Guest Column | November 5, 2019

Will Authorized Biologics Disrupt The Market For Biosimilars?

By Ha Kung Wong and Erica L. Norey, Venable Fitzpatrick


What we have learned from authorized generics and the interchangeable guidelines

Authorized small molecule generics have been subject to some controversy. Some take the view that an innovator’s launch of an authorized generic is anticompetitive by design and implemented solely to discourage generic entry into the market by undercutting a generic’s ability to turn a profit, leading to less ANDA filings and generic competition over time. Others believe that they are procompetitive, by not only offering an immediate lower cost alternative to consumers but also by providing more competition in the generic marketplace which may lead to lower prices for consumers. With the passing of the Biologics Price Competition and Innovation Act (BPCIA) in 2009, and a recent increase in biosimilar activity in the U.S., this same debate has started to enter the fledgling biosimilar space, leading commentators to ask whether we will see “authorized biologics” / “branded biosimilars” in the near future and how that might affect the biosimilars marketplace.

Many of the doomsday scenario predictions for biosimilar competition if authorized biologics were to enter the space prematurely assume mainstream development and adoption of authorized biologics by innovator companies in the current market and do not take into consideration the outcomes seen over the past 18 years with authorized small molecule generics. Although the small molecule generic drug market and the current biologics/biosimilar market are ultimately not directly comparable, at least not until interchangeables enter the market, it may be instructive to look at how authorized generics have impacted the small molecule space so as to determine whether any of what we have learned may help predict how authorized biologics may impact the biosimilar/interchangeable market in the future.

What the past has taught us: Launching authorized generics has not significantly affected ANDA filings and has resulted in a more robust generic market and lower prices for consumers overall.

Although the marketing of authorized generics began in the 1990s, the practice just began to gain in popularity around 2003, potentially due to an uptick in 180-day exclusivity awards under the Medicare Modernization Act and increased generic penetration in the market.1 Concerns over the commercial effects of these authorized generics, especially when marketed during a generic’s 180-day exclusivity period, spurred a number of research studies, reaching varying conclusions.2

In 2006, at the request of members of Congress, the FTC began the process of obtaining authorization to conduct its own study to examine the short- and long-term competitive effects of authorized generic drugs.3 Drawing upon information it collected directly from 59 brand-name and 59 generic companies (through compulsory information requests), FDA databases, and pricing and sales information from commercial sources, including information related to 119 oral-solid authorized generic products first marketed between January 1, 2001 and December 31, 2008, the FTC sought to compile a more robust dataset than previous studies from which to draw its conclusions.4 While the Final Report, published in 2011, and its preceding Interim Report, published in 2009, noted that there was considerable evidence that “[Authorized generic] entry significantly decreases the revenues of a first-filer generic company during its 180-day exclusivity period,”5 the Final Report ultimately concluded that, while there were some examples to the contrary, patent challenges by generics were not deterred on a whole, despite the potential for lost revenue, and that the consumer ultimately benefitted from the introduction of authorized generics in the market, including paying lower prices from additional competition during and after the 180-day exclusivity period. Specifically, the Report concluded, in part:

“[P]atent challenges, even on drugs with low sales, remain robust and, by most measures, have increased despite the prevalence of authorized generic competition;”6 and

“[C]ompetition from an authorized generic during the 180-day exclusivity period is associated with retail generic prices that are 4-8 percent lower and wholesale generic prices that are 7-14 percent lower than prices without authorized generic competition.”7

Importantly, since its publication in 2011, this Report has remained one of the most robust studies conducted on these issues and its findings have remained unchallenged by any new quantitative analysis of the same caliber. With this information, it appears that despite the anxiety some commentators have assigned to authorized small molecule generic entry, and its potential to discourage generic competition, the real world analytics indicate that authorized generic entry has not halted generic competition and in fact provides important benefits such as lower prices overall to consumers.8

Biosimilars are not interchangeable with their brand name counterparts — which is a fundamental difference from the small molecule space and will be a factor in the economics of authorized biologics.

With the above information, understanding why it is difficult to draw a direct parallel between the small molecule generic market and the biosimilar market requires an understanding of how these products are treated at the pharmacy counter.

