 that it plans to spin off Sandoz, its generics and biosimilars division, into a new publicly traded, standalone company.

In a statement, Novartis said the plan seeks “to maximize shareholder value by creating the number one European generics company and a global leader in biosimilars, allowing Novartis shareholders to participate fully in the potential future upside,” for both Sandoz and Novartis Innovative Medicines.

Sandoz will be incorporated in Switzerland and listed in Swiss Exchange, SIX, with an American Depositary Receipt (ADR) program in the United States, the statement said. Novartis officials said they expect the plan to be tax neutral; while subject to market conditions, tax rulings, and shareholder approvals, it is expected to be complete in the second half of 2023.

As a standalone company, Sandoz will be able to focus its existing biosimilars pipeline of more than molecules. In the statement, Novartis said it aims to become “a focused innovative medicines company with a stronger financial profile and improved return on capital.”

“Our strategic review examined all options for Sandoz and concluded that a 100% spinoff is in the best interest of shareholders,” said Joerg Reinhardt, Chair of the Board of Directors of Novartis, in the statement. “A spinoff would allow our shareholders to benefit from the potential future successes of a more focused Novartis and a standalone Sandoz, and would offer differentiated and clear investment theses for the individual businesses.”

Vas Narasimhan MD, CEO of Novartis, said, “For Novartis, the separation of Sandoz would further support our strategy of building a focused innovative medicines company, with depth in 5 core therapeutic areas, and strength in technology platforms. 

In addition, both companies would be able to focus on maximizing value creation for their shareholders by prioritizing capital and resource allocation, employing separate capital structure policies, and increasing management focus on their respective business needs.”

The 5 core therapeutic areas are hematology, solid tumors, immunology, neuroscience, and cardiosvascular medicine.

According to Novartis, Sandoz generated $9.6 billion in 2021 and served more than 100 markets globally, with a strong presence in Europe as well as in the United States. Sandoz plans to continue investment in the key biosimilars, antibiotics and generic medicines.

The move will create Europe's largest generics company.

Novartis to Make Sandoz a Stand-alone Company

The Center for Biosimilars

As the coronavirus disease 2019 (COVID-19) pandemic spreads, it will continue to affect the biopharmaceutical industry. Biosimilars are no exception, and the effect on their uptake and adoption will be multifaceted. Here are several ways that biosimilars are most likely to be influenced by COVID-19:

Inaccessibility of healthcare providers (HCPs) and other medical decision-makers:

 currently, COVID-19 is setting the priorities for most HCPs and hospital decision-makers: take care of affected patients, navigate the evolving COVID-19 coverage and payment landscape, and maintain an adequate supply of beds and personal protective equipment. During this time, institutions may lack the bandwidth to continue to evaluate complex biosimilar-related decisions and may stick to the status quo, the reference product, or the existing preferred biosimilar product until the dust settles. This will slow down biosimilar uptake across the board. As providers defer to their status quo therapy options to avoid unnecessary disruption, uptake of the 8 therapeutic oncology biosimilars 

 in the United States so far may be particularly hard hit.

Repurposed contracting and promotional activities: 

although many regular account manager activities have been disrupted by social distancing measures, contracting can be conducted effectively via digital media. This is especially true for biosimilar manufacturers with existing relationships or customers interested in immediate cost-saving opportunities who are not yet preoccupied with managing COVID-19. Many financial decision-makers (pharmacy directors, medical directors) are postponing contracting discussions. Account managers can now focus on bringing accounts on board for biosimilars and leave “pull-through” sales activity for later. Also, manufacturers that are preparing to launch biosimilars during this quarter or the next may decide to postpone marketing or do a soft launch, which would entail supplying product, leveraging digital or nonpersonal channels, and contracting via tele-detailing. This could affect biosimilars such as Merck's trastuzumab and bevacizumab biosimilars, Ontruzant and SB8, respectively, which are lined up for launch over the next 2 quarters.

