Statement of the Federal Trade Commission to the Department of Health and Human Services Regarding the HHS Blueprint To Lower Drug Prices and Reduce Out-of-Pocket Costs

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Statement of the Federal Trade Commission
to the Department of Health and Human Services
Regarding the HHS Blueprint to Lower Drug Prices and
Reduce Out-of-Pocket Costs
July 16, 2018
The Federal Trade Commission (“Commission” or “FTC”)1 submits the following
comments in response to the Department of Health and Human Services’ (“HHS”) call for public
comments on the Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs
(“Blueprint”).2 According to the Blueprint, HHS seeks to “increase competition and end the
gaming of regulatory processes that may keep drug prices artificially inflated or hinder generic,
branded, or biosimilar competition.”3
Competition brings substantial benefits to consumers through lower prices, greater access
to higher quality goods and services, and increased innovation. As one of the two federal
agencies charged with enforcing the nation’s antitrust laws, the FTC supports efforts to promote
and preserve competition by reducing abuses of regulatory processes and, where necessary,
clarifying regulations that may unduly limit competition.
Health care competition has long been a Commission priority because of its critical
importance to consumers and the economy. In particular, for many years, the Commission has
engaged in enforcement, study, and advocacy to promote competition in drug markets. Drawing
on this significant experience, the Commission focuses this statement on two areas identified in
the Blueprint: (1) combatting abuse of Risk Evaluation and Mitigation Strategies (“REMS”);4
1 The FTC approved this statement by a vote of 5-0.
2 HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, 83 Fed. Reg. 22,692 (May 16, 2018),
https://www.gpo.gov/fdsys/pkg/FR-2018-05-16/pdf/2018-10435.pdf [hereinafter “Blueprint”].
3 Blueprint, supra note 2, at 22,692.
4 See id., at 22,695-96. As the Blueprint explains:

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and (2) spurring biologics competition. Both areas are a high priority for the Commission
because they significantly affect U.S. health care expenditures. Any reduction in competition in
these areas can cause substantial consumer harm, and any additional competitive pressure on
prices can lead to significant consumer benefit. In addition, as our statement explains, a tension
between regulation and competition underlies each of these areas.5
I. 	FTC Interest and Experience in Pharmaceutical6 Markets
The FTC is an independent administrative agency charged by Congress with protecting
consumers by enforcing competition and consumer protection laws.7 The FTC is primarily
responsible for federal antitrust enforcement in the pharmaceutical industry.8 It has devoted
significant resources to examining the health care industry by sponsoring workshops and studies
on topics such as generic drug entry prior to patent expiration, the impact of authorized generic
drugs, and the proper role of competition in addressing challenges in health care markets.9 Most
recently, in 2017, the FTC collaborated with the Food and Drug Administration (“FDA”) on two
Certain prescription drugs are subject to limitations on distribution. Some of these distribution
limitations are imposed by the manufacturer, while others may be imposed in connection with an
FDA-mandated [REMS]. Some manufacturers may be gaming these distribution limitations to
prevent generic developers from accessing their drugs to conduct the tests that are legally required
for a generic drug to be brought to market, thereby limiting opportunities for competition that
could place downward pressure on drug prices.
Id. This statement focuses on REMS containing restricted distribution systems mandated by the FDA.
5 See e.g., FED. T RADE COMM ’N & U.S. D EP’ T OF J USTICE , I MPROVING H EALTH C ARE : A D OSE OF COMPETITION
(2004) [hereinafter FTC/DOJ Health Care Report], https://www.ftc.gov/sites/default/files/documents/reports/-
improving-health-care-dose-competition-report-federal-trade-commission-and-department-
justice/040723healthcarerpt.pdf.
6 The term “pharmaceuticals” used throughout this comment includes both drug and biologics. Further, the term
“branded manufacturer” includes both branded drug and reference biologic manufacturer.
7 15 U.S.C. §§ 41-58.
8 See FED. T RADE COMM ’N, O VERVIEW OF FTC ANTITRUST ACTIONS IN P HARMACEUTICAL P RODUCTS AND
D ISTRIBUTION (2017), https://www.ftc.gov/system/files/attachments/competitionpolicyguidance-
/overview_pharma_april_2017.pdf.
