On October 10, 2018, United States President Donald Trump signed a bill into law that requires drug makers to send details of biosimilar deals to the Federal Trade Commission (FTC) for antitrust scrutiny. The requirement, passed in the Patient Right to Know Drug Prices Act, slightly changes the Medicare Modernization Act of 2003 – currently governing generic drugs – to include biosimilars for FTC review of settlements between biologic and biosimilar developers.
A biosimilar is a generic version of a biologic drug. Although a generic drug is a direct copy of a branded drug, a biosimilar is “similar” to a branded biologic. As such, it requires a clinical trial and review process closer to that of a new branded drug.
Michael Perry, a partner at the law firm Baker Botts, has said the law wouldn’t have a huge impact on the industry, but it does help to clarify the FTC’s authority on reviewing such deals. Perry was counsel to the FTC’s Bureau of Competition Director from 2015 to 2016. Perry also remarked that the law will give FTC staff the authority to access the terms of these deals without needing to additional authority from the commission, “it gives them the green light from the get-go to look at any settlement without having to go through the usual hoops they have to go through,” he said in an Oct. 4 talk on the topic.
The law is also expected to allow the FTC to track biosimilar deals and develop a data record of relevant terms, similar to what has been done with generics. Perry has predicted biosimilar agreements are “really likely to attract antitrust attention” because of the large amounts of money involved and the wide range of settlement terms included in deals.
The Center for Biosimilars notes, “In addition, the bill also addresses pay-for-delay agreements by requiring patent litigation settlements between a reference product developer and a biosimilar manufacturer to be submitted for review by the FTC and the U.S. Department of Justice. Other legislation to address such pay-for-delay deals are also moving forward in Congress, as key components of the Biosimilars Competition Act of 2018, put forth by Congressman John Sarbanes, D-Maryland, were also passed last month by the House.”
The Food and Drug Administration (FDA) has been developing a Biosimilars Action Plan. FDA Commissioner Scott Gottlieb noted in July that less than two percent of Americans use biologics, but they account for 40 percent of total spending on prescription drugs. He glosses over the fact that these are generally newer, cutting-edge products. They do represent 70 percent of the growth in drug spending from 2010 to 2015. Which is at least partly why the government and payers want to bring their costs down.
Biosimilar growth has been slow in the United States compared to Europe (only 11 approved in the United States compared to roughly 25 in Europe), and according to Commissioner Gottlieb growth is “anemic because consolidation across the supply chain has made it more attractive for manufacturers, Pharmacy Benefit Managers, Group Purchasing Organizations and distributors to split monopoly profits through lucrative volume-based rebates on reference biologics—or on bundles of biologics and other products—rather than embrace biosimilar competition and lower prices.” It will be interesting to see if the additional scrutiny now given by the FTC and the DOJ will change to slow penetration of biosimilars in the U.S. market.