an individual basis, which replaces CMS’s current framework of reviewing drugs by class. While this bill is a response to CMS’s coverage with evidence development (CED) requirement for the recently FDA approved Aduhelm, the bill would support the entry of biosimilars by ensuring that biosimilars which should be covered by CMS are not wrongfully denied coverage simply by being categorized in the same class as other biosimilars which are not covered.