Biosimilars May Be at Risk Depending On Supreme Court’s Affordable Care Act Ruling

As the Supreme Court decides on the fate of the Affordable Care Act (ACA), much of the focus understandably has been on the millions of people who would lose health insurance coverage and protections for pre-existing conditions if the law is overturned. Another not-so-often-discussed ramification of such a ruling is that the biosimilars market could be completely upended. While industry experts tell AIS Health that such an outcome probably will not occur, they still recommend that stakeholders prepare for this possibility.

The Biologics Price Competition and Innovation Act of 2009 (BPCIA) created the 351(k) biosimilar pathway. After more than one attempt to get a stand-alone bill to pass, lawmakers made it part of the ACA, and it became law on March 23, 2010.

Biosimilars have been available on the U.S. market since the Sept. 3, 2015, launch of Novartis unit Sandoz Inc.’s Zarxio (filgrastim-sndz), a biosimilar of Amgen Inc.’s Neupogen (filgrastim), and the FDA has approved 29 therapies spanning nine reference products. Twenty of them have launched in the U.S.

At the heart of the issue is the individual mandate, which the Supreme Court upheld as constitutional in 2012. Then in 2017, Republicans passed a tax cut bill that set the penalty for not having health insurance at $0, which is what led to the current case before the Supreme Court, California v. Texas (Nos. 19-840 & 19-1019). It challenges the ACA’s individual mandate and questions the ability for the entire law to stand if part of it is found to be unconstitutional. California Attorney General Xavier Becerra (D), who has been nominated to serve as HHS secretary under President-elect Joe Biden, is leading the fight to uphold the law.

Industry observers expect a decision by June 2021, according to various sources.

Industry Experts Say ACA Is Severable

Opinions among industry experts vary on what the court will decide.

“I do think it is severable, but I am optimistic that that won’t be needed,” one industry expert who declines to be identified tells AIS Health.

“I think it’s highly likely the Supreme Court will find the ACA severable,” says a second industry expert who declines to be identified. “Of course there is a chance they’ll find the portion being challenged unconstitutional.”

Although the court’s makeup has shifted to a Republican majority since the 2012 decision, the source points out that during the Nov. 20 oral arguments, conservatives Justice Brett Kavanaugh and Chief Justice John Roberts both suggested the statute was severable because “Congress could have gotten rid of the whole thing, but they just got rid of the tax,” says the source.

A third industry expert who asks to remain unidentified says that “in order for the entire ACA to fall, there have to be a lot of things that fall into place. First is the standing issue.” Do the plaintiffs have standing to bring the case? This case has a “novel standing theory,” which is that if the plaintiffs are harmed by one piece, they can challenge the entire law. “Then the court has to establish that the individual mandate is unconstitutional.” Finally, the court has to find that the ACA can’t be severed. “For the BPCIA, only one of these things needs to go right,” the source tells AIS Health.

The second source points out that “there have been a fair amount of amicus briefings,” which will also make the court “think twice” about doing away with the BPCIA.

“I think the outcome of the Affordable Care Act case before the Supreme Court will be similarly mixed as a ruling like last time,” says F. Randy Vogenberg, Ph.D., principal at the Institute for Integrated Healthcare. “I doubt they will rule the ACA is severable but will keep that door open. That will cause winners and losers short-term plus reopen the executive branch taking presidential license to issue orders in the absence of congressional action. If the court strikes down the ACA entirely, biosimilars on the U.S. market or in the FDA approval pipeline would have to either be grandfathered in or face a regulatory wind-down.”

Coordinating a wind-down — a “worst-case scenario” — he says, “would likely play out over months and possibly years due to the adverse economic effect of losing a lower product cost option in the marketplace.”

Source Doubts Drugs Would Be Pulled

If the ACA and thus the BPCIA are struck down, “personally, I think it’s unlikely that medicines would be pulled off the market,” says source No. 2. However, if the ACA is invalidated, “It would not be, ‘As of tomorrow, biosimilars are no longer being sold.’…The Supreme Court, if they go that route, would likely include guidance in their opinion.…There would be implications for other portions of the ACA,” so the Supreme Court likely would include “guidance to regulators for carrying out their order.”

“I would not expect FDA to de-approve anything already approved, but the pipeline might get more muddled,” the first source tells AIS Health. “But given what FDA has done with the rollovers, I think they would
use their authority to make all the 351(k)s into 351(a)s — which, by the way, I have always believed they could have done anyway, i.e., BPCIA was never needed in the first place.”

If biosimilar manufacturers need to apply for approval via the 351(a) biologic pathway, they are likely to be able to stay on the market during that process, Vogenberg says, and unlikely to have to conduct additional clinical trials.

“I personally think it’s extremely unlikely” that the court would believe that “people who are taking drugs approved by the FDA as safe and effective, and prescribed by physicians” would suddenly not have access to those drugs, asserts source No. 2.

Oral Arguments Did Not Mention BPCIA

Expert No. 3 notes that in the oral arguments, “there wasn’t any direct discussion of the BPCIA; it’s sort of along for the ride. The justices aren’t focused on the idea of taking medications off the market.…Because this didn’t come up, I get the sense the Supreme Court’s not going there.”

Because the BPCIA originally was written as a standalone bill, the sources tell AIS Health that Congress could step in and pass legislation essentially reinstating the BPCIA. The second source points out that Congress could use “the original BPCIA as a model for legislation and negotiate around the edges” on certain issues, including the length of exclusivity for innovator drugs (which currently is at 12 years) and whether there needs to be a separate interchangeability category. “It’s a blueprint.”

And although earlier bills were not passed, it would be difficult to imagine that after more than five years of experience with these drugs and “so much economic activity centered around them now,” that Congress would not step in, says the third source. The issue of biosimilars “seems to enjoy bipartisan support.”

All that said, stakeholders should prepare for the possibility of the BPCIA being invalidated. For manufacturers, this means “working at the policy level with the new administration and expressing their confidence publicly in FDA and the thoroughness of their reviews of all biologics, consistency of reviews, solid quality, no unusual or unexpected adverse events with biosimilars anywhere in the world, etc.” says the first source.

“Good business practices would recommend that biosimilar manufacturers should be preparing for the possibility of the ACA, and thus the BPCIA, being struck down,” recommends Vogenberg. “What they should be doing is scenario planning and being prepared for the best or worst and everything in between. If biosimilars are not available, this could impact payers that have them on formulary should a disruption occur in their marketing.”

Ultimately, says source No. 1, “I am not into drama and panic, and FDA’s authority under the PHS [i.e., Public Health Service] Act [which contains the 351(k) pathway] is broad — they decide if a biologic is safe, pure and potent and made in a licensed facility. They now have the expertise and the experience. They just need the confidence through not being harangued daily to get on and do their job!”

Contact Vogenberg at randy@iih-online.com.

This story was reprinted from AIS Health’s monthly publication RADAR on Specialty Pharmacy. Visit https://aishealth.com/product/specialty-pharmacy.

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