To encourage competition, the health care law directs the FDA to develop an accelerated approval pathway for follow-on versions of original biologic products.

A patient holds a variety of medicine bottles

The Issue:

The Affordable Care Act includes several pro­visions—collectively referred to as the Bio­logics Price Competition and Innovation Act (BPCIA)—which are designed to encourage competition in the market for biologic drugs.

The term biologic refers to any therapeutic product derived from a biological source, in­cluding vaccines, antitoxins, blood products, proteins, and monoclonal antibodies. These drugs account for a substantial and an increas­ing share of the pharmaceutical market and a growing share of health systems costs.

A key provision of the BPCIA authorizes the Food and Drug Administration (FDA) to develop an accelerated approval pathway for what are known as “biosimilar” products. Biosimilars are subsequent versions of an original biologic product that have the same mechanism of action in the body and are used for the same clinical indication but are not identical to the original product (variously referred to as the reference, pioneer, or inno­vator product).

Because of the high cost of biologics, inter­est in developing an accelerated biosimilar ap­proval process is high for patients, third-party payers, and some in the biopharmaceutical in­dustry looking to contain costs.

What's Next?

In February 2012 the FDA released draft guidance on this accelerated approval process, but to, date no biosimilar products have been reviewed or licensed in the United States. Numerous scientific, legal, and regulatory is­sues remain unresolved, and it is not yet clear how the biosimilar market will develop, nor if it will lead to substantially lower drug prices or better access to biologic drugs.

The greater the expense in developing and marketing a biosimilar, the less likely it is that a substantial number of companies will be willing or able to pursue it, at least in the short term. Uncertainty over the regulatory requirements adds to this reluctance. Indeed, some potential biosimilar manufacturers have given up on the BPCIA biosimilar pathway and are instead pursuing their products under original Biologics Licensing Applications.