COVID-19 is causing a dramatic mismatch of supply and demand that manufacturers are struggling to forecast. On the supply side, manufacturing and supply chain processes in hubs such as China, India, and the United States are being disrupted due to global lockdowns. On the demand side, conflated factors make demand difficult to predict. On one hand, patients delay seeking treatment, particularly for less convenient administration methods such as infusions, which can lead to lower patient volume and overall demand. On the other hand, stockpiling and demand for subcutaneous or oral formulations may cause a spike in demand for certain products despite decreasing patient volume. In February 2020, the FDA 

 the first case of a shortage of a drug due to coronavirus. Although all manufacturers are working to mitigate the risk of supply shortages, biosimilar manufacturers that rely on facilities in Europe and Asia may be particularly at risk on the supply side (

Delays in biosimilar approvals and clinical trials: 

most clinical trials are likely to be delayed due to challenges managing protocols, deprioritization in favor of more immediate acute care needs, and patients’ inability to travel to appointments. Beyond the logistics and prioritization challenges, manufacturers run the risk of trial participants contracting the disease, which leads to 

 on how to manage clinical trials during the pandemic. All of the above-mentioned complicating factors are likely to undermine Prescription Drug User Fee Act/Biosimilar User Fee Amendments dates for biosimilars with approval decisions scheduled by the end of 2020 (

Increased budget pressure can accelerate postcrisis biosimilar usage: 

Without a doubt, the current situation is putting significant budget pressure on the health system, with many providers 

 copays, coinsurances, and out-of-pocket costs due to COVID-19. Although the broader impact on the economy and health system is still unclear, what is certain is that after the crisis, providers will actively look for ways to compensate for the extra expense they are incurring now, and it will be more important than ever for biosimilars to deliver on their promise to bring savings to the healthcare system. In the meantime, it will be important to monitor what manufacturers of reference products and biosimilars do to help support providers as this situation evolves.

There are additional aspects of the pandemic that will affect both biosimilars and reference products alike, such as ensuring safe supplies of medicine in patients’ homes as we all observe social distancing. Patients, either on their own or in consultation with their HCPs, may start to make adjustments to treatment regimens to allow for less time in the hospital or the clinic, especially when it comes to biologics that suppress their immunity, as also recommended by 

Such recommendations, along with the already limited infrastructure, overburdened healthcare system, and social distancing policies will create a very difficult environment for biologics and biosimilars businesses in the short and medium term. However, companies can think strategically about how to create opportunities from these difficult circumstances, such as leveraging virtual technology for contracting discussions, stressing cost savings with cash-strapped customers, and improving patient-support wraparound services. These will help them set the stage for success in a post—COVID-19 world.

At the end of the day, the priority for everyone right now is protecting health and safety. Although biosimilar adoption and evolution to new treatment paradigms may stall, we firmly believe that health and safety are foremost in mind for providers everywhere.

Christina Corridon, MPH, MBA, is a principal in ZS’s Boston office and leads the firm’s biosimilar vertical. Scott Kniaz, MBA, is a strategy insights and planning manager in ZS’s Washington, DC, office. Will Gatziolis, MBA, is an associate principal in ZS’s New York office. Ross Shahinian is a strategy insights and planning manager in ZS’s New York office. Sandeep Sangwan, MPharm, is a knowledge management consultant in ZS’s New Delhi office.  All are key leaders in the ZS biosimilar vertical.

The coronavirus disease 2019 (COVID-19) effect on the biosimilar industry will be deep and lasting, causing not just approval and launch delays but profound structural changes in how business is done.
 

COVID-19's Multifaceted Effect on Biosimilars

Ross Shahinian

The rapid growth of prescription drug costs continues to be a great concern in health care. The increasing use of specialty drugs, which includes biologics and totaled $360 billion in 2019, is one of the main drivers of prescription drug spending in the United States.

 Biologics, used as primary treatment for various cancers and other serious conditions, represented only 2% of all US prescriptions in 2017, yet accounted for 37% of net drug spending.

Given the vast amount of health care resources consumed by biologics, biosimilars are increasingly gaining attention as a viable option. As stakeholders evaluate biosimilars and their promised benefits, here’s a look at what biosimilars are bringing to health care today and the progress made so far.

No Longer a Theory: Cost Reductions and Increased Access

Even though the US biosimilar market is still in the early stages, promising signs are emerging demonstrating that biosimilars can bring value to health care. The theory behind biosimilars is that, much like generic drugs, they promote competition by competing with reference biologics on price. This leads to lower prices, increasing access to life-saving drugs with minimized financial toxicity for patients.

Because US biosimilars are in their infancy, there are many unanswered questions. However, significant price reductions in the European Union were documented when biosimilars entered the market.