9 See, e.g., FED. T RADE COMM ’N, AUTHORIZED G ENERIC D RUGS: S HORT -T ERM E FFECTS AND LONG-T ERM IMPACT
(2011), https://www.ftc.gov/sites/default/files/documents/reports/authorized-generic-drugs-short-term-effects-and-
long-term-impact-report-federal-trade-commission/authorized-generic-drugs-short-term-effects-and-long-term-
impact-report-federal-trade-commission.pdf; FTC/DOJ Health Care Report, supra note 5; FED. T RADE COMM ’N,
G ENERIC D RUG E NTRY P RIOR TO P ATENT E XPIRATION: A N FTC STUDY (2002), https://www.ftc.gov/sites/-
default/files/documents/reports/generic-drug-entry-prior-patent-expiration-ftc-study/genericdrugstudy_0.pdf; Fed.
Trade Comm’n & U.S. Dep’t of Justice Workshop Series, Examining Health Care Competition (Mar. 20-21, 2014 &
Feb. 24-25, 2015), https://www.ftc.gov/news-events/events-calendar/2014/03/examining-health-care-competition,
https://www.ftc.gov/news-events/events-calendar/2015/02/examining-health-care-competition.

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public events: one examining regulatory barriers in pharmaceutical markets;10 and the other on
the role of intermediaries in the distribution of pharmaceuticals.11 Over its many decades of
experience evaluating health care competition, the FTC has gained a deep understanding of the
market dynamics that contribute to robust pharmaceutical competition.
Of particular relevance to this comment are the Commission’s two amicus curiae briefs
and recent Congressional testimony detailing the FTC’s concern that branded pharmaceutical
manufacturers may misuse certain REMS to thwart generic competition,12 and policy and
advocacy work regarding competition in biologic product markets.13
II. 	Branded Pharmaceutical Manufacturers’ Misuse of REMS May Impede
Competition
For pharmaceuticals with certain potential safety risks, the FDA may require a REMS.
REMS are strategies intended to manage the known or potential safety risks associated with the
use or distribution of certain pharmaceutical products. In some cases, implementation of a REMS
10 Food & Drug Admin. , Public Meeting, The Hatch-Waxman Amendments: Ensuring a Balance Between Innovation
and Access (July 18, 2017), https://www.gpo.gov/fdsys/pkg/FR-2017-06-22/pdf/2017-12641.pdf.
11 Fed. Trade Comm’n, Public Workshop, Understanding Competition in Prescription Drug Markets: Entry and
Supply Chain Dynamics (Nov. 8, 2017), https://www.ftc.gov/news-events/events-calendar/2017/11/understanding-
competition-prescription-drug-markets-entry-supply. As explained by former Acting Chairman Ohlhausen during
her opening remarks at this event, “[c]ompetition is key to containing prescription drug costs. . . . In light of
concerns about rising drug prices, it’s critical we identify barriers that may prevent drugs from entering the market,
even after applicable patent protections have expired.” Id.
12 See Fed. Trade Comm’n Brief as Amicus Curiae, Mylan Pharm., Inc. v. Celgene Corp., No. 2:14-CV-2094
(D.N.J. June 17, 2014), https://www.ftc.gov/policy/advocacy/amicus-briefs/2014/06/mylan-pharmaceuticals-inc-v-
celgene-corporation; Fed. Trade Comm’n Brief as Amicus Curiae, Actelion Pharm. Ltd. v. Apotex Inc., No. 1:12-cv-
05743 (D.N.J. Mar. 11, 2013), http://www.ftc.gov/sites/default/files/documents/amicus_briefs/actelion-
pharmaceuticals-ltd.et-al.v.apotex-inc./130311actelionamicusbrief.pdf; Antitrust Concerns and the FDA Approval
Process Hearing Before the H. Jud. Comm., Subcomm. on Reg. Reform, Commercial and Antitrust Law, 115th
Cong. (2017) [hereinafter 2017 FTC Congressional Testimony], https://docs.house.gov/meetings/JU/JU05/-
20170727/106333/HHRG-115-JU05-Wstate-MeierM-20170727.pdf.
