SCOTUS Ruling on 6-Month Notice Period for Biosimilars: Formulary and Cost Impact

The US currently spends about $1 billion on biological drugs and this number is going to continue to climb since biologics are a critical component of new drug development as seen by their expansion into various novel treatment areas. As more biologics enter the market, healthcare expenditures will continue to rise and patient access to treatment will ultimately be affected.

Price increases of pharmaceuticals are usually regulated by the introduction of generic competition; however, prior to the introduction of the biosimilar approval pathway, this process had been missing for biologics. As a result, biologic price increases were common in the absence of competition—some biologic agents have been on the market for greater than 12-years with no competition.

Unfortunately, despite the biosimilars approval pathway, several barriers have prevented biosimilar from entering the marketplace, resulting in prolonged high prices. I am excited that on June 12th, the Supreme Court sided with a biosimilar manufacture and ruled that a manufacturer of a biosimilar product can provide a notice of commercial marketing, either before or after FDA approval of the drug to the reference drug developer, and rejected the timing interpretation for the 180-day marketing notices to the FDA. This ruling will allow earlier commercial availability of the biosimilar—a huge win for healthcare organizations and patients. This is an important win in the battle against excessive and unsustainable healthcare expenditures.

The essential purpose of biosimilars is to introduce direct competition for branded biologics, resulting in lower cost for critical pharmaceuticals used in healthcare. Rising competition in the market place promotes competitive pricing strategies and, eventually, higher cost savings for patients and the healthcare system overall. The 180-day exclusivity period allowed the reference manufacture to raise the drug price and create contracts that bundled the reference product with other medications. In addition, this also gave the reference product 6-months to negotiate preferred status with payers before the biosimilar could enter the market. This strategy often forced healthcare organizations into maintaining the reference product and the preferred agent, which has resulted in a very slow uptake of biosimilar usage.

Optimistically, this ruling is another step in expanding the overall acceptance and familiarity of biosimilars. By improving the availability of biosimilars in the United Stated, we will, hopefully, start to see similar outcomes to those seen in Europe where biosimilars are not just alternatives to competition, but are the preferred treatment option. At this point in time, market entry of Pfizer’s biosimilar product infliximab-dyyb (Inflectra) has not led to a significant cost savings. Removing the 180-day waiting period will allow Samsung Bioepis’ biosimilar product infliximab-abda (Renflexis) to enter the market sooner. This will hopefully result in significant cost savings and pave the way for future biosimilar pricing competition.