 Price reductions for epoetins in 2015 following biosimilar competition were substantial: 25% to 29% in Scandinavia, 39% in France, and 55% in Germany. Price reductions for the reference biologic and biosimilar filgrastim after the 2015 launch of a filgrastim biosimilar ranged from 14% in France to 27% in Germany.

 Because of the differences in market conditions, pricing, and governmental policies, the European data do not predict exactly what might happen in the United States. However, they do suggest price reductions in the same drug class can be expected as biosimilars are launched.

When the United States finally created the regulatory framework for biosimilars in 2009, the Congressional Budget Office estimated the sales-weighted market average discount on biosimilars would be 20% to 25% relative to reference agents―a high bar to reach, but hopefully one that is attainable.

The first US biosimilar, a granulocyte colony-stimulating factor (G-CSF) filgrastim, finally became available in September 2016, and data are clearly demonstrating significant cost savings. For example, for the fourth quarter of 2017, the payment limit for biosimilar G-CSF filgrastim was 28% lower than for filgrastim, based on CMS payment limits of average sales price (ASP) plus 6%.

Similar results have been demonstrated across The US Oncology Network, a network of more than 1350 independent physicians who deliver value-based cancer care in the community setting. The ASP trend for G-CSF biosimilars over a 3-year period clearly shows substantial cost savings compared with the reference product, based on CMS data for the Oncology Care Model (Figure 1).

The declining ASP trend for G-CSF over this same 3-year period resulted in a progressive increment in savings.

If the results seen so far in the United States and Europe hold true, as more biosimilars enter the US market, price reductions in the same drug classes will happen. Examples of this are already emerging. Commercial payers and pharmacy benefit managers in the United States are leveraging the competition from the few biosimilars in the market to negotiate lower prices on biologics in the same class and, in some cases, prefer one product over another.

The potential for biosimilars to deliver cost savings appears to be significant. The 

 utilized 2016 sales data from a large selection of biologic drugs to project potential savings from biosimilars over a 10-year period, concluding “…biosimilars would lead to a $44 billion reduction in direct spending on biologic drugs from 2014 through 2024, or about 4% of total biologic spending over the same period, with a range of $13 billion to $66 billion.”

 The study noted the savings potential will be affected by various evolving features, such as payment rates, litigation, competition, and interchangeability.

In addition to cost savings, biosimilars add value through increased access for patients. According to the European data, a substantial increase in use of therapeutic biologics and biosimilars occurred when a biosimilar entered the market, with the increase being attributed to reduced costs driven by competition.

An analysis for the Biosimilars Council projected 1.2 million US patients could gain access to biologics by 2025 due to increasing biosimilar availability.

Based on the data, women, lower-income patients, and the elderly would benefit more than others, although all individuals with health insurance would profit by having more treatment options.

Many originator biologics will lose exclusivity over the next 5 years, generating projected savings of $78 billion as biosimilars enter the market.

 As several long-awaited therapeutic biosimilars for cancer finally launch, patients will have more treatment options and the potential for more affordable care. However, these benefits will be realized only if more stakeholders embrace biosimilars.

Progress so far has been slow. For instance, it has taken 5 years for the first US filgrastim biosimilar, Sandoz’s Zarxio, to achieve a 32% market share.

 Unfortunately, biosimilars do not take off quickly, mainly because displacing products that are firmly entrenched in the market is not easy (Figure 2).

Those of us involved in biosimilar development, including the Center for Biosimilars®, are collaborating and working hard to drive better education for all stakeholders, especially physicians, because they play a key role in recommending and prescribing biosimilars for their patients. There is much work to be done, as demonstrated by a recent physician survey in which 74% of respondents indicated “physician confidence” was one of the biggest barriers to biosimilar adoption.

 It will be critical to help providers understand the vital role biosimilars can play in achieving success with value-based care. Even in the face of declining ASPs, providers can succeed in the value-based world by utilizing biosimilars that hold down costs while increasing access.

Preparedness Can Overcome Operational Hurdles

Successfully integrating biosimilars into a cancer practice requires careful preparation. This is especially critical for the therapeutic biosimilars that are now emerging, because they impact virtually all aspects of the practice. Strategies must be defined to ensure the delivery of high-quality care and operational efficiency. Practices can begin by examining various biosimilar brands and then refining their choices. Technology and workflow tools should be modified to minimize errors, and processes should be developed for updating providers and staff as the biosimilar market evolves.