13 The FTC held several workshops from 2008 to 2015, issued a report on biologics in 2009, and submitted a public
comment to the FDA in 2015. See Fed. Trade Comm’n, Public Workshop, Follow-On Biologic Drugs: Framework
for Competition and Continued Innovation (Nov. 21, 2008), https://www.ftc.gov/news-events/events-
calendar/2008/11/emerging-health-care-competition-consumer-issues-competition; FED. T RADE COMM ’N,
E MERGING H EALTHCARE I SSUES: FOLLOW-O N B IOLOGIC D RUG COMPETITION (2009) [hereinafter FTC FOB
REPORT], https://www.ftc.gov/sites/default/files/documents/reports/emerging-health-care-issues-follow-biologic-
drug-competition-federal-trade-commission-report/p083901biologicsreport.pdf; Fed. Trade Comm’n, Public
Workshop, Follow-On Biologics Workshop: Impact of Recent Legislative and Regulatory Naming Proposals on
Competition, 78 Fed. Reg. 68,840 (Nov. 15, 2013),
https://www.ftc.gov/sites/default/files/documents/federal_register_notices/2013/11/131115biologicsfrn.pdf; Fed.
Trade Comm’n, Staff Comment to FDA on Draft Guidance for Industry on the Nonproprietary Naming of Biological
Products (Oct. 27, 2015) [hereinafter 2015 FTC Naming Comment],
https://www.ftc.gov/system/files/documents/advocacy_documents/ftc-staff-comment-submitted-food-drug-
administration-response-fdas-request-comments-its-guidance/151028fdabiosimilar.pdf.

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may involve restricting distribution of a pharmaceutical to ensure that its benefits outweigh its
risks. But when branded manufacturers misuse REMS to thwart entry by would-be generic
competitors, they threaten to upset the careful balance between competition and innovation that
Congress established in the Hatch-Waxman Act and the Biologics Price Competition and
Innovation Act (“BPCIA”). REMS abuse can occur in two ways.
• 	First, for products subject to REMS with restricted distribution systems, branded
manufacturers sometimes invoke REMS requirements improperly to justify their
refusal to make samples of their products available to firms seeking to obtain
FDA approval of generic or biosimilar products.14
• 	Second, if a competing firm applies for FDA approval of a generic, biosimilar, or
interchangeable product, the branded manufacturer may improperly deny that
competitor access to a single, shared REMS system, which leaves the FDA unable
to approve the competitor’s application and labeling.15
Using either strategy, a branded manufacturer could exploit a REMS system to delay – or block
indefinitely – an entrant poised to become its closest competition.
Below, we provide additional detail about the competitive problems posed by each of
these strategies. Given the potential limitations of antitrust enforcement to address these
problems, we also outline and reiterate our support for carefully considered regulatory and
legislative efforts to address REMS abuses.
A. 	Denial of Reference Product Samples
The Hatch-Waxman Act and the BPCIA establish abbreviated routes to market for firms
able to demonstrate to the FDA that their products are equivalent to a branded pharmaceutical or
biologic product.16 These abbreviated regulatory pathways rely on branded manufacturers
making samples of their product available for purchase on the open market by firms wishing to
develop and obtain FDA approval for lower-cost alternatives. But when the branded product is
subject to a restricted distribution REMS, samples typically are not available for purchase
through customary pharmaceutical distribution channels, because of strict limitations on how
those products can be sold.17 In these instances, a branded manufacturer may prevent a firm that
needs to conduct bioequivalence testing from obtaining samples. As HHS stated in the Blueprint:
14 We note that branded pharmaceutical manufacturers sometimes restrict distribution of their products voluntarily –
without an FDA requirement that they do so – and that those voluntary restrictions on distribution may have the
same anticompetitive effect as misuse of FDA-required REMS.
15 See 2017 FTC Congressional Testimony, supra note 12.
16 For a description of the time and costs differences to obtain FDA approval of a generic drug compared to a
branded drug, as well as between a biosimilar and reference biologic, see FTC FOB REPORT, supra note 13, at
Chapter 1 and Appendix A.
