Supreme Court ACA ruling could accelerate biosimilar development, advocates say

Supreme Court ACA ruling could accelerate biosimilar development, advocates say

The Supreme Court voting to uphold the Affordable Care Act on Thursday was greeted with applause from payers and providers—and the biosimilar drug development industry.

While opponents of the ACA large criticized the law’s expansion of insurance and mandates around coverage, undoing the law would have unraveled the federal framework for reviewing and approving biosimilars, and litigation guidelines that backbone the industry, said Meghan Rose Smith, executive director of the Biosimilars Forum, a trade group that applauded the Supreme Court’s decision. In the U.S., biosimilars offer a lower-cost alternative to some 30 name-brand biologics on the market today.

“Upholding this law means that millions of patients will continue to have access to biosimilars—lower cost options for life-saving brand name biologic therapies both now and in the future,” Rose Smith said in a statement. “We encourage Congress to reinforce its commitment to the next generation of generics and the biosimilars market by passing bipartisan legislation that expands access to these cost-saving therapies.”

The U.S. market for biosimilars is expected to rise to $22.9 trillion by the end of 2027, up from $737.2 million in 2019, according to a report from Fortune Business Insights. While biologic drugs represent just 2% of all prescriptions filled, they represent 40% of all drug spending in the U.S. A December 2020 report from Kaiser Permanente estimated that replacing brand-name biologics with biosimilars could generate $54 billion in savings over 10 years across the healthcare industry.

The cost potential for payers, providers and patients means streamlining biosimilars’ approval process must remain a critical focus for the Biden administration and Congress, said Ceci Connelly, CEO of the Alliance for Community Health Plans. The U.S.’ outdated procedures for approving these drugs has left the nation behind Europe, where more than 60 biosimilars have been approved.

“We are big supporters of biosimilars,” Connelly said. “We are extremely frustrated that Big Pharma has blocked so many biosimilars from getting to market. They are approved by the FDA as safe and effective, and then the big drug companies are using all sorts of tactics to block them from actually getting onto the market. It’s terrible.”

Like their generic counterparts, biosimilar medications mimic the effects of existing therapies but, instead of being chemically derived, are grown from living organisms like cell tissue, bacteria, protein and more. This makes manufacturing these medications more challenging—and the regulatory approval process more stringent, said Kevin Nelson, a partner at the law firm Schiff Hardin. A small provision tucked away in the ACA essentially set the standards for federal approval of these drugs, kickstarting the potentially trillion dollar industry.

“We’ve all breathed a collective sigh of relief when ACA was not struck down as unconstitutional,” Nelson said. “Without this structure, we would be back to square one with biosimilars.”

Prior to 2010, Nelson said there was no process for approvals, meaning the bar was much higher for biosimilar manufacturers to indicate the scientific effectiveness of their drug, which required more cost on manufacturers’ part and more unpredictability about whether their product would ever make it to market. There was also no structure for litigating these applications at the time, leaving prospective manufacturers unsure of what their legal risk looked like when undertaking development, Nelson said. All of this led manufacturers to pause when thinking of developing new products.

“Sometimes you’ve got to build a whole new factory. We’re talking about significant cost outlaid to even begin the process,” Nelson said. “But we’re also talking about drugs that are worth several billion dollars for chronic diseases in a country that is known for having chronic diseases as a normal state of being.”

The ACA changed that through a provision known as the Biologics Price Competition and Innovation Act, which essentially provided the industry guidance needed. A 2018 rule that stated doctors would receive a 6% bonus for prescribing biosimilars has also been key for accelerating development, Nelson said. In 2021, Nelson expects the FDA to approve 11 biosimilars, up from three in 2019.

“There’s more incentive for doctors to prescribe it and more incentive for people to pay for it,” he said. “You’re creating a market. You’re incentivizing people to go into biosimilars, to make biosimilars, and to lower drug costs.”

Although more applications and approvals are coming in, there’s room for improvement in the process, Nelson said. Most biosimilars target multiple sclerosis, some cancers and rheumatoid arthritis, Nelson said. He believes drug manufacturers should diversify their offerings and newly diagnosed patients should be automatically prescribed biosimilars rather than name-brand drugs as a way to lower drug costs and further incentivize development. He supports the bipartisan “Lower Costs, More Cures Act of 2021,” which would temporarily raise the bonus that doctors are paid for prescribing biosimilars to 8%, among other things.

“There’s just too much at stake,” he said. “We need to improve the way that we educate people around biosimilars and the benefits and the safety, we need to further improve the reimbursement aspect to increase uptake and we need to improve what we can expect from the approval pathway, but also in the litigation structure.”

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Marie Maynes
Marie Maynes is a Sports enthusiast and writes for the Sports section of ANH.