Operational excellence and clinician and patient confidence can be achieved by developing strategies that integrate biosimilars with each phase of the patient journey, including diagnosis and treatment selection, insurance authorization, patient education, treatment scheduling, treatment admixture, and finally, treatment administration. Careful planning and execution of each phase will ensure a seamless patient experience, resulting in satisfied patients and secure reimbursement. It also is critical to educate all staff, including prescribers, revenue cycle employees, nurses, pharmacists and admixture personnel, so they understand the role they play in delivering quality care when a biosimilar is involved.

With health care transitioning away from fee for service—style practice, the future looks bright for biosimilars. Because they can increase access and decrease costs, biosimilars are poised to play a vital role in value-based care. As patients take on an increasing share of rising health care costs, biosimilars may become a valuable tool in minimizing financial toxicity while maintaining quality of care and stretching limited health care dollars. With the advent of coronavirus disease 2019, stakeholders may enthusiastically embrace biosimilars as they pursue ways to curb costs. Empowering the value biosimilars bring to health care just might be a big part of the solution everyone is seeking.

1. Statista. Prescription drug expenditure in the United States from 1960 to 2020. Accessed June 15, 2020. 

https://www.statista.com/statistics/184914/prescription-drug-expenditures-in-the-us-since-1960

2. Roy A. Biologic Medicines: The biggest driver of rising drug prices. 

https://www.forbes.com/sites/theapothecary/2019/03/08/biologic-medicines-the-biggest-driver-of-rising-drug-prices/#553ba24918b0

3. Patel KB, Arantes LH, Tang WY, Fung S. The role of biosimilars in value-based oncology care. 

4. Mulcahy AW, Hlavka JP, Case SR. Biosimilar cost savings in the united states initial experience and future potential. 

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6075809/

5. Biosimilars in the United States: Providing more patients greater access to lifesaving medicines. The Biosimilars Council. 2017. Accessed June 15, 2020. 

http://biosimilarscouncil.org/wp-content/uploads/2019/03/Biosimilars-Council-Patient-Access-Study.pdf

6. McGowan S. 5 years of biosimilars in the US: what have we learned? 

. January 29, 2020. Accessed June 15, 2020. 

https://pharmaphorum.com/views-analysis-market-access/5-years-of-biosimilars-in-the-us-what-have-we-learned/

Biosimilars Bring Value to Health Care

Tommy Pourmahram

Jim Hassard is a senior vice president at Coherus BioSciences. An experienced biopharmaceutical marketing executive, he has served in senior roles with Schering-Plough Canada, Amgen, and Medivation. Jim holds an MBA from Nova Southeastern University and a bachelor's degree in pharmacology from the University of Toronto.

Jim Hassard, MBA

Our health care spending as a country is more than any other country in the world (including all developed countries) both in total cost and on a per capita basis as well as percentage of gross domestic product. However, outcomes are not matched compared to spending and in some cases our health care system underperforms other countries.

In 2022, our health care spending rose to $4.5 trillion in health care and is projected to increase even further, to nearly $6 trillion in 2027.

 Rising health care costs not only poses a threat to sustainability, but also increases risk of outcomes due to increase in financial toxicity. The US biologics market has grown 12.5% annually on average over the last 5 years on an invoice-price basis, faster than nonbiologics. In 2021, the United States spent $568 billion on medicines including $260 billion on biologics. Spending on biologics comprise 46% of total pharmaceutical spending but only 2% of total prescriptions.

Thus, understanding and creating competitive markets in biologics would facilitate addressing multiple challenges emanating from ever escalating drug prices particularly in biologics market. Entry of biosimilars in 2015 in US health care (almost a decade after European Union in 2006) has a potential to save close to $181 billion provided appropriate assimilation through multiple tiers from manufacturers of biosimilars, smoother regulatory approvals, provider acceptance and payer and pharmacy benefit manager (PBM) cooperation.

Congress passed the Biologics Price Competition and Innovation Act (BPCIA) 2009, creating a pathway for biosimilars entry and approvals in the US. Biosimilars have no clinically meaningful differences in safety, purity, or potency. They must undergo the same rigorous standards set forth by the FDA for reference biologics. However, they have enormous potential to address financial toxicity at an individual level, insurance level and health care system level as whole. Biosimilar competition may help decrease reference product pricing. Due to archaic implementation system though it took almost 6 years from the passage of the BPCIA in 2009 the first biosimilar approval happened in 2015. Despite slower initial uptake, biosimilar launches in the last 5 years have generally been more successful than earlier. This fact raises hopes that savings and patient access could increase substantially.