17 See Blueprint, supra note 2, at 22,696.

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In some instances for products that are subject to REMS that impact distribution,
manufacturers continue to restrict access to generic developers even after the
FDA issues a letter stating that it has favorably evaluated the developers’
proposed safety protections for testing and would not consider the provision of
drug samples to this developer for generic development to violate the applicable
REMS.18
By improperly blocking the product developer from obtaining samples, the branded
manufacturer can potentially delay or indefinitely block generic or biosimilar competition to its
product, thereby reducing the competition that Congress specifically sought to facilitate via the
Hatch-Waxman Act and the BPCIA.19
The FTC continues to monitor legal and regulatory developments in this area. For
example, the FTC has investigated allegations that restrictions on the distribution of certain
branded drug products are preventing generic firms from offering competing generic versions of
those products.20 In 2017 Congressional testimony and 2013 and 2014 amicus curiae briefs, the
FTC explained that, under certain circumstances, a branded firm’s refusal to sell product samples
to a potential competitor may violate the antitrust laws.21 To date, the Commission has not filed
any law enforcement action challenging conduct in this area.
The FDA, similarly, has taken a number of steps to provide additional transparency and
guidance in this area, including:
• 	recent release of a list identifying all drug products for which prospective generic
competitors have reported an inability to obtain branded product samples, as well as the
brand manufacturer and the number of such reports;22
18 See Blueprint, supra note 2, at 22,696-97.
19 A more complete description of the Hatch-Waxman Act’s balancing of innovation and competition is contained in
the Commission’s recent amicus curiae briefs on the REMS issue. See Fed. Trade Comm’n Brief as Amicus Curiae,
Mylan, supra note 12; Fed. Trade Comm’n Brief as Amicus Curiae, Actelion, supra note 12.
20 See 2017 FTC Congressional Testimony, supra note 12. The Commission’s amicus briefs in the Mylan and
Actelion cases explained that the Hatch-Waxman regulatory framework cannot function as Congress intended if
generic firms are unable to obtain samples of branded products. Even if the generic firms prevail in their antitrust
actions against the branded firms, and subsequent appeals therefrom, these litigations take many years and can
create substantial delays in obtaining the needed samples and a corresponding delay in generic approval.
Accordingly, even a successful antitrust challenge to REMS abuse is unlikely to provide immediate redress. See Fed.
Trade Comm’n Brief as Amicus Curiae, Mylan, supra note 12; Fed. Trade Comm’n Brief as Amicus Curiae,
Actelion Pharm., supra note 12.
21 See 2017 FTC Congressional Testimony, supra note 12; Fed. Trade Comm’n Brief as Amicus Curiae, Mylan,
supra note 12; Fed. Trade Comm’n Brief as Amicus Curiae, Actelion Pharm., supra note 12.
22 See FOOD & D RUG ADMIN., Reference Listed Drug (RLD) Access Inquiries, https://www.fda.gov/Drugs-
/DevelopmentApprovalProcess/HowDrugsareDevelopedandApproved/ApprovalApplications/AbbreviatedNewDrug
ApplicationANDAGenerics/ucm607738.htm.

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• 	2014 publication of draft guidance detailing how generic firms seeking to enter with
generic versions of drugs covered by restricted distribution REMS may obtain letters
validating that their safety protocols are comparable to the branded firm’s safety
protocols;23 and
• 	continuing public statements highlighting the potential problems arising from branded
firm’s misuse of restricted distribution systems.24
The FTC commends the FDA on these efforts, and supports the FDA’s efforts to highlight
misuse of REMS with restricted distribution systems.25
B. 	Denial of Access to the Single, Shared System
Even if a would-be competitor obtains samples of a branded product, subject to a
restricted distribution system or not, the branded manufacturer still can delay or deter market
entry by denying access to its REMS system, commonly referred to as a shared system REMS. A
shared system REMS encompasses multiple prescription drug products and is developed and
implemented jointly by two or more firms. Branded and generic drug manufacturers must – as a
condition of FDA approval – use a single, shared system REMS, unless the FDA waives that
requirement.26 In practice, however, the FDA has rarely granted such a waiver. This can create a
strong strategic incentive for the branded firm to refuse to cooperate with the generic entrant in
order to delay generic entry.27
The FDA has recognized this concern. In a statement announcing the FDA’s two recent
draft guidance documents on shared system REMS, Commissioner Gottlieb highlighted the risk
that the shared system REMS requirements could “become a tool that drug companies can use to
delay or block competition from generic products or hinder their ability to enter the market.”28
23 FOOD & D RUG ADMIN., How to Obtain a Letter from FDA Stating that Bioequivalence Study Protocols Contain
Safety Protections Comparable to Applicable REMS for RLD: Guidance for Industry (2014), https://www.fda.gov/-
downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM425662.pdf.