Small molecule generic drugs on a whole are created to be therapeutically equivalent to their innovator/reference listed counterpart. The FDA “requires drug companies to demonstrate that the generic medicine can be effectively substituted and provide the same clinical benefit as the brand-name medicine that it copies.”9 As such, innovator small molecule drugs may be substituted at the pharmacy counter for their generic counterparts, many times without the need to involve the prescriber.10 While specific state regulations vary on when a generic may be substituted for the innovator’s product at the pharmacy, the Department of Health and Human Services has reported that “[g]eneric substitution rates . . . are almost 90 percent when there is a generic equivalent available.”11 Because this substitution is so straightforward, and rarely involves a medical decision, generic drug makers can expect sales of their products without much effort put into advertising, brand loyalty, or carving out a market space for themselves.

On the other hand, because of their nature and method of manufacture, truly identical copies of biologic products by others are “currently impossible to produce.”12 Under the BPCIA, “copies” of innovator biologics may come in the form of either a biosimilar or an interchangeable. Biosimilars are “highly similar to and [have] no clinically meaningful differences from an existing FDA-approved reference product.”13 But it is not until a biosimilar undergoes additional testing to show, for example, that the product “is expected to produce the same clinical result as the reference product in any given patient” that it will be classified as an interchangeable.14 This interchangeable designation brings with it the ability to substitute the biologic for an interchangeable product at the pharmacy counter without the involvement of the prescriber, and the NCSL has reported that as of May 2019, “47 states have passed biosimilar substitution laws with most requiring that the drug be designated as interchangeable.”15 While this places an extra emphasis on the importance of interchangeable development to the economics of the biologics space, it is important to note that no interchangeables have been approved by the FDA to date.

Also, recent reports have shown that the market penetration of biosimilars over innovator biologics is nowhere near that of generic small molecules.16 One extreme example includes sales of biosimilar Inflectra, which was reported to have only captured 1.3% of the infliximab market one year after its launch.17 While there may be many factors contributing to this phenomenon in the biologics space, the fact that biosimilars are not interchangeable for their innovator counterparts is certainly a contributing factor.18 Not only are they ineligible for automatic substitution at the pharmacy, but prescribing physicians may also be “reluctant to switch patients who are stable on the reference product to a new therapy.”19 Because the market penetration for biosimilars has not been as quick as small molecule generics, there may be little market incentive for innovator companies to join the biosimilar market in the form of a branded biosimilar / authorized biologic. While at least one innovator company has publicly hinted that it may be considering the development of “second versions of their innovator biologics,”20 we are likely still years away from observing any market changes that could possibly result from any mainstream adoption and implementation of branded biosimilar / authorized biologic development and sale, which, for reasons stated above, will likely be highly dependent on and influenced by the development of interchangeables.

An important situation to keep in mind is the impending transition of insulin products from a small molecule regulatory scheme to the biologics regulatory scheme, which is expected to occur in 2020.21 The hope is to open up this market, which has been plagued with rising prices and accessibility issues, to biosimilar competition, by “enabl[ing] a more robust route for developing lower cost copies of insulin, including products that are fully interchangeable with branded insulins.”22 According to the Orange Book, there are over 30 branded insulin products available on the prescription market, including a couple of follow-on insulins (Sanofi’s Admelog and Eli Lilly’s Basaglar)23 but only one generic - Insulin Lispro Injection - which is an authorized generic of Humalog U-100 launched on May 22, 2019 by Eli Lilly at approximately 50% of the brand price.24 Novo Nordisk has also recently announced plans to launch authorized generics of its NovoLog (insulin aspart) and NovoLog Mix (insulin aspart protamine and insulin aspart) products for January 2020 at approximately the same discount.25 The question becomes, how will these authorized generics be handled in the transition to being regulated as biologics? While there is clear intent that all insulins approved under the Food Drug and Cosmetic Act “shall be deemed to be a license for the biologic product under section 351 of the Public Health Service Act” once the transition takes place in March 2020,26 it is unclear if the interchangeability of the authorized generic will be preserved. Potentially, the FDA may, to keep with the agency’s commitment to “bring competition to the insulin market to lower prices and expand access,”27 grandfather in any existing authorized generic that is already on the market as an “interchangeable product” (although it may have a different official name and may not be required to meet the specific clinical requirements of a new interchangeable). Doing so would also limit disruption of existing marketplace competition, interchangeability at the pharmacy counter established under the small molecule scheme (in the case of the authorized generics), and, to the extent it exists, patient reliance on its accessibility.28

