Pathway to Biosimilar Drugs

The CVS Health Research Institutes explors ways to promote adoption of biosimilars.

The Hatch-Waxman Act, a 1984 U.S. federal law, was introduced to promote the adoption of generic medications and help contain the cost of small-molecule drugs. Years later, the Biologics Price Competition and Innovation Act of 2009, enacted as part of the Affordable Care Act, created a streamlined FDA approval pathway for biosimilars, follow-on versions of biologics, with the goal of encouraging competition and controlling costs in the rapidly expanding biologics market. Despite the Biologics Act’s passage, there has only been one biosimilar application to the FDA.

A new commentary by the CVS Health Research Institute, published in Health Affairs, compares the two Acts and examines the utilization management tools that are likely to be most successful in promoting adoption of biosimilars.

Biosimilar Competition in the United States: Statutory Incentives, Payers, and Pharmacy Benefit Managers  

While biologics are the fastest-growing sector of the U.S. pharmaceutical market, they have yet to face competition from follow-on products. The authors of the Health Affairs commentary note that although the Biologics Act has the potential to spark competition and deliver significant savings while encouraging innovation; uptake has been slower than seen with Hatch-Waxman and the generic market.

The authors suggest that this may be due to several barriers created by the Biologics Act that make market entry more challenging for biosimilar manufacturers, including a lack of statutory guidance from the FDA as well as weak incentives for manufacturers. 

The authors also write that “unlike the case with Hatch-Waxman, the FDA is essentially solely responsible for determining the type of data that biosimilar manufacturers must produce in order to secure abbreviated approval, and it has the authority to require whatever analytical, animal, or clinical data it sees fit.”

The authors note that in addition to future FDA rulemaking and influence, payers and pharmacy benefit managers will also be critical in encouraging appropriate uptake of biosimilars and suggest some of the same utilization management strategies that helped drive successful generic drug adoption. According to the authors,

“successful payers and pharmacy benefit managers will employ various strategies, including tiered formularies and innovative fee schedules, that can control spending … across both the pharmacy and medical benefits.”

In addition, the authors propose that provider relationships are essential for spurring biosimilar adoption, including those in provider payment models where a significant portion of biologics are currently bought and billed by physicians’ offices and outpatient practices.