24 See e.g., Scott Gottlieb, M.D., Comm’r, Food & Drug Admin., Understanding Competition in Prescription Drug
Markets: Entry and Supply Chain Dynamics (Nov. 8, 2017),
https://www.fda.gov/NewsEvents/Speeches/ucm584195.htm.
25 See Antitrust Concerns and the FDA Approval Process, Hearing Before the H. Jud. Comm., Subcomm. on Reg.
Reform, Commercial and Antitrust Law, 115th Cong. (July 27, 2017) (statement of Scott Gottlieb, Comm’r, Food &
Drug Admin.), https://docs.house.gov/meetings/JU/JU05/20170727/106333/HHRG-115-JU05-Wstate-GottliebS-
20170727.pdf; 2017 FTC Congressional Testimony, supra note 12.
26 21 U.S.C. § 355-1(i).
27 See 2017 FTC Congressional Testimony, supra note 12.
28 Food & Drug Admin., Statement from FDA Comm’r Gottlieb, New Policies to Reduce the Ability of Brand Drug
Makers to Use REMS Programs as a Way to Block Timely Generic Drug Entry, Helping Promote Competition and
Access (May 31, 2018), https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm609365.htm.

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As Commissioner Gottlieb explained, “the generic drug maker has to negotiate with the brand
firm to enter into shared REMS programs before the generic drug can be approved. We know
that these negotiations between a brand and generic company – to reach agreement on shared
system REMS – can extend for long periods of time. This can delay market entry of a generic
drug.”29 The FDA’s two draft guidance documents are intended to help generic firms navigate
the shared REMS issue. They describe “general principles and recommendations” for developing
shared REMS systems and “when and how the FDA will consider waiving” the shared REMS
requirement.30
The FTC supports the FDA’s efforts to clarify the circumstances under which it will grant
waivers of the shared REMS requirement. Clarity on the shared REMS issue is particularly
important because, as explained in the FTC’s recent Congressional testimony, at least one court
has held that the existence of the waiver option bars an antitrust claim centered on a branded
manufacturer’s refusal to grant its competitor access to its REMS.31 Under current law, it seems
unlikely that the prospect of antitrust liability alone will create the proper incentives for branded
and generic firms to reach agreement on a shared REMS program.
C. 	Regulatory and Legislative Action to Address REMS Misuse
As explained in sections II.A and II.B above, the FTC supports the FDA’s efforts to bring
clarity and transparency to the REMS issues. The FTC stands ready to work with the FDA on
these and other issues of importance to competition and consumers.
In addition, the FTC has supported well-crafted legislation aimed at correcting the
misuses of REMS related to obtaining branded product samples and accessing shared REMS
systems. A legislative solution to these issues could avoid the uncertainty of litigation and, unlike
a lengthy antitrust case, provide an immediate solution to this challenging problem. Legislation
also could provide a clearer path for competing firms to establish separate FDA-approved REMS
programs.32
29 Id.
30 Id.; FOOD & D RUG ADMIN., Development of a Shared System REMS: Guidance for Industry (June 2018),
https://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/UCM609045.pdf;
FOOD & D RUG ADMIN., Waivers of the Single, Shared System REMS Requirement: Guidance for Industry (June
2018), https://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/-
UCM609048.pdf.
31 See 2017 FTC Congressional Testimony, supra note 12. The case was In re Suboxone Antitrust Litigation, 64 F.
Supp. 3d 665, 685-688 (E.D. Pa. 2014).
