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The FDA and Insulin: Biologic and Biosimilar Pricing

The United States is the most expensive market for biologic drugs, including insulin, despite initiatives devised by the Food and Drug Administration (FDA) and the Affordable Care Act. For more than a decade, the biosimilars market in the US has lagged behind the European market, whose medicines are as much as 80 percent cheaper. The Biologics Price Competition and Innovation Act (BPCIA), a provision in the 2010 Affordable Care Act, authorized the FDA to create a new regulatory scheme to approve biosimilars, which are products designed to work like biologics that have already been licensed. In 2015, the FDA approved the first biosimilar, Basaglar (a type of insulin), and by 2017, there were three marketed biosimilars and two more that had been approved. The development of biosimilars is intended to increase competition among biologic manufacturers and drive down prices and making products like insulin more accessible.

Despite the BPCIA and approval of biosimilars like Basaglar, the cost of insulin has continued to skyrocket, and the FDA proposed a new classification system to address soaring prices. In December, FDA Commissioner Scott Gottlieb unveiled a plan to classify insulin as a biologic as opposed to its previous classification as a drug. In doing so, biosimilar drug makers will be enabled to develop biosimilars that can be substituted for the original biologic. Although Gottlieb’s proposal will likely not go into effect until March 2020, the new classification scheme could create competition in what is currently a limited marketplace of insulin, thus driving down the cost for the millions of Americans with diabetes.

As of now, the insulin market is dominated by three manufacturers: Sanofi, Novo Nordisk, and Eli Lilly. Due to their market dominance, these three companies have driven up the cost of insulin, which has tripled between 2002 and 2013 and doubled between 2012 and 2016. Sanofi, Novo Nordisk, and Eli Lilly have faced immense scrutiny due to the price hikes, and criticism peaked when Minnesota Attorney General Lori Swanson filed a legal salvo against the manufactures for their “deceptive” practices. With the issue of insulin pricing entering the public eye, it is clear changes must be made.

Gottlieb’s proposal, designed to implement the intent of Congress, will address pricing standards in three ways. The first step is to extend the anti-evergreening provisions, which are meant to prevent manufacturers from having exclusivity and forestalling competition, to the newly deemed biologics and biosimilars. The next step is to address patent exclusivity and to stop twelve years of exclusivity once the current terms expire. Lastly, the proposal intends to offer guidance to current manufacturers when they submit a New Drug Application for approval under the Food, Drug, & Cosmetic Act (FDCA). This guidance will offer standards for transitioning a product from the drug pathway to the biologic pathway so that it meets the requirements of the Public Health Safety Act and section 505 of the FDCA. With these changes afoot, the FDA and Congress will hopefully make strides in addressing the current high cost of insulin and allow for new biosimilar manufacturers to enter the market, thus significantly benefitting the millions of Americans with diabetes.

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