How Congress Can Help Biosimilars Succeed

By Anna Rose Welch, Editorial & Community Director, Advancing RNA

This week, the Biosimilars Council and The Atlantic teamed up for the third Atlantic policy briefing on biosimilars. Those of you who are regular readers know these policy briefings tend to be valuable avenues for me from a content perspective. I’ve written several articles based off the two previous events, which were held last December and in March. (The three articles are linked here, here, and here for your reference.) So suffice it to say, I was excited to learn there was another briefing scheduled for this week.

Though the information shared isn’t always groundbreaking for those who are very close to the space, a big draw for me is the diversity of the guests featured. There is typically a discussion with a congressman or senator, followed by a panel discussion among legal experts, patient organizations, Big Pharma, and/or biosimilar companies. This discussion was no exception.

During this newest installment, I was particularly drawn to the conversation with Vermont Representative Peter Welch, who introduced the Fair Access for Safe and Timely Generics Act (FAST Generics Act) to Congress. This bill has been heralded as a valuable policy to tackle the significant barriers posed by Risk Evaluation and Mitigation Strategies (REMS) many biosimilar makers have been facing. Welch focused largely on the role of government in biologics price reduction rather than specifically on biosimilars and biosimilar legislation. However, there were still some snippets of his interview I found worth noting by biosimilar stakeholders.

Government’s Role In The Battle For Lower Drug Costs

Welch’s discussion centered around a topic I have been thinking about quite a bit and, coincidentally, just broached in another recent article. Welch put to words what I’ve been struggling to articulate: one of the primary political conflicts the U.S. is facing today has to do with establishing what the government’s role should or shouldn’t be in certain initiatives—for instance, drug pricing.

Having lived through the 2016 election cycle and the first 100 days of Trump’s presidency, we’ve heard many impassioned, albeit vague, calls for drug companies to lower their prices. Though these critiques have mainly been leveled at innovator drug companies, we’ve also been hearing it in the biosimilar space. But what is often left out of the simplistic arguments that drug prices must come down — and I’m not denying they must — is the fact that the pricing landscape is far from simple. Pricing doesn’t involve one person brainstorming a number, slapping price tags onto a couple thousand auto injectors, putting it into a “free-of-charge” delivery truck, and sending it on its merry way to the pharmacy.

Rather, there is a convoluted and opaque system that exists between the biologics or biosimilar company that owns the product and the patient who pays the co-pays and insurance deductibles. Between “middle-man” expenses, like pharmacy benefit managers (PBMs) and distributors, and discounts and rebates, some companies may have a large price tag, but are realizing only a small margin of those prices. (In fact, PBMs have been taking more heat lately as doubts increase over their transparency and the fair re-allocation of their savings.) And though it’s still early days for biosimilars, this complex pricing ecosystem is a challenge biosimilar companies are also going to face — and likely to a heightened degree, given their promise to be more cost-effective.  

As Welch argues, the only way he can see medicine prices going down is if government plays a role. “There’s always an apprehension we will go too far,” he acknowledged. “And that’s fair. But if government doesn’t play a constructive role, the industry will tend toward rising drug costs and anticompetitive practices.”  

He believes one of the government’s roles in the pricing debate is price negotiation. I don’t get the sense Welch was arguing for establishing the price-setting practices we typically see abroad. (Here’s a nice breakdown of the five most common [and, according to PhRMA, problematic] forms of price-setting in wealthier nations.) For instance, though biosimilar-evangelist Steinar Madsen recently argued the U.S. would do well to reform its healthcare system to mimic Norway’s successful tender system, this is an unlikely solution to our problem. If the U.S. were to implement a similar tender system, competition would be severely limited right off the bat by race-to-the-bottom pricing and a quick elimination of biosimilar players.

Rather, in the U.S., the government’s role is to pass acts such as the FAST Generics Act, that have the capability of streamlining biosimilar development and getting them to the market more efficiently and, hopefully, more cheaply. Welch is also proposing a bill on the importation of drugs from Canada (which, judging from the angst I’ve heard over such proposals, is a whole other article on its own). He also referenced the importance of granting Medicare the ability to negotiate on drug prices, which is on President Trump’s list of goals. 

Is Congress Focusing On The Wrong Solutions For Biosimilars?

But, after listening to Welch speak, it seems misperceptions and hesitations within Congress serve as a stumbling block to government-assisted cheaper prices, as well as the timely market entry of biosimilars.

When it comes to lowering the price of drugs, many of Welch’s Republican colleagues in Congress are concerned about high prices but believe they can be lowered by increasing the rate at which the FDA approves drugs. Given the backlog of small molecule generics and their capacity for generating savings in the past, whittling down that backlog is certainly one path to cheaper drugs. But it’s far from the only solution — and, in fact, when it comes to the biosimilar space, I’d say it’s not the best solution either.

The U.S. is still lagging behind Europe, and there are certainly areas in which the FDA could improve in order to bolster its own productivity. That said, however, since Zarxio, there have been five other biosimilar approvals, as well as the approval of a follow-on insulin. There are currently two infliximab biosimilars approved in the U.S., setting up the market for the first instance of competition between biosimilars. We’ve been given notice of upcoming advisory committee hearings for Amgen/Allergan’s bevacizumab (Avastin) biosimilar and Mylan/Biocon’s biosimilar trastuzumab (Herceptin). Biosimilars are slowly branching into the oncology space, and the approval hearings seem to be getting more streamlined. What isn’t happening are the market launches of these products because of patent litigation.

As such, Welch argued in favor of reducing the innovators’ data exclusivity periods from 12 years to seven years, and he believes the government can and should aid in drug price reduction by rigorously enforcing exclusivity periods. “But a lot of my colleagues are so hesitant about that role of government that they oppose it,” he explained. “We no longer sit down and try to come up with reasonable steps to take us one step further.”

Ultimately, Welch emphasized the time has come to acknowledge the citizens who are faced with high copays and deductibles. And this will require some government involvement in order to ensure patients are protected from escalating prices.