American Journal of Law & Medicine

The Legal and Regulatory Status of Biosimilars: How Product Naming and State Substitution Laws May Impact the United States Healthcare System

Alongside the constitutional controversy ultimately addressed by the Supreme Court, the colossal Patient Protection and Affordable Care Act (ACA) ushered in a new paradigm for regulation of biologics by the Food and Drug Administration (FDA). Nestled within the expansive ACA, the Biologies Price Competition and Innovation Act (BPCIA) set forth an abbreviated pathway to market for "biosimilar " and "interchangeable " biological products. While the current BPCIA implementation debate focuses chiefly on the scope of scientific and technical assessments by the FDA and the effect on the emergent biosimilar industry, two issues will prove essential for determinations of access to and costs of the resulting products: how the biosimilar and interchangeable biosimilar biologics are to be named, and whether pharmacist substitution is appropriate for products the FDA deems interchangeable. This article examines the current debate surrounding the use of nonproprietary names for biosimilar biologics, as well as state efforts to reconcile automatic substitution laws for the eventual products. In particular, the article addresses the implications for patients and the United States health care system, highlighting the potential negative effect on anticipated cost-savings, hindrances for effective tracking and reporting of adverse events, and a general lack of consistency in state laws.

      A. THE LABEL


In the wake of the Supreme Court's highly anticipated decision in National Federation of Independent Business v. Sebelius. (1) the implementation of the Patient Protection and Affordable Care Act (ACA) (2) is now well underway by the federal government, states, employers, and insurers. While the initial debate over the ACA focused chiefly on the constitutionality of the individual mandate and the severability of the Medicaid expansion provision, the ACA also introduced a challenging new paradigm for regulation of biologics by the Food and Drug Administration (FDA). Nestled within the expansive ACA, the Biologics Price Competition and Innovation Act (BPCIA) (3) spanned only three sections of the legislation, yet it vastly altered the face of the Food, Drug and Cosmetic Act (FDCA) (4) by setting forth an abbreviated pathway to market for "biosimilar" and "interchangeable" biosimilar biological products.

The inclusion of the BPCIA was in part motivated by widespread cost reduction in the generic drug realm, coupled with the increasingly high costs of biologics. American consumers, insurers, and payors have reaped the financial benefits of generic drugs for the last thirty years. The United States Government Accountability Office has estimated the savings to be one trillion dollars in the last decade alone. (5) The Federal Trade Commission (FTC) reports that the first generic drug to enter the market typically offers a price 25% lower than that of the reference drug, rising to 80% cost savings with multiple generics on the market. (6) For example, 2012 data compiled by Blue Cross Blue Shield of Michigan suggests that, on average, a thirty-day supply of the brand-name cholesterol drug Lipitor costs $141.60, while the same supply of the generic drug, atorvastatin calcium, costs $22.50. (7)

In comparison, the costs of biological products (commonly known as biologics) are often astronomical, averaging twenty-two times the price of traditional drugs, (8) with many treatment regimens exceeding $ 100,000 per year. (9) The PricewaterhouseCoopers Health Research Institute reports that biologics spending increased 18% in 2012 and is projected to rise by 22% in 2014, (10) reaching 45% of national prescription sales in the United States by 2017. (11) FDA approvals of biologics accounted for over 50% of new approved therapies in 2012, projected to reach 60% in 2014. (12) According Aetna's Vice President, Harry Travis, the rising cost of biological products "could soon undermine the economics of the United States health care system." (13)

Fueled by both the failures and successes of the Drug Price Competition and Patent Term Restoration Act of 1984 (also known as the Hatch-Waxman Act), (14) the BPCIA unveils a panoply of regulatory tasks for the FDA. The Hatch-Waxman Act created the generic drug approval process and incentives for drugs deemed therapeutically equivalent to a reference brand drug. In a similar manner, the BPCIA authorizes the FDA to implement an abbreviated pathway to market for biologics, setting forth definitions, basic requirements, patent processes, and periods of exclusivity for particular products. However, the statute delivers a mere skeletal vision of how the outcomes are to be achieved by the FDA and fails to address several core issues that are currently being debated at both the federal level by the FDA and the state level by legislators. As industry and the FDA spar over the details of this new abbreviated regulatory pathway to market, two equally important aspects of the BPCIA implementation are subject to recent scrutiny: how to name the resulting biosimilar and interchangeable biologics, and whether automatic substitution of biological products is appropriate. Each issue will also have a significant impact on the United States health care system.

Since enactment of the Hatch-Waxman Act of 1984, generic drugs in the United States are assigned an international nonproprietary name (INN) and, typically, an identical United States adopted name (USAN), connoting that the active ingredient of the generic drug is an exact copy of the active ingredient of the reference brand drug. The INN and USAN are then used in pharmacopeia listings, product labeling, advertising and promotional material, scientific and medical literature, as a basis for generic names, and to assist in pharmacovigilance, product tracking, and adverse event reporting. As for pharmacist substitution practices, all fifty states have laws that provide for automatic substitution of generic drugs for the therapeutically equivalent reference product, subject to some variation. The universal feature of these laws is to foster cost savings through pharmacist substitution of generic prescription drugs for the more expensive brand drug.

