By Gregg Girvan
European Union drug pricing policies are often criticized in the United States, but the EU is light years ahead of us in adopting biosimilar biologics.
There are several reasons why this is the case.
U.S. Patent Practices Anticompetitive
First, the EU has a rigorous patent opposition system in which trivial patents can be challenged.
In contrast, drug companies in America engage in various practices to ward off competition that would not occur in Europe. These practices include patent “evergreening”—seeking approval of additional disease indications to extend market exclusivity—and patent “thickets,” or filing a web of numerous patents on various aspects of a drug’s composition, manufacturing processes, and method of administration to forestall approval of competing products.
The drug maker Abbvie is famous, in particular, for building a patent thicket around its blockbuster drug Humira, which will remain exclusive in the United States until 2023 (20 years after it was first approved), even though the drug has had biosimilar competition in Europe since 2018.
In addition, the European Medicines Agency is forward-thinking in approving biosimilar applications in a timely manner.
Longer Patent Protection
Second, U.S. law affords biologics longer market exclusivity granted by the U.S. Food and Drug Administration (FDA) than small-molecule drugs—that is, drugs delivered in tablet or capsule form.
The Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, is responsible for the robust generics market we have today.
Among other things, Hatch-Waxman set the FDA exclusivity for small molecule drugs at five years, required drug makers to publish their patents so generic manufacturers know which patents to avoid, and allows generic drug manufacturers to simply show their active pharmaceutical ingredients are substantially similar rather than conduct costly clinical trials.
In contrast, the Biologics Price Competition and Innovation Act of 2009 (BPCI), passed as part of the Affordable Care Act, regulates the biologics market. BPCI arbitrarily set the exclusivity for biological products at 12 years rather than five. In addition, the BPCI requires manufacturers of biosimilar biologics to conduct lengthy trials to demonstrate efficacy and safety, driving up development costs and risk.
One critical reform is to align the BPCI with Hatch-Waxman with the same five-year exclusivity and FDA approval requirements. This would inject greater competition into the biologics market and drive down costs for patients and taxpayers.
Make Biologics Interchangeable
While there are many other needed reforms, one that is absolutely critical to greater biosimilar use is making biosimilar products interchangeable with brand-name biologics.
This means a pharmacist could automatically substitute a biosimilar for the reference product without permission from the doctor. This has been a critical component driving greater generic drug use since the passage of Hatch-Waxman.
The Biosimilars Council appears to be trying to address the lack of automatic substitution in the biologics market by encouraging consultations between pharmacists and patients about the benefit of biosimilars. This could help around the margins. But several states have laws preventing automatic substitution without prior prescriber approval. Unless automatic substitution is permitted in every state, biosimilars will struggle to gain market share to make such medicines more affordable.
In short, we need to reform our patent laws, align biologics laws with those for small molecules, and allow automatic substitution at the pharmacy level. These and other reforms will drive greater biosimilar adoption, saving patients and taxpayers billions of dollars.
Gregg Girvan (ggirvan@freopp.org) is a scholar who researches health care policy at Foundation for Research on Equal Opportunity (FREOPP).