In sum, the likelihood of mainstream development and entry of branded biosimilars / authorized biologics, their economics, and their effects on competition, will likely not be realized until interchangeables are approved by the FDA. The final interchangeable guideline that came out in May 2019 may well accelerate this process, and state laws that provide substitution rules for interchangeables will also have an impact, particularly those that have mandatory substitution. However, once the interchangeable market matures, there is potential that the outcomes for authorized biosimilars that enter the market may model what we have seen with the authorized generic market, which appear to have been a positive for both the consumer and competition.


  1. See, e.g., Authorized Generic Drugs: Short-Term Effects and Long-Term Impact, FEDERAL TRADE COMMISSION (Aug. 2011) (“FTC 2011”), at 11, 12, 32, available at (last visited Sept. 24, 2019); Thomas Chen, Authorized Generics: A Prescription for Hatch-Waxman Reform, 93 UNIV. OF VA. SCH. OF LAW 459, 461-62 (March 2007).
  2. See, e.g., FTC 2011 at 5, 34-36; Chen at 469.
  3. FTC 2011 at 6-8; Chen at 462.
  4. See FTC 2011 at 5-7.
  5. See FTC 2011 Executive Summary at ii, iii (“The new analysis also confirms the Interim Report’s finding that authorized generics have a substantial effect on the revenues of competing, generic firms during the 180-day exclusivity period; depending on how the models are specified, they estimate that the presence of authorized generic competition reduces the first-filer generic’s revenues by 40 to 52 percent, on average. Moreover, the impact of [authorized generic] competition on first-filer revenues persists outside of exclusivity. Revenues of the first-filer generic manufacturer in the 30 months following exclusivity are between 53 percent and 62 percent lower when facing an [authorized generic].”).
  6. FTC 2011 Executive Summary at vii.
  7. FTC 2011 Executive Summary at ii.
  8. The only potential anticompetitive harm the FTC highlighted with respect to authorized generics was their potential use as leverage in pay-for-delay settlement agreements, wherein authorized generic launch may be suppressed. See FTC 2011 Executive Summary at vi. Fortunately, recent reports from the FTC are beginning to show a drop in occurrence of pay-for-delay agreements overall and especially those involving delayed authorized generic entry, and therefore may now be of diminishing concern. See FTC Report Shows a Drop in Potential Anticompetitive Drug Settlements, THE CENTER FOR BIOSIMILARS (May 28, 2019), available at (last visited Sept. 24, 2019); Jonathan Gardner, Pay-for-Delay Deals Disappearing, FTC Says, BIOPHARMADIVE (May 24, 2019), available at (last visited Sept. 24, 2019); Zachary Brennan, FTC Finds Dwindling Number of Anticompetitive Reverse Payment Deals, REGULATORY AFFAIRS PROFESSIONALS SOCIETY (May 23, 2019), available at (last visited Sept. 24, 2019). In any event, the FTC monitors all such agreements and seeks to block implementation of those with such anticompetitive effects.
  9. Generic Drug Facts, U.S. FOOD & DRUG ADMINISTRATION (June 1, 2018), available at (last visited Sept. 24, 2019).
  10. Generic Drug Substitution Laws, NAT’L CONFERENCE OF STATE LEGISTLATURES HEALTH PROGRAM: PRESCRIPTION DRUG RESOURCE CENTER (May 3, 2019) (“NCSL 2019”), available at (last visited Sept. 24, 2019).
  11. ASPE Issue Brief, Expanding the Use of Generic Drugs, OFFICE OF THE ASSISTANT FOR PLANNING AND EVALUATION, OFFICE OF SCIENCE AND DATA POLICY, U.S. DEPT. OF HEALTH AND HUMAN SERVS. (Dec. 1, 2010), at 3-4 (emphasis added); see also NCSL 2019.
  12. NCSL 2019.
  13. Biosimilar and Interchangeable Products, U.S. Food & Drug Administration (Oct. 23, 2017) (“Biosimilar and Interchangeable Products”), available at (last visited Sept. 24, 2019).
