On December 24, 2009, the Senate passed a landmark health care reform bill. Included within the Patient Protection and Affordable Care Act is the Biologics Price Competition and Innovation Act, which contains provisions for the regulation of cheaper versions of biologic drugs. While an abbreviated pathway already exists for generic chemical drugs to gain FDA approval, similar regulations are not in place to bring less expensive versions of biologic pharmaceuticals, known as biosimilars, to the market. However, differences in the structure and function of biologic as compared to chemical drugs preclude the simple extension of current legislative provisions for generics to also apply to biosimilars.
Chemical drugs are the traditional small-molecule pharmaceuticals, often compounded into tablets and capsules, that the public is most familiar with. Biologic drugs are relatively new, having only entered the market in the 1980s, and have revolutionized treatment for many serious diseases, including cancer and HIV. The two drug types follow separate pathways towards FDA approval. The approval of new chemical drugs is regulated under the Federal Food, Drug and Cosmetic Act (FDCA), while biologics fall under the Public Health Services Act (PHSA). Biologics are a fast-growing area of drug research, with over 250 biologic drugs already approved by the FDA, and hundreds currently in development.
Traditional pharmaceuticals are created from combining chemicals and reagents in inert reaction vessels, whereas biologics are made from proteins produced within living cells, plants, and animals. An important difference between chemical drugs and biologics is that biologics have the ability to elicit an immune response. Chemical drugs are not recognized as foreign by the body’s immune system, but biologics can stimulate the production of antibodies. An immune response can cause an allergic reaction and more seriously, deplete naturally occurring proteins in the body, causing serious and sometimes fatal conditions. For some patients, biologic drugs have provided therapeutic relief beyond what chemical drugs are able to achieve, but at a steep price. Biologics are on average over twenty times more expensive than chemical drugs per day and can cost up to hundreds of thousands of dollars per year for a patient. The cost can be attributed in part to the higher expenses associated with research and development. Raw materials for biologics cost 20-100 times more than for chemical drugs, and manufacturing facilities take years to establish and hundreds of millions of dollars for building and maintenance. The high price for biologics also results from a lack of competitor products on the market, which has contributed to the growing push for less expensive versions of branded biologic drugs.
In the 1980s, public concern grew over the rising cost of pharmaceuticals. In response, the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act (HWA), created two abbreviated pathways for the approval of generic pharmaceuticals. The HWA explicitly amended the FDCA only and not the PHSA, leaving no clear route for the approval of generic biologic products. The HWA has been successful in encouraging the entry of generics to the market and reducing drug prices. The Generic Pharmaceutical Association (GPhA) reports that generics comprise 69% of the total prescriptions dispensed in the US, but only 16% of dollars spent. However, even if similar provisions for biosimilars are created, they are not expected to yield the same cost savings as generic chemical drugs.
Differences between chemical and biologic drugs affect the ability of generic manufacturers to create similar products that can be sold more cheaply. For chemical drugs, innovator and generic companies can use different processes to synthesize identical molecules. For biologics, innovators maintain that “the product is the process” and since generic firms do not have access to proprietary information regarding manufacturing, they cannot produce an identical product. Adding to the difficulty in creating generic versions of biologic products is that biologic drugs are typically 100-1000 times larger than chemical drugs and unlike chemical drugs, the structure of biologic drugs cannot be fully characterized with current technology. Under the HWA, generic firms do not need to provide their own clinical data, which can result in significant cost savings that can then be passed on to consumers, but given the potential for biologic drugs to produce immune responses, biosimilars may need additional clinical testing to ensure safety. According to GPhA, generic versions of chemical drugs cost 30-80% less than brand-names, but the group predicts savings for biosimilars will be 10-25%. The Congressional Budget Office estimated that during the first year of competition, the discount on biosimilars would be 20-25% and increase to 40% by the fourth year.
The first bill for biosimilars was introduced in Congress in 2006. Since then, multiple bills have been introduced in both the House and Senate. Other nations, including the European Union and Canada, have already implemented regulation of biosimilars. The recently passed Senate bill allows for the approval of biosimilars that show no clinically meaningful differences in safety and efficacy from the innovator product, which must be established using analytical testing, animal data, and clinical trials. A biosimilar may be declared interchangeable with the innovator after it has been shown that the biosimilar drug produces the same clinical effects and there are no adverse effects from switching the products. Similar to the HWA, the Senate bill provides an accelerated route for litigation between innovator and generic firms to expedite the identification of patents that are potentially infringed. While the HWA provides 5 years of market exclusivity to innovator products, the Senate bill grants 12 years of market exclusivity to innovator biologic drugs. The Senate bill must be merged with the House bill passed in November to create a final health reform bill, but the key provisions for biosimilars are similar under both bills, so it appears that the US may soon have a pathway in place for the approval of cheaper biologic drugs.