Although these two aspects of the BPCIA implementation have significant long-term implications for patients, physicians, pharmacists, and payors, they have only recently begun to gamer attention as the FDA moves toward approval of biosimilar products. The FDA has thus far sidestepped the naming question because of the nascent state of the regulatory pathway development and paucity of tangible biosimilar products. (15) Meanwhile, states are just beginning to confront the issue of how to extend or adapt their pharmacist substitution laws. However, given that biologics are complex macromolecules derived from living materials and are therefore much more susceptible to variation (due to manufacturing procedures, temperature and storage conditions, and interaction with the human body), many stakeholders resist the use of an identical product name. Naming in this way would be inappropriate, according to stakeholders, because of the potential for a biosimilar to have a much different safety profile than that of its reference biologic. Pharmacists resist biosimilar substitution for the same reason, leading several states to impose restrictive practices on the substitution of interchangeable biologics. Prospective biosimilar sponsors are now simultaneously communicating with the FDA on preferences for naming practices and lobbying state legislators on substitution law initiatives. Although each battle will be waged at a different level of government, the two issues are intertwined and deserve immediate attention, discussion, and resolution.

This article examines the current debate surrounding the use of nonproprietary names for biosimilars, as well as efforts to institute state substitution laws. Part II of the article sets forth the statutory basis and history of the generic drug approval pathway and concepts of therapeutic equivalence. It also reviews the nonproprietary naming system employed for brand and generic drugs from both an international and a United States perspective. Part III addresses the importance of the product name for labeling requirements, adverse event reporting and pharmacovigilance, and postmarket label changes. Part IV explains the foundational definitions and basic application requirements set forth in the BPCIA for biosimilar and interchangeable biosimilar products, as well as the subsequent guidance from the FDA framing these requirements. It also compares traditional drugs with biologics with regard to complexity, characteristics, and measures of comparison.

The next sections of this article highlight the numerous challenges posed by product naming and substitution laws for biosimilar biologics. Part V examines the current debate regarding the naming of biosimilar and interchangeable products and reflects on the ongoing debate and actions in the European Union. Part VI addresses the role of state substitution laws for generic drugs and discusses recent state legislative efforts aimed at extending or modifying the substitution laws for biological products. It also assesses the various positions held by industry, advocacy groups, and professional organizations on the scope of these laws and proposed bills. Part VII discusses implications for patients and the United States health care system, particularly focusing on the potential negative effect on anticipated cost savings, hindrances for effective tracking and reporting of adverse events, and a general lack of consistency in state law.


Until 1984, all new drugs entering the market were evaluated by the FDA by means of the New Drug Application (NDA) process, which includes clinical trials and data requirements for safety and efficacy, among other things. (16) The Drug Price Competition and Patent Term Restoration Act of 1984 (also referred to as The Hatch-Waxman Act) introduced the abbreviated, or generic, drug approval pathway. (17)

As the resulting abbreviated drug pathway developed, the FDA utilized established naming systems to categorize the generic products entering the market as the same as the pioneer brand product. Regulations required that pioneer drug products list both the brand name as well as the established generic name on the label and promotional materials. (18) For example, Pfizer's cholesterol drug is marketed and sold under the brand name Lipitor, while the established generic name is atorvastatin calcium. (19) Following the expiration of Lipitor's patent several years ago, any generic version of Lipitor can enter the market, subject to FDA approval, as atorvastatin calcium.

The generic naming system has been an overwhelming success, leading to extensive cost savings in the drug realm. However, as standard-of-care medicinal products have evolved from simple chemical drug compositions to more complex biological substances, the FDA has struggled to adopt appropriate names for similar, but not identical, products.


The Hatch-Waxman Act contained several important features, including data exclusivity (20) and patent term restoration for pioneer drugs, (21) incentives for generic manufacturers to challenge existing drug patents, (22) and a safe harbor provision allowing generic drug sponsors to use the patented pioneer drug in laboratory and clinical trials to collect and measure the required data. (23) However, the touchstone feature of the Act was the creation of the abbreviated pathway to market.

