Incentivizing Generic and Biosimilar Product Uptake


Increasing competition can help drive down drug prices. This is particularly true following the introductions of generics, especially when there are three or more generic competitors – which has been shown to bring down prices more sharply than with only one or two generic competitors. A robust pathway for generic competition can help expand access to lower priced drugs.

Not all parts of the pharmaceutical market have been equally open to competition from more affordable products. This is especially true for biologic medicines, which are typically complex molecules produced by living cells, and are increasingly important in the treatment of disease.

Until 2010, biologics lacked effective competition because there was no abbreviated pathway for bringing follow-on versions of biologics to market under the Public Health Service Act (PHS Act), similar to the generic pathway for small molecule drugs created under the 1984 Hatch Waxman amendments to the Federal Food, Drug, and Cosmetic Act (FD&C Act). Congress, through the Biologics Price Competition and Innovation Act (BPCI Act), gave the FDA the authority to implement a pathway for approval of biosimilar and interchangeable products, to open biologics to competition, ultimately providing more treatment options, increasing access to lifesaving medications, and potentially lowering drug costs.

Graph displaying the effects of moving to full generic substitution in Part D. Click image to go to the text version.
Graph displaying the effects of moving to full generic substitution in Part D.