Fulfilling interchangeables’ promise will take work

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Eva Temkin

Pharmacy-substitutable biologics, known as interchangeables, have long been little more than an idea. Since the Biologics Price Competition and Innovation Act of 2009 (BPCIA) created a dual pathway for follow-on biologics — with biosimilars that are prescribed by name by a health care provider and interchangeables that can be automatically substituted at the pharmacy — commenters have lamented the absence of interchangeables. Now, more than a decade later, we may finally see FDA-approved interchangeable products become a reality. For all the promise that holds, it also shines a spotlight on questions of state substitution laws, and it begs the questions: how will state pharmacy laws function to make these products available to patients, and what additional obstacles may lie ahead?

The role of biosimilars

Biological products are large, complex molecules produced through biotechnology. They are the fastest-growing and most expensive class of therapeutic products in the United States by a wide margin. Biologics represented 43% of spending on medicines in the United States in 2019, an estimated $211 billion, and therapeutic biologics can cost 20 times more than non-biologic drugs. The market for biologics has been growing at more than twice the pace of the total pharmaceutical market and, by some estimates, the global biologics market is expected to reach a value of almost $750 billion by 2028.

Naturally, then, there has been increased focus from regulators, industry and patients on opportunities to introduce “follow-on” biologics, or biosimilars, into the market. The stakes are high, and biosimilars are a key tool. Former FDA commissioner Dr. Scott Gottlieb said that “[our] ability to build a market for safe, effective biosimilar products is key for patients and our nation’s health care system.” The Biden administration has continued to focus on biosimilars, recently issuing an executive order that called for the Department of Health and Human Services and the FDA to promote “biosimilar competition” as outlined under FDA’s “Biosimilar Action Plan of 2018.”

In this context, the pathway for biosimilar products in the U.S. has gained significant momentum. The number of launched biosimilars on the market has begun to keep pace with expectations, and those products are projected to gain increasingly large market share, typically at discounts of up to 35% below innovator biologics’ prices. Educational efforts are making inroads among health care prescribers and patients, who are more likely to prescribe and take biosimilars as they understand the pathway and the meaning of FDA approval.

At the same time, much has been made of the fact that biosimilars are prescribed directly, by name, and are not automatically substitutable at the pharmacy. Pharmacy substitution would require FDA approval of an interchangeable biologics — something that, to date, has not happened.

The path to pharmacy substitution of biologics

In order to be approved as an interchangeable biologic, FDA must have made a determination that:

  • The interchangeable biologic is biosimilar to the innovator (or reference) biologic, meaning it is “highly similar” to and has “no clinically meaningful differences” from the innovator biologic.
  • The interchangeable biologic is expected to produce the same clinical result as the innovator product in any given patient.
  • Switching back and forth between the innovator product and the interchangeable will not increase risks or decrease benefits compared to use of the innovator product alone.

Commentators have suggested many ideas for why interchangeability has been slow to catch on: Interchangeability is a uniquely U.S. phenomenon (other countries have just one category of biosimilar); there may not be a business case for drug manufacturers to seek interchangeability for physician-administered or hospital-administered products; there are a number of questions that may arise around pricing and reimbursement for biosimilars versus innovator products; development programs for interchangeability may be too data-intensive and too expensive; FDA may be too opaque around how it interprets the requirements of interchangeability; the incentives of the unique and complicated exclusivity that accompanies approval as a “first interchangeable” may be too intangible.

In all likelihood, some combination of these factors has slowed the pace of interchangeable development. Now, however, public reports of pending applications for interchangeable biologics abound, and we expect to see FDA-approved interchangeable products in short order.

Pharmacy substitution of interchangeable biologics

FDA approval is a critical step to successful pharmacy substitution of biological products, but it is not the end of the road. Each state regulates the use of brand and biosimilar and interchangeable products individually, and those laws ultimately can be determinative of whether potentially lower-priced interchangeable products are substituted at the pharmacy.

All states have laws applicable to pharmacy substitution of generic drugs, too, a majority of which require substitution of generic drugs. But interchangeable products are approved by FDA on standards and information different from generic drugs. The inherent heterogeneity that results from natural variations in biological products means that interchangeable biologics are not “exact copies” of innovator biologics (nor are they expected to be). State laws governing substitution of generic drug products — which typically rely on the concept of “therapeutic equivalence” ratings listed in FDA’s Orange Book — are inapplicable to biologics. States needed to account separately for substitution of biological products, and to incorporate information included in FDA’s Purple Book instead.

After the passage of the BPCIA in 2010, states began to establish standards for substitution of interchangeable biologics. By the spring of 2021, all 50 states had enacted biosimilar substitution laws. The specifics vary, but state laws on biological product substitution have a few common themes:

  • They permit substitution only of FDA-approved interchangeable biologics.
  • They prohibit substitution if the prescribing health care provider has indicated that the product should be “dispensed as written,” that is, not substituted. This framework is not surprising. Prescribing regulations historically have required FDA approval — as arguably they must — and have permitted physicians to specify when they believe a prescription must be dispensed in a particular way.

Similarly, state requirements for substituting interchangeable biologics generally mirror those governing the substitution of generic drugs. This means that the concepts should already be familiar to pharmacists. But there will likely be some points of confusion, too. For example, physician notification requirements and patient notification and consent requirements may cause delay and frustration — particularly given the federal definition of interchangeable biologics as substitutable “without the intervention of the health care provider who prescribed the reference product” (section 351(i)(3) of the Public Health Service Act (42 U.S.C. § 262(i)(3)). Patient and physician notification provisions are not new — they are often required for generic substitution. In the context of biologics, however, commenters often have focused on the potential for these requirements to exacerbate patient confusion about, and heightened sensitivities around, interchangeable products. It is also not clear what impact these requirements will have in the face of extensive education efforts undertaken by FDA and other stakeholders to assure patients that “biosimilars are as safe and effective as the original biologic; both are rigorously and thoroughly evaluated by the FDA before approval.”

There are also a number of lingering ambiguities in some of the state substitution provisions. For example, many state laws provide that the liabilities will be the same as for dispensing and substitution of generic drugs, but some are silent on this question. Some state laws are also silent on questions of substitution for mail orders. A lack of clarity in this area can disincentivize pharmacists from substituting interchangeable products.

At the federal level, FDA’s recently renovated Purple Book does not contain the same information or have the same format as the Orange Book, to which pharmacists typically are accustomed, so this may also be a source of some confusion. Many biological products have multiple indications and come in multiple strengths, and device presentations — and FDA can approve an interchangeable product as interchangeable with only a subset of the reference product’s approved strengths, presentations or conditions of use. If it is not immediately clear in the Purple Book, for example, whether a specific strength or presentation (vial, prefilled syringe, etc.) is interchangeable, there may be confusion and delay at the point of dispensing. In addition, some state laws require posting of a separate list of interchangeable products to be kept — this dual system can cause inconsistencies to arise, particularly if there are time lags between updates to FDA’s Purple Book and updates to state interchangeable listings. FDA and state pharmacy regulators will likely have to make adjustments to the Purple Book as they, and pharmacists, gain experience with substitution of interchangeable products.

Whether and the extent to which these questions and possible additional administrative and educational burdens will impact or discourage substitution or use of interchangeable products remains to be seen — we will know more once FDA has approved interchangeable products. But there is likely more work to be done to realize the promise of interchangeable products even once FDA begins to approve them.

Eva Temkin is a partner in King & Spalding’s FDA & Life Sciences practice. She can be contacted at etemkin@kslaw.com.


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