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Ginsburg Death Threatens Biosimilars in Looming Obamacare Case (1)

Sept. 25, 2020, 10:03 AMUpdated: Sept. 25, 2020, 4:17 PM

The system that allows for low-cost versions of biologic drugs is in peril if Obamacare is reversed in the wake of Justice Ruth Bader Ginsburg’s death.

The Affordable Care Act created a pathway for companies to make biosimilars—generic versions of biologic drugs that are very similar, though not identical, to the originals—without having to jump through costly hoops associated with getting a novel medicine approved.

Biologic drugs are produced from living organisms or contain components thereof to create effective therapies. For example, AbbVie Inc.'s Humira is a biologic that treats conditions such as rheumatoid arthritis and Crohn’s Disease, while Genentech Inc.'s Herceptin is one that treats breast, stomach, and esophageal cancers. Most vaccines are also biologics. Generic versions—known as biosimilars—are seen as essential to ensuring patients get the treatment they need.

Now the system is at stake because a Trump nominee to replace Ginsburg would likely vote to repeal the ACA—the signature health-care law that President Donald Trump pledged to undo during his 2016 election campaign. Before the ACA, it was nearly impossible in the U.S. to produce biosimilars.

If the ACA is repealed, the Biologics Price Competition and Innovation Act that was included in the law will likely be struck down with it, and then there will “no longer be a pathway for biosimilars to be approved by the FDA,” Ted Mathias, a partner with Axinn Veltrop & Harkrider LLP, said.

“Biosimilar makers would have to file as new biologics and therefore undertake a lot more testing and overcome more regulatory obstacles than they would have under the BPCIA,” he said.

Ultimately, if a majority of justices hold that the two laws are intertwined and repeal the whole thing, it will fall to Congress to pass another bill preserving the current biosimilar system. And that path is anything but certain.

A spokesman for Sen. Chuck Grassley (R-Iowa), a member of the Senate Judiciary Committee, declined to comment on whether he would commit to getting legislation passed to protect the BPCIA if the ACA is struck down. The spokesman pointed to a December 2019 statement that Congress would have to step in if that happened.

Potential Fallout

Biosimilar medicines are expected to deliver up to $54 billion in savings to the U.S. health care system by 2027, according to a 2017 RAND report.

And many more biologic drug patents are expected to expire in the next 3-5 years, making it a critical time for the biosimilar pipeline to keep moving, according to an S&P Global Ratings report issued in March.

“Without that competition from biosimilars, there will be higher costs, not only for patients, but the government and payors,” such as private insurers, Mathias said.

But the pipeline of biosimilars could be cut off if Trump appoints a justice that votes to repeal the ACA.

Amy Coney Barrett, a front-runner for Ginsburg’s seat and a judge on the U.S. Court of Appeals for the Seventh Circuit, said in a 2017 law article that Chief Justice John Roberts “pushed the Affordable Care Act beyond its plausible meaning to save the statute in 2012.”

Barrett took issue with Roberts construing the penalty imposed on those without health insurance as a tax, which permitted him to sustain the statute as a valid exercise of Congress’s taxing power.

“If Justice Ginsburg had stayed on the bench, the assumption was that the ACA would be upheld,” said Katie Keith, a professor at Georgetown Law.

“Now with her gone, you have three sort of liberal justices, and Chief Justice John Roberts has—at least in two past cases—voted to uphold the ACA, which would put him as the fourth vote,” she added. “It makes Justice Kavanaugh the deciding vote.”

Having Brett Kavanaugh, a Trump appointee, as the deciding vote isn’t comforting to many who would like to see the ACA remain intact. And many lawyers think it isn’t possible for the high court to sever the BPCIA from the ACA if it’s repealed.

“If you strike down one of them, you strike down all of them,” said Kevin Noonan, a partner with McDonnell Boehnen Hulbert & Berghoff LLP in Chicago.

Severability

Severability is a legal doctrine that presumes Congress wants its statutes preserved, meaning that the courts can reverse one flawed piece of legislation while preserving the rest of a given law.

As Roberts wrote in the majority opinion in Seila Law v. CFPB, severability allows for “a scalpel rather than a bulldozer.”

“We try to limit solutions to the problem, severing any problematic portions while leaving the remainder intact,” Roberts added. The high court held in that case that the president could remove at will the director of the Consumer Financial Protection Bureau.

The Supreme Court has historically demonstrated a preference for not upsetting the status quo and limiting the impact of its decisions to the relevant legal issue at hand, Mathias said.

Kavanaugh in July, in Barr v. American Assn. of Political Consultants, led a 7-2 majority in ruling that an exception to the federal ban on robocalls for government debt collectors can be severed from the Telephone Consumer Protection Act.

Those cases signal that Roberts and Kavanaugh could try to steer the court toward a ruling that the BPCIA can be severed from the rest of the ACA.

Still, uncertainty reins.

The justices are being asked in the Obamacare case if the provision requiring everyone to buy insurance is unconstitutional, and whether the law can survive without it if it is.

The ACA doesn’t have an express severability clause, which may hurt its chances of survival. That doesn’t bode well for the BPCIA and biosimilars.

“If we’re in a world where biosimilars were gone it raises more questions than we have answers,” Keith said.

“What about the products already approved? What about products waiting in the pipeline? How would the FDA approach the regulatory uncertainty that this would unleash?” Keith said. “It could be severely disruptive. It would be a free fall.”

—With assistance from Lydia Wheeler

(Updates third paragraph to add examples of biologics.)

To contact the reporter on this story: Valerie Bauman in Washington at vbauman@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Alexis Kramer at akramer@bloomberglaw.com

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