While uptake of biosimilars has not been equal amongst all specialties, oncology has led the adoption of biosimilars the most. Pegfilgrastim and epoetin alfa biosimilars, both launched in 2018, have seen moderate uptake achieving 37% share of molecule volume in the first 3 years. Pegfilgrastim biosimilar share has continued to rise slowly. The 3 other molecules with biosimilar launches in 2019—bevacizumab (82%), trastuzumab (80%), and rituximab (67%)—achieved significant uptake within the first 3 years. Oncologists have paved the way for successful integration of biosimilars.

In 2023, a major shift happened in the biosimilars market with the launch of the biosimilars for some of the most widely used drugs in the world. It is well documented that biosimilars can dramatically reduce health care costs. Savings from biosimilar adoption could range from $38.4 billion to $124.5 billion from 2021 to 2025, according to a 2022 study.

 Biosimilars cost an average of 30% less than reference biologics—a critical factor given that biologics represent 2% of all US prescriptions but nearly 40% of net drug spending.

However, despite huge success in the oncology biosimilars arena, the adoption of biosimilars in other medical specialties has not been a huge success. Infliximab has seen the lowest adoption of biosimilars, with volume share at 3% after 1 year and rising slowly to 13% after 3 years.

The introduction of lower cost biosimilars has led to declines in overall molecule costs per unit of biologic and/or biosimilar. This has over time, driven down costs for originators as well.

Biosimilars were one of the first realistic alternatives that would allow the provision of appropriate affordable care to tens of millions of Americans in multiple ways from reducing out-of-pocket costs to impacting financial toxicity in a positive way. We all have a collective responsibility of embracing, adapting, and administering biosimilars to address issues from the ecosystem level, from the individual patient to the health system across the country.

As we continue to see widening gaps in access to care increasing risks to bankruptcies due to debts arising out of medical care, innovative approaches for acceptance, assimilation, and adoption of biosimilars is a must to reduce disparities. Financial toxicities are very well recognized cause of adverse outcomes where a patient may prefer food over expensive drugs. Biosimilars offer a realistic option at multiple levels as a solution.

Unlike Europe, where biosimilars were first approved in 2006 and have become a household entity, entry, introduction, and assimilation of biosimilars in the therapeutic armamentarium has not been without challenges. First, even after passage of BPCIA it took almost 5 years to introduce the first biosimilar. Then there was a struggle between biosimilars and biologics where a legislative push took place to lump all biosimilars in one J code (which would have led to downward spiral of average sales price eventually triggering premature failure).

I was very heavily involved in supporting biosimilars as chairman of biosimilars committees for Community Oncology Alliance and the Association of Community Cancer Centers. I reached out to the Office of Management and Budget Office under Director John Michael "Mick" Mulvaney and the White House office supporting initiative to create unique Q codes which eventually happened. Then, I took a personal initiative to start writing, publishing, and educating my colleagues about the role of biosimilars at individual level and in value-based care.

While Medicare beneficiaries with cancer and supportive drugs in cancer saw quick uptake reducing out-of-pocket costs, with rising number of beneficiaries who are now on Medicare Advantage plans and Managed Care Organizations managing Medicaid Benefits, have not yielded full benefit of adoption of biosimilars due to some of occult policies by the PBMs advising insurance plans. PBMs have started creating favorites and preferred lists, restricting coverage to 1 biosimilars (and frequently, the most expensive) placing unnecessary burden on providers to succumb to pass on higher out-of-pocket costs to consumers and patients once again risking financial toxicities. Nevertheless, hope is eternal and eventually payers and law makers will realize the obstacles to fair and just place for biosimilars in day-to-day use and unfair practices will be corrected.

CMS. National Health Expenditures: 2022 Highlights. 2023. Accessed March 1, 2024. https://www. cms.gov/files/document/highlights.pdf

2)Biosimilars in the United States 2023-2024: Competition, savings and sustainability. IQVIA. January 31, 2023. Accessed March 1, 2024.

3) Mulcahy A, Buttorff C, Finegold K, et al. Projected US savings from biosimilars, 2021-2025. 

