The Feds Act to Boost Competition in the Biosimilars Market

Importance of Generic or "Follow On," Versions of Brand-Name Drugs Generic medicines are a critical element of Americans' health care. Since 1984, the marketing of generic versions of chemically synthesized "small molecule" drugs such as those used commonly to control diabetes, blood pressure, cholesterol, and pain, has been governed by legislation commonly known as the Hatch-Waxman Act. The impact of newly available generic drugs is often rapid and impressive: when the first generic copy of a typical small-molecule drug reaches pharmacies, there is typically about a 30% drop in price, often reaching 80% as additional generic versions appear. [...]brand-name drugs like Lipitor and Prilosec that were economic blockbusters while their patents were intact and they had the market to themselves have seen their market-share and revenues plummet once generics became available. The provider mark-up is typically a percentage of the medicine's price. Since a biosimilar's price is less than a biologic's price, providers lose money when they prescribe a lower-priced biosimilar medicine instead of a higher-priced biologic medicine. In this case, the insurance clauses will only allow patients to use the less expensive biosimilars if they first failed on the more expensive biologics. [...]as currently applied, fail-first policies bias the market against less expensive biosimilars, harming competition in the process.