State-Level Substitution Rules for Biosimilars

Legislators in at least 10 states are rushing to introduce pharmacy law that would govern the use of biosimilar substitution—but without further FDA guidance on interchangeability, physicians may be less likely to switch patients to lower-cost alternatives.

There are very few ways to control the cost of specialty medications, but the use of biosimilars in place of branded specialty medications is one strategy that many health plans, biopharmaceutical companies, and PBMs have started to explore. When The New York Times reported that Amgen and Genentech were supporting a bill that would restrict a pharmacist’s ability to substitute biosimilar products for expensive specialty medications, many key opinion leaders in the pharmaceutical industry questioned the motives behind the biotech companies’ efforts.

Despite the fact that it has been about a year since the FDA first released draft guidance on the development of biosimilars, few companies have actively pursued the development of these complex molecules. The main reason this pathway is emerging so slowly is that there is still much uncertainty surrounding the manufacture, safety, and interchangeability of these products. Unlike small molecule drugs, which are synthesized chemically, biologics have complex structures and are created from living cells. As a result of their delicate manufacturing process, slight changes in the cells from one batch to the next can result in different products.

Even though Amgen insists that its support of state substitution rules is based on its desire to keep patients safe, as biosimilars have the potential to trigger an undesirable immune response, critics of the proposed legislation perceive these lobbying efforts as a way for biotech companies to discourage the use of biosimilars and capture more revenue for a longer period of time from their own innovator biologics. As summarized by Joseph Martinez, contributor to the Decision Resources Consulting Group, “a lack of automatic substitution would likely initially limit biosimilar profits and help to ameliorate sales erosion of blockbuster biologics.”

Although some see biosimilar development as a threat to the success of branded specialty medications, others argue that these biologics won’t enjoy market penetration for many years to come. Biosimilars can only be substituted for a specialty medication if the drug is deemed “interchangeable,” but the FDA has not provided thorough guidelines on when a drug may be considered “similar enough” to an originator product. Until more guidance is developed, widespread use of biosimilars seems unlikely, especially because proposed legislation would only allow substitution of a biosimilar if the attending physician explicitly notes that the branded version is not medically necessary.

“Biosimilar and bioequivalent guidance is essential in order to introduce cost savings,” noted Sharon Frazee, vice president of research analytics at Express Scripts, in a December 2012 Specialty Pharmacy Times interview. Despite this, Frazee admits that pharmaceutical companies will be less likely to invest in biosimilar development if they are expected to give up their intellectual property. “Although the ACA [Affordable Care Act] establishes a pathway for biosimilars, essentially the provision mandates that a biosimilar manufacturer hand over their complete dossier and all of their intellectual property to the originator manufacturer to ensure that there will be no litigation down the road,” she noted.

Many professional pharmaceutical organizations have released formal statements opposing the proposed state laws. The Generic Pharmaceutical Association said in a statement that state law limiting substitution would keep affordable medications from patients in need. “While in the guise of supporting biosimilar efforts, Amgen and Genentech are making every effort to limit consumer and patient access to safe and effective biosimilars in the future,” the association said. Meanwhile, the Pharmaceutical Care Management Association (PCMA) pointed out that “dueling” state and federal rules laws would prevent a pharmacist from knowing when it would be appropriate to dispense a biosimilar in place of a branded product. Additionally, PCMA president and chief executive officer Mark Merritt said in a press release that “campaigning to restrict the use of biosimilars enriches brand manufacturers at the expense of the employers, public health programs, and patients who need access to lower cost medications.”

To many players in the health care industry, the biosimilar pathway is not yet fully “cooked”—and the creation of state-by-state guidelines for biosimilar use should not occur until the FDA can resolve the biosimilar “interchangeability” issue. The point of enacting a biosimilar pathway, explained Michael McCaughan of Elsevier Business Intelligence, “is to deliver significant savings on the cost of biologic therapies; that is what society wants and expects from the new law.” If the law cannot help in this endeavor, said McCaughan, Congress can make specialty medications cheaper immediately with the use of cost controls.

Another method to control cost, said Kay Morgan, senior vice president of Drug Products and Industry Standards Research and Compliance, Elsevier/Gold Standard, would be to “deny high-priced brand prescriptions when submitted by pharmacies for plan members." “Unfortunately, denials lead to abandoned prescriptions (nearly 68%) and poor adherence, which very likely increases overall health care costs in the end,” she said in a special post for Drug Channels.