. 2022;28(7): 329-335. doi:10.37765/ajmc.2022.88809

4) New Report finds biosimilars could save states billions of dollars annually. Biosimilars Forum. October 2021. Accessed March 1, 2024. 

https://biosimilarsforum.org/2021/10/13/new-report-finds-biosimilars-could-save-states-billions-of-dollars-annually/

5)HHS Inspector General report: Biosimilars could generate significant Medicare Part D savings. Biosimilars Forum. March 2022. Accessed March 1, 2024. 

https://biosimilarsforum.org/2022/03/31/hhs-inspector-general-report-biosimilars-could-generate-significant-medicare-part-d-savings/

Kashyap Patel, MD, CEO of Carolina Blood and Cancer Care, a member of the Community Oncology Alliance, and member of The Center for Biosimilars® Advisory Board, glances back at the development of the biosimilar industry and the last 5 years of progress.

The Role of Biosimilars: Advancing Access, Financial Health, and System Sustainability

Kashyap Patel, MD, is the managing partner at Carolina Blood and Cancer Care and has been with them since its inception in 2004. Dr Patel received his medical degree from Thomas Jefferson University Hospital, has authored several research articles regarding melanoma, and is board certified in hematology, oncology, and internal medicine.

Kashyap Patel, MD

The Senate voted 94-5 in favor of the 21st Century Cures Act, the sweeping bill that will fund National Institutes of Health research, mental illness and substance abuse treatment, and FDA reform. Senator Lamar Alexander, R-Tennessee, called the bill’s passage “a Christmas miracle…that will help virtually every American family.”

The legislation now heads to President Barack Obama, who has vowed to sign it into law as soon as it reaches his desk.

Senate Overwhelmingly Passes 21st Century Cures Act

AJMC Staff

Sandeep Sangwan, MPharm

The Department of Justice (DOJ) recently filed a brief with the Supreme Court arguing that the Affordable Care Act (ACA) should be found unconstitutional. Although the brief was focused primarily on 3 insurance coverage provisions of the ACA, the DOJ also argued that even the “ACA’s comparatively ‘minor,’ ancillary provisions” are inextricably intertwined and should fall with the unconstitutional provisions. One of the many “minor, ancillary provisions” that would fall under the government’s argument would be the Biosimilar Price Competition and Innovation Act (BPCIA). The BPCIA established a framework for exclusivity for novel biological products and FDA approval of lower-cost “biosimilar” versions of such drugs. It also provided a system for litigation of patent disputes involving those products. It is projected that by 2026 the BPCIA will have saved over $50 billion for patients, health care payers, and providers.

The BPCIA has been far from a perfect system, and arguably it has not achieved its goal of meaningfully reducing the cost of life-saving biological products in the United States. In fact, the United States lags significantly behind the European Union and India in biosimilar approvals and cost savings. And because it is less than ideal from both a patient and business standpoint to toss the BPCIA framework out without a viable system to replace it, now is the time to consider what works well with the BPCIA and what improvements should be made. After all, instead of just blaming the cow, Chicago dealt with the great fire by building one of the world’s greatest skylines.

So, here is what we like about the BPCIA and the 6 things that we would change if we go back to the biosimilars drawing board.

What to Keep: The Approval Standard and the Opportunity for Interchangeability

There are 3 positive aspects of the BPCIA that ultimately should be retained.

: Initially the subject of frustration and derision, the standard for approval of biosimilars is the appropriate standard from a scientific and safety perspective and should be retained. The BPCIA requires that for approval a biosimilar must be demonstrably “highly similar to the reference product, notwithstanding minor differences in clinically inactive components.” There should also be “no clinically meaningful differences in terms of safety, purity, and potency.”

 The statute further provides that this standard can be met through analytical studies, animal studies, and clinical studies, with a focus on the assessment of immunogenicity.