  14. Id.
  15. NCSL 2019 (emphasis added); Biosimilar and Interchangeable Products.
  16. Doug Long, Global Generic and Biosimilars Trends and Insights, IQVIA, at 7, 49-52, 58 (Feb. 13, 2018), available at (last visited Sept. 24, 2019); IQVIA Data Show Biosimilars Struggling for Market Share in the US, J. CLIN. PATHWAYS, available at (last visited Sept. 24, 2019).
  17. Long at 52.
  18. Henry G. Grabowski et al., Regulatory and Cost Barriers Are Likely To Limit Biosimilar Development and Expected Savings in the Near Future, 33(6) HEALTH AFFAIRS1048, 1050, 1053-54 (June 2014), available at (last visited Sept. 24, 2019).
  19. Grabowski at 1051.
  20. Kelly Davio, Eli Lilly Hints That It May Pursue “Branded Biosimilars” of Its Own Products, THE CENTER FOR BIOSIMILARS (Feb. 18, 2019) (internal quotation marks omitted), available at (last visited Sept. 24, 2019).
  21. Statement from FDA Commissioner Scott Gottlieb, M.D., on the Agency’s Continued Efforts to Bring Competition to the Insulin Market to Lower Prices and Expand Access, U.S. FOOD AND DRUG ADMINISTRATION (Apr. 2, 2019) (“FDA 2019”), (last visited Oct. 14, 2019).
  22. FDA 2019.
  23. Amelia Dmowska & Payal Marathe, FDA Approves Admelog, the First Biosimilar Mealtime Insulin, DIATRIBE LEARN (Jan. 17, 2018), (last visited Oct. 14, 2019); John White & Jennifer Goldman, Biosimilar and Follow-on Insulin: The Ins, Outs, and Interchangeability, J. Pharm. Technol. 35(1):25-35, at 28 (2018) (“White & Goldman”), available at (last visited Oct. 14, 2019). Follow-on insulins are not exact copies, but similar to their reference listed product under the Food Drug and Cosmetic Act.
  24. PRNewswire, Lilly’s Lower-Priced Insulin Now Available, LILLY (May 22, 2019), (last visited Oct. 14, 2019); Novo Nordisk Plans Authorized Generic Insulins for Early 2020, THE CENTER FOR BIOSIMILARS (Sept. 12, 2019) (“The Center for Biosimilars 2019”), (last visited Oct. 14, 2019).
  25. The Center for Biosimilars 2019.
  26. White & Goldman; Interpretation of the “Deemed to be a License” Provision of the Biologics Price Competition and Innovation Act of 2009, Guidance for Industry, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES (Dec. 2018), available at (last visited Oct. 14, 2019).
  27. FDA 2019.
  28. There have been some reports that patients may be having a difficult time finding and getting access to the generic insulin lispro injection. See The Center for Biosimilars 2019.

About The Authors:

Ha Kung Wong is a partner in Venable Fitzpatrick’s Intellectual Property Litigation Practice. He practices general intellectual property law, with an emphasis on complex patent and trade secret litigation in pharmaceuticals, biologics, and chemistry. Wong has litigated cases related to protein pump inhibitors, anti-epileptic drugs, anti-tussives, RNAi eye care products, and a host of other pharmaceuticals. He has extensive experience with inter parts review (IPR), post-grant review (PGR), intellectual property counseling, pre-lawsuit investigations, and IP transactions, including licensing and due diligence. He can be reached at

Erica L. Norey is counsel in Venable Fitzpatrick’s IP Litigation Practice Group. She focuses on patent litigation under the Hatch-Waxman Act, patent diligence, and contract issues related to intellectual property and licensing. Norey has worked on cases involving a range of pharmaceutical products and medical conditions, including antivirals, antipsychotics, calcimimetics, chronic kidney disease, hyperparathyroidism, HIV, HBV, HCV, and overactive bladder. In addition, she has extensive experience with issues related to patent ownership, FDA practice and procedure, employment, contracts, copyright, e-discovery, corporate acquisitions, and alternative dispute resolution. She can be reached at