The Abbreviated New Drug Application (ANDA) created the concept of "bioequivalence," meaning that the generic drug applicant has demonstrated that no significant difference in the rate or extent of the availability of the active ingredient exists between the generic and the pioneer drug at the site of action when administered at the same dose under similar study conditions. (24) These measures entail comparison studies of active ingredient, dosage and route of administration, and strength and conditions of use, (25) rather than the full-scale clinical trials for safety and efficacy required for approval through the NDA process. (26) Generic drug data focuses on measures of bioavailability, (27) pharmacokinetic (PK), and pharmacodynamic (PD) activity as compared to the pioneer NDA drug. PK measures how the body processes the drug, including the time for absorption, distribution, metabolism, and eventual excretion. (28) PD measures how the drug interacts with the body, including the concentration at the site of action and the resulting therapeutic and adverse effects. (29)

The FDA may approve an ANDA after all relevant patents and periods of exclusivity have expired for the pioneer drug, unless the generic applicant succeeds in challenging the validity of the reference drug patent. (30) Once approved, the FDA designates the status of the generic in the Approved Drug Products with Therapeutic Equivalents Evaluations, otherwise known as the "Orange Book. (31) The Orange Book is a public resource maintained by the FDA that includes therapeutic equivalence (TE) designations derived from bioequivalence data and other scientific measures, as well as patent listings provided by the reference brand drug. TE means that: the generic drug sponsor submitted an ANDA that scientifically demonstrates bioequivalence; the drug products are pharmaceutical equivalents containing the same active ingredients, route of administration, strength, and dosage form; and the FDA has listed either the brand or the generic as a reference listed drug (RLD) for purposes of comparison. (32)

The Orange Book is the universal resource consulted by generic sponsors when developing a drug product to compete with a pioneer marketed drug. Orange Book listings contain the approved application numbers for both NDA and ANDA products, active ingredient(s), dosage form and route of administration, propriety name, applicant information, drug strengths, approval date, and patent and exclusivity information. (33) The listing also denotes which drug is the RLD and provides the TE code for all other drugs within that established chemical name. (34) Drug products are assigned either an "A" code (i.e., AA, AB, AN, AO, AP, or AT), symbolizing that the FDA considers the product to be TE to the RLD because it poses no bioequivalence problems, or a "B" code (i.e., BC, BD, BE, BN, BP, BR, BS, BT, BX, or B*), symbolizing that the FDA does not consider the product to be TE to the RLD. (35) If substituted for a prescribed reference product, drug products classified as TE in the Orange Book can be expected to produce the same clinical effect and profile of safety. (36) The TE classification ties directly into the operation of state generic drug substitution laws, discussed in Part VI.


Independent of the Orange Book listings developed and maintained by the FDA--yet directly tied to labeling and marketing--there are two established naming systems relevant to the identification of drugs in the United States. The INN system began in 1950 as the result of a World Health Assembly resolution to institute a global drug marketplace. The INN establishes universal recognition of the active ingredients in a given drug product by attaching an identical name to drug products that once had different brand names in each regional market. The resolution dictates that the World Health Organization (WHO) "develop, establish and promote international standards with respect to food, biological, pharmaceutical, and similar products." (37) Today, the WHO has instituted over 8,000 INNs, (38) and publishes an average of 120-150 new INNs are published each year. (39)

The WHO's Guidelines on the Use of International Nonproprietary Names for Pharmaceutical Substances establish the basic principles for generic drug naming. The INN has become known by a number of related names: nonproprietary name, generic name, established name, compendial name, or official name. The INN is globally recognized and is public property and in the public domain, meaning that no single company has a proprietary interest in the name. (40) Both prescription and over-the-counter drugs are assigned an INN. (41) The INN is intended to assure "clear identification, safe prescription and dispensing of medicines to patients, and for communication and exchange of information among health professionals and scientists worldwide." (42) It signifies that the active ingredient of the generic drug is identical to the active ingredient of the brand drug.

In the United States, the establishment of a generic name also involves a USAN, which is typically the same as the INN, with rare exceptions. (43) The American Medical Association's USAN Council, not the WHO, assigns the USAN. (44) As described by the AMA, a core purpose of a naming system is utility to health care practitioners, where "simplicity (brevity and ease of pronunciation), euphony and ready recognition and recall" are key factors for consideration. (45)

Both the WFIO and the AMA have adapted innovative methods to identify important relationships with regard to naming of drugs. For example, chemical compounds that are related by structure or function are also given the same stem name in order to assist health professionals identify the similarities. Two examples are the stem "-profen", which denotes that the product is an anti-inflammatory or analgesic agent of the ibuprofen type, and "-terol", which denotes that the product is a bronchodilator (phenethylamine derivative). (46)


A product name conveys important information to many different audiences: patient consumers, health care providers, physicians, pharmacists, manufacturers, pharmaceutical representatives, and the general public. Despite the WHO's position that their work assigning a name is purely that of nomenclature, the INN and the Orange Book listing of TE are inextricably linked in the United States. The INN has immense ramifications for cost savings to consumers, marketing requirements and costs to industry, and public and consumer perceptions about particular products.

On a fundamental level, the INN represents to all audiences that all products with that established name are the same and that substitution of one product for another will have no additional adverse effects on their health and well-being. A generic version of a brand drug must demonstrate bioequivalence, as described in Part II.A., and the label must be the same in all material respects. …

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