 Companies were initially frustrated because neither the statute nor FDA regulations described the quantum of evidence needed to demonstrate that the “highly similar” standard has been met. But the FDA is becoming more familiar with the types of information it should be seeing from applicants, and therefore, approvals (until very recently) were increasing. In addition, the FDA has established a system of meetings for applicants to discuss their plans for submitting their applications and ways to resolve issues in those applications. Although the regulatory process can still be improved through experience, the statutory standard for approval is the correct one to ensure the safety and efficacy of biosimilars.

 of interchangeability is also a key aspect of the statute that should be retained, although the mechanism needs tweaking, as discussed below. Interchangeability allows a pharmacist to fill a prescription for a higher-cost branded drug with the lower-cost biosimilar version of the same product. This mechanism exists for traditional, small molecule drugs based solely on proof that the active ingredient is the same and that it will result in a similar amount of drug being available in the body as the branded version. No additional clinical trials for efficacy or safety are required. Automatic substitution has resulted in substantial cost savings to consumers and increased market penetration for small molecule products. But biosimilar manufacturers seeking interchangeability in the US market must run complex clinical trials, proving that the drugs will maintain efficacy if patients are switched between the brand and biosimilar products. The complex scientific proof that is required and the high cost of the trials have resulted in no awards of interchangeability in the United States, and the lack of a meaningful opportunity for interchangeability is the primary reason that companies are hesitant to pursue biosimilars.

Because it is unclear whether there will be an interchangeable biosimilar in the near future, the current approach to interchangeability has failed. However, interchangeability is an important statutory incentive for biosimilar applicants, and without it biosimilar applicants must compete with an existing biological product that is sold by a company that often has superior marketing power. The difficulty in attaining interchangeability should not be a reason to abandon it with a new statutory regime; it is incumbent upon the FDA to devise regulations to make it scientifically attainable. We provide a proposal below that provides a further incentive for applicants to seek biosimilar approval.

Notice to sponsor of biosimilar application

: Finally, although the information exchange or “patent dance” provisions of the statute should be eliminated, any new statutory scheme should retain the requirement that the applicant notify the reference sponsor that a biosimilar application has been filed and is under review. Much like in Hatch-Waxman Act cases, such notification would be the trigger for a patent infringement lawsuit and additional exclusivity for the reference product. However, as we discuss further below, significant improvements to this notice requirement are needed.

If the ACA is found unconstitutional in its entirety, we propose that Congress make the following 6 changes to the BPCIA when it is constructing a new pathway for biosimilar approvals and litigation: (1) mandatory biosimilar dispensing for treatment-naïve patients; (2) expansion of the Purple Book; (3) first filer exclusivity; (4) limited period of exclusivity with a potential compulsory license; (5) elimination of the patent dance; and (6) streamlining of the resulting patent litigation.

Default use for treatment-naïve patients

: One of the primary reasons that biosimilars have not taken off in this country is that potential applicants are intimidated by the high costs and risks of the regulatory and litigation processes. Without a meaningful opportunity for interchangeability, the applicant will be forced to compete with the reference sponsor, who will likely be better equipped to market and detail their own product. However, if the statute creates a market for an applicant’s biosimilar product, then there is greater incentive for more companies to undertake the risks associated with filing a biosimilar application. To that end, Congress could mandate that all treatment naïve patients be treated with an approved biosimilar product, if available, unless the treating physician or patient opts out. Although the safety of switching from a reference product to a biosimilar has been debated, it is generally accepted that treatment-naïve patients can be safely started on a biosimilar. And because most biological products treat chronic conditions, this requirement will create a sustained market for the biosimilar applicant and incentivize competition. 

 that setting generic pharmaceuticals as the default option has been shown to increase generic prescribing rates. The same should be expected for biosimilars. This approach would provide patients access to lower-cost treatments, which has been shown to increase medication adherence and thus reduce preventable morbidity and mortality. We would suggest price controls on the applicant in order to receive this benefit; for example, requiring the biosimilar to be priced at a 25% discount from the average sales price of the reference product over the last 5 years. The applicant should also have to maintain that price (absent competition) for at least 2 years.

: In the context of small molecules and Hatch-Waxman, the FDA’s Orange Book has been a useful tool—sponsors have been able to give notice to the public as to what patents purportedly protect their product, and applicants have a better understanding of the patent landscape that could be facing them. On the other hand, the Purple Book for biological products contains very little useful information. In fact, there has been proposed legislation to expand the Purple Book. Those calls should be heeded. As with the Orange Book, sponsors should be required to list in the Purple Book patents covering their approved biological product, and applicants should be required to submit a certification to FDA as to each listed patent that the applicant will not launch its biosimilar product until after the patent expires or that the patent is believed to be invalid and/or will not be infringed by applicant’s biosimilar product if marketed. Unlike the Orange Book, however, the Purple Book should include relevant process patents, because the process for making a biologic product is more often the subject of patent protection. The Purple Book should not include any use codes, and there should be penalties for improper listing of patents in the Purple Book.

