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Biological products, or biologics, are used to treat a range of conditions that commonly affect older populations such as cancer, multiple sclerosis, and rheumatoid arthritis. In contrast to traditional drugs that are derived from chemicals, biologics are made from living cells. They are also typically expensive: many of the most widely used biologics have annual prices that exceed $30,000 per year.
In the United States, spending on biologics is now growing nearly 10 times faster than spending on traditional drugs. Meanwhile, products representing over half of current biologic spending are either facing or could soon face competition from biosimilars, which are less expensive but equally safe and effective substitutes for biologic drugs. These trends indicate that consumers and payers could soon see substantial savings from increased utilization of biosimilar drugs.
Yet while patients facing high costs for traditional prescription drugs often see substantial savings when they switch from a brand-name drug to a generic equivalent, this option is not yet widely available for biologic drugs. State biosimilar substitution laws may be standing in the way.
State Laws Regulate How Pharmacists Dispense Drugs
Over the past decade, every US state and the District of Columbia passed legislation regulating pharmacist substitution of biologics with interchangeable biosimilars, a Food and Drug Administration (FDA) designation for a biosimilar that produces the same clinical result as the original biologic drug. Often these laws were controversial, as they typically included additional requirements that did not apply to traditional generic substitution, despite extensive clinical evidence that biosimilars are safe and effective.
Supporters of additional requirements for interchangeable biosimilar substitution contended that increased regulation would protect both patient safety and the prescriber–patient relationship as well as reduce the possibility of adverse drug events. Many of these arguments mirror concerns previously raised about traditional generic drug substitution that ultimately proved groundless.
Other stakeholders argued that some drug substitution requirements can create barriers that reduce generic substitution and that additional restrictions could similarly limit biosimilar utilization and savings. The FDA and the US Federal Trade Commission have echoed these concerns.
Differential Treatment of Biosimilar Substitution
State drug substitution laws differentiate between generic drugs and interchangeable biosimilar drugs in a variety of ways:
- Forty-seven states and the District of Columbia require pharmacists to notify the prescriber when they substitute an interchangeable biosimilar, typically within a specific timeframe and using specific channels. By contrast, only 2 states have comparable requirements for traditional generic substitution.
- Twenty-nine states and the District of Columbia require pharmacists to notify or obtain consent from patients prior to substituting a generic for a brand name prescription. However, 40 states and the District of Columbia require such notification for interchangeable biosimilars.
- Thirteen states require pharmacists to keep written or electronic records of each interchangeable biosimilar substitution or each biological product dispensed for a defined period. There are no comparable state requirements for traditional generic substitution.
- Although 18 state laws include mandatory generic drug substitution, only 12 states require substitution for interchangeable biosimilars.
Less expensive generic drugs are associated with improved adherence and health outcomes, and pharmacy-level generic substitution is a known driver of generic uptake and price competition. In the same way, lower-priced interchangeable biosimilars could help reduce out-of-pocket costs and, in so doing, improve patient adherence and health outcomes as well as reduce overall health care spending.
The biosimilar market will be unable to provide such benefits if interchangeable biosimilar substitution is unnecessarily constrained. The differential treatment in state drug substitution laws could contribute to lingering concerns about biosimilars and unnecessarily reduce consumer access to and savings from these increasingly important products.
Purvis, Leigh, and James McSpadden. State Biosimilar Substitution Laws Could Reduce Consumer Access and Savings. Washington, DC: AARP Public Policy Institute, October 26, 2022. https://doi.org/10.26419/ppi.00175.001