On Feb. 4, 2014, the U.S. Federal Trade Commission examined a key aspect of competition in health care when it held a workshop on competition issues for "biosimilars," governed by the 2010 Biologics Price Competition and Innovation Act (BCPIA). The FTC focused on two specific questions of competitive effect on the market: state regulation on the substitution of interchangeable biosimilars for biologics, and rules regarding biosimilar naming. The Workshop did not – and was not designed to – reach any firm conclusions on these topics; however, companies in this space should be aware of the FTC's intense interest in this area.

A biological medical product (commonly called a biologic) is a therapeutic product typically made by or derived from living cells by recombinant DNA or gene expression methods, unlike traditional pharmaceuticals, and are larger and more structurally complex. Examples of currently marketed biologicals include Enbrel®, Humira®, and Herceptin®. Due to the difficulty and complexity of the development and manufacturing processes for biologics, the cost per patient can be expensive, up to about $250,000 annually.

A biosimilar, sometimes called a follow-on biologic, is the term to describe a subsequently-developed "highly similar" version of the innovator's branded biologic. Biosimilars, like biologics, are governed by federal law and the U.S. Food and Drug Administration (FDA). The BCPIA created an abbreviated regulatory pathway for biosimilars, in concept analogous to the Hatch-Waxman approval pathway for traditional generic drugs, with the same purpose: to improve competition in the biologics market to reduce the cost to consumers. In countries where biosimilars are already approved, the cost to the patient of the biosimilar is less than the biologic. A biosimilar will be subject to approval despite clinically minor differences, although it may not be "interchangeable" with a currently prescribed biologic. However, to date, no application for approval for a biosimilar has yet been submitted in the U.S, much less approved.

The FTC was established to be an expert body in competition and consumer protection issues. As part of its mission, the FTC often conducts workshops or other inquiries into how competition works in the current economy. It held a roundtable on biosimilars in late 2008 and issued a report detailing its findings in June 2009.

The FTC considers biologics among the most important pharmaceutical products currently marketed, and has identified two possible limitations on the development of biosimilars competition: (1) State regulations governing substitution of interchangeable biosimilars for branded biologicals; and (2) the official non-proprietary name of the biosimilars. The FTC's objective in addressing these two issues is to increase competition to reduce prices, and expand their availability and access by patients. The Workshop participants who elaborated on these two issues included more than 20 highly-qualified representatives of stakeholders in the biosimilars market, including manufacturers and developers of biologics (Pfizer, Amgen) and biosimilars (Hospira, Sandoz, Momenta), academics/physicians (Harvard/Brigham and Women's), professional consultants (ThinkFDA, Sanford C. Bernstein), Pharmacy benefit managers/pharmacies/payors (PCMA, CVS Caremark, Express Scripts, National Alliance of State Pharmacy Associations, Aetna) (collectively PBMPP), drug naming professionals (USPC), and AARP.

State Regulation of Substitution of Biosimilars for Biologicals

Eighteen states have introduced legislation governing the substitution of interchangeable biosimilars for biologics, and laws have been enacted in five. The legislation proposed or enacted by states creates various requirements for pharmacists and/or prescribers regarding the substitution of interchangeable biosimilars for a reference product; many include requirements for pharmacists to notify patients and/or prescribers upon dispensing an interchangeable biosimilar, and additional record-keeping. The FTC's concern is to ensure that any such legislation be no broader than justified to minimize the influence on market entry. The Workshop participants presented data and views predictably split on the value and importance of such legislation.

The branded, reference biologicals' representatives described the legislation regarding interchangeability in terms of patient safety. Amgen's representative noted that biologics persist within the body longer than most chemical drugs, such that a latent immune response makes attribution to the correct product problematic. Without the requirement that the physician specify substitution and post-prescription notification, and preserved notation by the pharmacist, the patient records will be ambiguous or inaccurate. The biologicals did not state that biosimilars represented a safety risk on substitution.

The biosimilars, PBMPP, AARP, and ThinkFDA generally consider substitution important because it eliminates the costly need to market to physicians and payors; provides access and affordability after the biologics' patents and exclusivity expire; and provides a return on the investment required to develop an interchangeable biologic that matches the reference product. Their concern is that the hurdles introduced by legislation will undermine confidence in interchangeable biosimilars, and inhibit market entry (access and cost) due to the likely need for a larger, costly sales force. These presenters asserted that states should not be legislating in an area in which the FDA has the experience and expertise to make decisions about drug characteristics and quality based on rigorous analytical and clinical testing, given adequate funding. Under these circumstances, anti-substitution mandates are problematic for products with no clinically meaningful differences that the FDA would consider interchangeable. Some presenters noted that the experience in Europe (where biosimilars have been approved and are interchangeable with the reference biologic) is evidence that additional legislative burdens are unnecessary and unduly restrictive.

Naming Biosimilars

Biosimilar naming, that is, the non-proprietary name given a biosimilar, is a critical focus of the FTC because of the potential for the use of different non-proprietary name (or trade name) from that of the reference biologic to unduly limit market penetration, patient access, and limit cost reduction.

The U.S. Pharmacopeial Convention and United States Adopted Names (USAN) establish the nomenclature for all drugs and biologics in the U.S. The International Nonproprietary Name (INN) is a generic name given to a pharmaceutical's active ingredient by the World Health Organization, and in the U.S., the USAN is usually the same as the INN. The National Drug Code (NDC) is the most widely used and detailed system for tracking pharmaceuticals in the U.S. and provides more information than the INN. The NDC contains information to uniquely identify the drug manufacturer and other information, including: drug strength; dosage form; formulation; and package size.

At the Workshop, the biologics manufacturers described the issue in terms of facilitating pharmacovigilance – differing, although similar, non-proprietary names supporting patient safety by improving ease and accuracy of adverse event reporting. Amgen, Pfizer and AbbVie interpreted data from the U.S. adverse event reporting system to conclude that events can be misattributed because biological therapies tend to be retained longer than chemical drugs. This leads to the companies' suggestion that patient records should more accurately reflect the specific therapy over a period of time, because the causal agent of an adverse event involving biologicals may not be the one being administered when the adverse event occurs. It was pointed out that Japan and Australia have adopted distinguishable non-proprietary names for biosimilars, and that in those countries, the differing names appear to present no significant barrier to entry.

The biosimilars, AARP, and PCMA described the importance of a non-proprietary name different from that of the reference biologic as a barrier to entry in the biosimilars market and a limitation on consumer access, because of likely confusion about the similarity and safety of the differently-named biosimilars. If different names or INNs were imposed, a prescriber or patient might conclude that the active ingredients are different. They believe that the brand name for biologicals, with the use of a single specific non-proprietary product name for biosimilars will adequately protect the consumer. The use of brand name, INN, USAN, manufacturer, NDC, and lot number provides information redundancy sufficient to identify products, without the limitation on market penetration caused by the inevitable confusion. In addition, pharmacies currently track the dispensed drugs, and they would do so when biosimilars and interchangeable biologics become available without additional regulatory requirements. There is no evidence that unique names would result in better tracking of adverse events. They pointed out that in Europe, the INN or non-proprietary name of some biosimilars may be the same as for the reference biologic, and the use of different non-proprietary names in the U.S. would be likely to cause confusion internationally.

Conclusion

The FTC did not reach any conclusions and did not indicate if it will issue another report or take any other particular action; however, the Workshop clarified the positions of the stakeholders and made clear the FTC's interest in the competitive actions being taken in this area.