Competition to reduce the costs of biologic medicines

When faced with a major illness, patients usually want the best medicine available, regardless of cost. In some cases, next-generation “biologic” medicines may be the best treatments available. Unfortunately, these critical treatments can be very expensive. For example, Herceptin, used to treat breast cancer, can cost more than $50,000 a year; Remicade, which treats rheumatoid arthritis, more than $10,000 a year.

In the future, competition from follow-on biologics – both biosimilars and interchangeable biosimilars – could help bring prices down. That’s why the FTC will convene numerous experts to explore follow-on biologic competition issues at a workshop on Tuesday, December 10, 2013. [RESCHEDULED FOR FEB. 4, 2014]

In the traditional drug space, prices typically drop after a drug’s patent expires and a competing, therapeutically equivalent generic drug enters the market. For biologic medicines, Congress enacted the Biologics Price Competition and Innovation Act to encourage the development of both biosimilar and interchangeable biosimilar medicines, which can enhance competition and lead to greater patient access and lower costs for biologic medicines. The Act provides the Food and Drug Administration (FDA) with the authority to develop abbreviated pathways for the licensure of biosimilar and interchangeable biosimilar medicines.  Some draft FDA guidance is now available. So far, the FDA has not approved any biosimilar or interchangeable biosimilar medicines for sale in the United States (although some biosimilars are on the market in Europe).

Nonetheless, state legislatures are already considering—and some have already passed—laws that may affect the ability of biosimilar and interchangeable biosimilar medicines to compete with existing biologic medicines. In particular, certain laws would affect when, and under what circumstances, pharmacists would be able to substitute an interchangeable biosimilar for an original reference biologic.

Additionally, some parties are requesting that regulators change the existing paradigm for naming medicines that compete with an original “reference” medicine. In the case of traditional small-molecule drugs, each drug usually has two names: a proprietary or branded trade name, and a non-proprietary name of the active ingredient. A generic drug has the same active ingredient as its reference branded drug, which means that a generic drug typically has the same non-proprietary name as its branded counterpart.

Biologic medicines in the United States also have two names: a proprietary branded trade name, and a non-proprietary name that reflects certain scientific characteristics of the product. Some parties argue that biosimilars should have unique non-proprietary names that differ from the reference biologic’s name, in addition to different brand names.  This naming process may have profound implications for how follow-on biologics will be received in the marketplace, which will influence companies as they evaluate whether to invest in biosimilar development. Naming also may have crucial implications for patient safety.

Some commentators argue that these policy choices regarding naming and pharmacy substitution laws involve public health and safety issues, and we agree that the FDA is the expert when it comes to protecting patient safety. Competition helps consumers when it lowers prices and expands access to life-sustaining medicines. That’s why the FTC wants decision makers to consider ways to promote competition from biosimilars and interchangeable biologic medicines, and to encourage companies to invest in developing and marketing such products, without compromising consumer safety.

Our December 10 workshop will explore a wide range of questions, as detailed in our recent Federal Register notice. For instance, we will ask how price, access, and innovation might be affected by state proposals that would place extra requirements on pharmacists before they can switch patients from biologics to biosimilars or interchangeable biologics. We intend to explore how names are assigned to the active substance in a biosimilar or interchangeable biologic medicine versus an original reference biologic. Will different names deter the use of biosimilars and interchangeable biosimilars or affect reimbursement by public or private insurance? In addition, we will ask how all of these policies may affect biosimilar or interchangeable biosimilar companies’ incentives to develop and market lower-cost biologic medicines.

The workshop will be open to the public and webcast on the FTC’s website. We are also accepting written comments through March 1, 2014.

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