: There is currently no exclusivity provided for the first biosimilar applicant to file an application. As a further incentive to encourage filing of biosimilar applications, there should be a 6-month exclusivity period for the first applicant to file a biosimilar application, which would be forfeited if that first filer does not obtain approval within 3.5 years of filing and launch its product within 2 years of approval of its application. This approach would be similar to the first-filer exclusivity period under Hatch-Waxman.

Limited exclusivity and compulsory licensing

: Instead of the current 12 years of exclusivity, Congress should separate the exclusivity period and provide a compulsory licensing period if litigation runs too long. Our proposal would grant a reference drug sponsor a total of 8 years of exclusivity prior to compulsory licensing while allowing biosimilar applicants to challenge patents 5 years into the exclusivity period. Under this approach, the sponsor should be provided a 5-year period of exclusivity during which no biosimilar application may be filed. After that 5-year period, the applicant can file an application referencing that biological product. Like with Hatch-Waxman, the applicant would be required to file with FDA a certification of patent invalidity and/or non-infringement as to every patent listed in the Purple Book, and must inform the sponsor of its application and certifications once FDA begins formal review. If the sponsor files suit in 60 days from receipt of notification from the applicant, then the biosimilar application shall not be approved for 3 years (earlier if the applicant is successful in the litigation). If this sounds like Hatch-Waxman litigation, well it’s very similar. The twist is that if the litigation is still pending after 3 years and the biosimilar application is already approved, the reference sponsor will provide a nonexclusive license to the applicant that will allow the applicant to launch its product and set a standard for damages in the event the launch was improper. Compulsory licensing schemes for pharmaceuticals have been proposed in other countries, such as the United Kingdom, and the international Agreement on Trade-Related Aspects of Intellectual Property Rights already allows for compulsory licensing in some situations.

: One of the most bemoaned aspects of the BPCIA is the so-called patent dance, and with good reason. It is confusing, causes unnecessary delay, and frequently involves gamesmanship. We propose eliminating it in its entirety. Under a new statute, applicants would be required to inform the sponsor of the certifications it provided to the FDA and provide information regarding its application so that the sponsor can determine which patents to assert. Applicants would not be required to provide detailed reasons for their certifications: Lawsuits are inevitable regardless of what is included in the detailed statement, and court-required contentions in patent cases provide advanced notice of the applicant’s patent invalidity arguments well before trial. Applicants would be permitted to restrict review of information to outside counsel eyes only, which would include independent expert review. As stated above, if the sponsor files suit within 60 days of receipt of this information, then they are entitled to another 3 years of exclusivity.

 Finally, the resulting patent litigation can be improved by a statutory requirement limiting the number of patent claims asserted in the litigation. The statute could require the number of asserted claims to be limited by the end of fact discovery, and it could limit either the total number of asserted claims or limit the number of claims per patent family or based on patent subject matter. In addition, patentees could ask the court to increase the number of asserted claims upon a showing of good cause.

In the 10 years since the BPCIA has passed, we have had the opportunity to learn many of the strengths and weaknesses of the act as passed within the Affordable Care Act. If either the Supreme Court or Congress ultimately determines that portions of the ACA are to be repealed, the fundamental premise of the BPCIA should be preserved or reissued in order to improve patient access to lower-cost medical treatments. At the same time, the important lessons learned should also be implemented in the form of the changes we have proposed here. As with the rebuilding of Chicago after the fire, a better version of the BPCIA is possible with careful planning and vision.

1. Regulation of Biological Products. §262(i)(2), 42 USC (2017).

2. Regulation of Biological Products. §262(i)(2)(A)(i)(I)(aa)-(cc), 42 USC (2017).

IP Attorneys Propose a New Biosimilar Pathway in Case of ACA Repeal

Joel M. Wallace is an intellectual property attorney 

Joel M. Wallace

Sourced-Center for Biosimilars Staff

Madelaine Feldman, MD, is a rheumatologist in private practice with The Rheumatology Group in New Orleans, Louisiana. She is president of the Coalition of State Rheumatology Organizations, which is a founding member of the Alliance for Transparent and Affordable Prescriptions. She is also chair of the Alliance for Safe Biologic Medicines and a past member of the American College of Rheumatology’s insurance subcommittee.

Authors