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Navigating the U.S. Patchwork of Biosimilar Laws

By Jayne Hornung

The FDA approved the first biosimilar more than eight years ago, and the agency continues to give the green light to multiple agents per year. In fact, 2023 could well be a landmark year in launches, spurred by multiple biosimilars of AbbVie’s Humira (adalimumab) entering the U.S. market.

While the upcoming launches are a boon for biosimilar manufacturers, it’s important to note that FDA approval will not guarantee automatic market access for these products. Given the various state regulations in play, biosimilar manufacturers will need to handle managed care differently for different patients and insurers. They must adjust their commercialization strategies based on each state’s regulations, as what works for one team in Ohio may not work for another managed access team in California.

Two levels of biosimilarity

So what are biosimilars, exactly? As biologic products are made with living sources, slight variations exist in each batch. Because of this complexity, biosimilars are not the same as generic drugs, whose active ingredients are simpler and more easily copied. Biosimilars are by definition highly similar to FDA-approved biologics, known as reference drugs, and have no clinically meaningful differences in terms of safety and efficacy.

The 351(k) pathway for FDA approval of biosimilars was established with the Biologics Price Competition and Innovation Act (BPCIA), which was part of 2010’s Affordable Care Act (ACA). Almost five years would pass before the FDA approved its first biosimilar, Sandoz’s Zarxio. As of late May 2023, the agency has approved 41 biosimilars.

The BPCIA also established a second type of biosimilar: an interchangeable biosimilar. To apply for this designation, biosimilars must undergo additional studies, known as switching studies, to demonstrate that patients can switch back and forth between a biosimilar and its reference drug without a loss of effectiveness or an increase in safety risks.

It’s important to note that the U.S. classification of biosimilars is markedly different to the treatment of biosimilars in other countries. For example, the European Union’s European Medicines Agency (EMA) and the Heads of Medicines Agencies (HMA) clarified last year that all biosimilars approved in the EU are interchangeable with both their reference product and equivalent biosimilars. And Health Canada leaves a declaration of interchangeability up to each province’s and territory’s rules and regulations.

As a response to our current regulatory environment, the Biosimilar Red Tape Elimination Act was introduced in the fall of 2022 to eliminate the need for switching studies and essentially make all FDA-approved biosimilars interchangeable.

The rules of dispensing

In the U.S., physicians must specifically prescribe biosimilars that the FDA has not approved as interchangeable. Interchangeable biosimilars, on the other hand, may be dispensed at the pharmacy level without provider intervention, as is commonly done with generics. The first interchangeable biosimilar for a reference drug also has one year of exclusivity of that designation.

So far, the majority of the biosimilars that are available in the U.S. are professionally administered and fall under the medical benefit. Buy and bill remains the main route by which providers acquire these drugs, although pharmacy dispensing of these agents may occur via brown bagging (where a specialty pharmacy ships a drug to a patient to bring to a healthcare setting for administration), white bagging (where a specialty pharmacy ships a drug to a provider for administration) and clear bagging (where a health system specialty pharmacy dispenses a drug to be administered in an in-network facility).

At present, only four FDA-approved biosimilars are interchangeable, but several manufacturers are currently pursuing interchangeable status for their biosimilars. As more interchangeable biosimilars hit the market in the coming years, how and when a pharmacy can dispense these drugs will become much more important than it has been.

Conflicting legislation on biosimilar substitution

The ACA clearly spelled out that an interchangeable product “may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product.” However, that hasn’t stopped all 50 states, Washington, D.C., and Puerto Rico from passing their own legislation regarding interchangeable biosimilar substitution.

While a few similarities exist, the laws differ in various ways. Manufacturers must have a clear grasp of the patchwork of laws, as they will influence market access in each state.

In all 50 states, D.C. and Puerto Rico, a physician may prevent automatic substitution of a biosimilar. In many states, a physician must include “dispense as written” (or “DAW”), “do not substitute,” “brand medically necessary,” or a DAW code on the prescription to do so. Other states, however, take a broader view; for example, Arizona law allows prescriptions to include “any statement by the prescriber that clearly indicates an intent to prevent substitution on the face of the prescription form.” The prescriber’s intention can be conveyed in multiple ways, from a note on a prescription or the patient’s electronic health record to a phone call to the pharmacist.

Forty states allow automatic substitution by a pharmacist without prior prescriber approval. Six states and D.C. allow it only if the substituted drug results in a lower cost to the patient: Arkansas, Idaho (which makes exceptions during drug shortages), Mississippi, North Carolina, Ohio and California (which allows it if the substituted drug’s cost is the same or lower as the cost of the prescribed drug). And four states — Alabama, Indiana, South Carolina and Washington — plus Puerto Rico do not allow substitution of an interchangeable biosimilar without prior approval from a prescriber.

To further complicate matters, other differences among the laws include whether a pharmacist must communicate a substitution back to a provider, the time frame for such communication, the communication method used, and the retention and storage of all communication records. These laws also differ on whether pharmacists need to notify patients of a substituted drug and when that notification must occur; some are silent on the issue.

Thus, it’s not enough that the FDA has approved a biosimilar as interchangeable. To optimize market access, manufacturers need to be aware of the details of biosimilar legislation. By coordinating their commercialization strategies in a state-specific approach that includes provider and pharmacy education, manufacturers can better ensure that all patients have access to their products.

© 2024 MMIT
Jayne Hornung

Jayne Hornung

Jayne Hornung is the Chief Clinical Officer at MMIT (Managed Markets Insight & Technology), a trusted go-to-market partner who believes that patients who need lifesaving therapies shouldn't face delays because accessing drugs can be confusing. She is a clinical pharmacist and has been one of MMIT’s clinical subject matter experts for the past 13 years. In her role, she conducts research of drug, indication and policy data and helps MMIT’s clients understand market access from a clinical perspective. You can find her on LinkedIn.

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