Obamacare Ruling Paves Way for Fixing Flaws in Biosimilar System

The Supreme Court’s decision to uphold Obamacare preserves a pathway for low-cost versions of biologic drugs to hit the market while also stirring a fresh debate over how to fix the system’s shortcomings.

The Biologics Price Competition and Innovation Act is tucked into Obamacare and lets drugmakers get around hurdles like certain extensive clinical trials to market biosimilars—versions of biologics that mimic the originals. Allowing the Affordable Care Act to stand ensures patients still have easier access to cheaper versions of some of the market’s most expensive therapies.

Yet while many legal observers laud the high court for upholding the ACA, they say the time is ripe to adjust the BPCIA for greater savings.

“The framework of the BPCIA needs a deeper look,” said Tahir Amin, co-founder of the Initiative for Medicines, Access & Knowledge. “Now that the ACA fight has been put to rest for now, the question is what are lawmakers going to do about improving it?”

Biologic drugs include AbbVie Inc.'s Humira, which treats conditions like rheumatoid arthritis and Crohn’s disease. Genentech Inc.'s biologic Herceptin treats breast, stomach, and esophageal cancers.

Biologics are expensive. The U.S. spent more than $200 billion on these drugs in 2019, according to a report by health tech company IQVIA. Research suggests that biosimilars drive down those costs—IQVIA pegs savings from biosimilars at more than $100 billion in the coming years, while an Xcenda report says the alternatives have lowered prices by up to 150%.

Even with the ACA upheld, attorneys say many challenges remain to a more expansive biosimilars market, including patent barriers, lack of pricing controls, and manufacturing difficulties.

Not-So-Easy Pathway

The BPCIA faced a serious threat when the state of Texas tried to cut down the ACA. Wiping out the law would have eliminated the process for approving low-cost biosimilars.

The justices’ 7-2 decision “ensures America’s patients and taxpayers can continue to benefit from biosimilar access and competition in the marketplace,” Rachel Schwartz, spokeswoman at the Association for Accessible Medicines, said in a statement.

Biosimilars have the potential to “reach patients faster than ever before,” and the market is rapidly growing “due in no small part” to the BPCIA, said Brian Newell, spokesman for the Pharmaceutical Research and Manufacturers of America, an industry group representing major drugmakers.

Yet critics say the path to biosimilars isn’t as streamlined as the one for regular generics, and they don’t offer as high discounts.

“It’s supposed to be a Hatch Waxman for biologics, but it’s very different,” said Georgia State law professor Yaniv Heled, referring to the 1984 law that established the pathway for generic drugs to enter the market. “It’s very good for the brands. It’s not very easy for the follow-on manufacturers.”

Unlike generics, biosimilars in the U.S. typically aren’t direct substitutions for biologic drugs, Heled said, meaning a pharmacist can’t just swap one product out for another to help a consumer save costs. Rather, they would have to get a specific prescription for the biosimilar.

Biologics are harder to make than standard drugs, and federal law prevents the FDA from sharing key manufacturing information with those trying to make biosimilar versions of the complex drugs, according to Heled. That can make it expensive for producers and consumers, he said, noting that the U.S.'s lack of pricing controls on drugs also adds to the price tag.

‘Now Is the Chance’

Another issue may be patents.

Some biologic drugs like AbbVie’s Humira are covered by a high number of patents, at times more than non-biologic drugs, according to research published in the Chicago-Kent Journal of Intellectual Property Law. These “patent thickets” have “resulted in a lower launch to approval ratio for biosimilars compared to small-molecule drugs,” which cuts down competition and makes it easier for biologics makers to raise prices, the study found.

“We probably won’t see an increase in biosimilar entry without getting ahead of the patent thicket problem,” said Matthew Lane, executive director of the Coalition Against Patent Abuse.

But with the ACA surviving its latest Supreme Court challenge, Amin said “now is the chance” for lawmakers to resolve these issues and improve the biologics pathway. Congress may consider looking at more “standalone” options for biosimilar entry, given that the ACA is still prone to threats in the court system, said Charles Duan, senior fellow at the R Street Institute.

“There’s certainly a bit of risk” with having BPCIA tied up with Obamacare, Duan said. Lawmakers “may have some interest right now” for a standalone options so industry and patients “have clarity.”

In the meantime, the BPCIA as stands is better than no pathway at all, attorneys say.

“The biosimilar industry just had a big sigh of relief, because the biosimilar pathway will now be maintained,” said Chad Landmon, an Axinn Veltrop & Harkrider LLP attorney who represents biosimilar companies.

“They would’ve been running to Congress to potentially start from scratch,” he said.