Biologic Manufacturers Should Disclose Patent Settlements to the Federal Government

Express Scripts has long supported drug pricing transparency to our patients and clients.  In that spirit, we are pleased to support new bipartisan legislation aimed at shining a light on the drug supply chain.  The Biosimilars Competition Act of 2018, introduced by Rep. John Sarbanes (D-MD) and Rep. Bill Johnson (R-OH), would require biologic and biosimilar manufacturers to report biosimilar patent litigation settlements to the Department of Justice (DOJ) and Federal Trade Commission (FTC) in the same manner as drug patent settlements. Express Scripts joined a wide range of healthcare stakeholders in endorsing the legislation.

The Medicare Modernization Act (MMA) of 2003 requires brand and generic manufacturers to file patent settlement agreements with FTC and DOJ. The intent is twofold: 1) to allow the agencies to take enforcement action on anticompetitive agreements and 2) to deter manufacturers from entering into anticompetitive settlements in the first place.

The FTC uses this information to publish an annual tally of anticompetitive reverse payment settlements and sue in federal court to prevent anticompetitive settlements from going into effect. This notification requirement, however, does not extend to biologic and biosimilar manufacturers, since the statutory requirement predates enactment of the biosimilars pathway by seven years. Rep. Sarbanes recently discussed the need for this legislation to bring additional scrutiny to biosimilar settlements and promote biosimilar competition with the FTC Chairman. 

Spending on biologic drugs in the United States totaled more than $105 billion in 2016, and approximately two-thirds of drug spending in Medicare Part B is on biologic drugs. In 2010, the Congress enacted the Biologics Price Competition and Innovation Act (BPCIA) with the intent of providing an approval pathway for lower-cost biosimilar products while preserving incentives for innovation. With an expected cost of 15% to 40% less than originator products, biosimilars create a significant savings opportunity across the U.S. healthcare system. Enhancing competition between biosimilar and biologic manufacturers is vital to reducing prescription drug costs for American families.

Two recent patent litigation settlements for biosimilar versions of Humira, the top-selling drug in the United States with nearly $10.5 billion in sales in 2016, provide for significantly earlier launches in the European Union –October 16, 2018 – than in the U.S. marketplace, which will not see a Humira biosimilar until 2023 at the earliest. Express Scripts highlighted the need for additional scrutiny of biosimilar patent settlements earlier this year.

In 2002, the Congressional Budget Office noted that the notification requirement would be a deterrence to bad settlements and therefore reduce federal spending on prescription drugs through earlier generic entry. We are confident the Biosimilars Competition Act will also save the federal government money by deterring bad settlements and bringing biosimilars onto the market sooner.