Some of the most expensive medicines in America are also the ones patients can least afford to go without. Biologic drugs are used to treat life-threatening and debilitating conditions including cancer, autoimmune diseases, and other serious illnesses. When these medicines cost tens or even hundreds of thousands of dollars a year, competition is not an abstract economic concern. It can determine whether patients can afford treatment.
Unlike conventional drugs, which are usually chemically synthesized and can often be copied exactly, biologics are complex medicines generally produced from living organisms, making exact copies impractical. Biosimilars play roughly the same role for biologics that generics play for conventional drugs: they provide lower-cost alternatives after a name brand drug’s exclusivity expires. Yet federal policy makes it harder for biosimilars to compete than it needs to be. Federal law distinguishes between an approved “biosimilar” and an “interchangeable biosimilar,” complicating pharmacist substitution and raising costs even as the scientific justification for that distinction has eroded.
FDA-approved biosimilars have already demonstrated that they have no clinically meaningful differences in safety, purity, or potency from their reference product. Yet federal law creates a second designation before biosimilars can be substituted at the pharmacy without first involving the prescriber. If a prescription specifies the reference biologic, a pharmacist generally cannot simply replace it with an ordinary biosimilar. Unless the biosimilar has the interchangeable designation, the prescriber must instead authorize or prescribe the alternative, subject to state law. That can leave patients and doctors with the mistaken impression that an ordinary biosimilar is somehow less safe or effective.
The distinction raises costs twice. Manufacturers spend additional time and money satisfying interchangeability requirements that FDA increasingly considers unnecessary, while biosimilars without the designation face greater barriers to substitution. Both effects weaken the price-reducing competition biosimilars are supposed to create.
The problem is that U.S. regulation has not kept pace with what scientists now know. When Congress created the biosimilar pathway in 2010, regulators had relatively little real-world experience switching patients between biologics. That caution made more sense when there was little data, however, a more recent systematic review conducted by FDA researchers found no meaningful safety or effectiveness differences after patients switched between reference biologics and biosimilars. Other reviews have reached similar conclusions.
FDA increasingly agrees. Although FDA historically recommended switching studies to support interchangeability, they were never universally required: nine of the first 13 interchangeable biosimilars were approved without additional clinical switching-study data. In 2024, FDA proposed going further, saying such studies should generally no longer be needed because accumulated evidence shows insignificant safety or effectiveness risks from switching. Yet that reform remains unfinished. FDA has gone even further by asking Congress to eliminate the separate interchangeability designation altogether.
Other developed countries have already done that. Europe does not require manufacturers to obtain a second U.S.-style regulatory designation before a biosimilar can be considered scientifically interchangeable. In 2022, the European Medicines Agency and Heads of Medicines Agencies formally concluded that every EU-approved biosimilar is interchangeable with its reference product.
Interchangeability regulations are not the only barrier biosimilars face. FDA’s naming rules make the system even more confusing. FDA does not give a biosimilar exactly the same full nonproprietary name as its reference product. Instead, products share a recognizable core name while each newly named biological product receives its own meaningless four-letter suffix. The suffix does not tell a doctor or patient whether the product has FDA’s separate interchangeable designation. That can make an approved biosimilar look like a meaningfully different medicine even when FDA has determined that it is not.
The Federal Trade Commission warned FDA that differentiated naming could cause medical professionals to infer clinical differences and discourage biosimilar use. A survey of pharmacists reinforces that concern: nearly three-quarters were confident substituting an interchangeable biosimilar when it shared the reference product’s nonproprietary name, compared with only 37 percent when a prefix or suffix made the name different.
The United States is an outlier here too. Australia reaffirmed in 2018 that it would use the same biological name without a biosimilar-specific suffix, citing unnecessary regulatory burden and potential confusion. Canada followed in 2019, warning that suffixes could create the false impression that clinically meaningful differences exist.
Congress and FDA should bring the rules in line with the evidence by eliminating the separate interchangeability designation and treating every FDA-approved biosimilar as interchangeable with its reference product. FDA should finalize its 2024 effort to eliminate unnecessary switching studies and end its four-letter suffix requirement. If two products have no clinically meaningful differences, government rules should not imply otherwise.
These reforms remove regulatory barriers that no longer have a scientific justification. FDA increasingly recognizes that the current framework reflects an earlier period of uncertainty and ignorance. Congress and FDA should finish modernizing the biosimilar approval process so patients have more lower-cost options for some of the most expensive medicines on the market.
Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on X @ConsumerPal.