32 See 2017 FTC Congressional Testimony, supra note 12.

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III. 	Regulatory Uncertainty May Create Undue Barriers to Biosimilar Development,
Approval, Education, and Access
Biologics have become a mainstay of modern medicine, comprising a third of all new
medicines approved by the FDA annually.33 Biologics are used to treat a variety of serious
medical conditions for which patients have no other therapeutic alternative, including rare
genetic disorders, autoimmune diseases, and cancer.34 But biologics are, on average, 22 times
more expensive than traditional medications.35 Some biologic drugs cost more than $200,000 per
year. Biologics’ prices also are increasing about 10 to 15 percent each year.36 Consequently,
biologics comprise the fastest growing and one of the most expensive segments of prescription
medicine spending.37 The federal government spends more than $5 billion each year on biologic
therapies through the Medicare and Medicaid programs.38
33 Food & Drug Admin., Statement from FDA Comm’r Scott Gottlieb, M.D., Capturing the Benefits of Competition
for Patients (Mar. 7, 2018), https://www.fda.gov/NewsEvents/Speeches/ucm599833.htm.
34 Id. (“Taken together, biologics now account for about 40% of all U.S. drug spending -- and 70% of spending
growth.”).
35 See SCOTT M ORTON, L.T B OLLER , Enabling Competition in Pharmaceutical Markets, Brookings, Hutchins Center
Paper #30, at 6 (May 2017), https://www.brookings.edu/wp-content/uploads/2017/05/wp30_scottmorton_-
competitioninpharma1.pdf (citing Statement of Ed Weisbart, M.D., Chief Med. Officer, Express Scripts, Hearing
Before the Subcomm. on Health of the Comm. on Energy and Commerce, 125, 128 (May 2, 2007),
https://www.gpo.gov/fdsys/pkg/CHRG-110hhrg40500/pdf/CHRG-110hhrg40500.pdf) (“The average cost per day of
a biopharmaceutical is $45 compared with $2 per day for a traditional medicine.”), https://www.brookings.edu/wp-
content/uploads/2017/05/wp30_scottmorton_competitioninpharma1.pdf; see also Express Scripts 2017 Drug Trend
Report, http://lab.express-scripts.com/lab/drug-trend-report/2017-dtr; Medicines use and spending in the U.S.,
IQVIA I NSTITUTE (May 4, 2017), https://www.iqvia.com/institute/reports/medicines-use-and-spending-in-the-us-a-
review-of-2016.
36 M ORTON & B OLLER , supra note 35; Gottlieb, supra note 33.
37 See D EP’T H EALTH & H UM . SERVS, O FFICE OF THE ASS ’T S EC ’Y P LANNING AND E VAL., Observations on Trends
in Prescription Drug Spending (Mar. 8, 2016), https://aspe.hhs.gov/sites/default/files/pdf/187586/Drugspending.pdf;
MEDPAC, Medicare Part B drug payment policy issues, Table 2-1 (June 2017) (9 of the 10 top spending Part B
drugs are biologics), http://medpac.gov/docs/default-source/reports/jun17_ch2.pdf?sfvrsn=0; A LLAN COUKELL,
CHUCK SHIH, What’s Driving Increased Pharmaceutical Spending?, PEW (May 26, 2016),
http://www.pewtrusts.org/en/research-and-analysis/analysis/2016/05/26/whats-driving-increased-pharmaceutical-
spending; PEW, A Look at Drug Spending in the U.S., http://www.pewtrusts.org/en/research-and-analysis/fact-
sheets/2018/02/a-look-at-drug-spending-in-the-us.; IQVIA, Medicine Use And Spending in the United States
(2017), https://www.iqvia.com/-/media/iqvia/pdfs/institute-reports/medicine-use-and-spending-in-the-us-a-review-
of-2017-and-outlook-to-2022.pdf; T HE B IOSIMILARS COUNCIL, The Next Frontier for Improved Access to
Medicines: Biosimilars and Interchangeable Biologic Products 14 (2015), http://www.biosimilars-
council.org/pdf/GPhA-biosimilars-handbook.pdf (annual U.S. spending on biologic drug therapies in the United
States exceeding $100 billion). Several biologics covered by Medicare cost more than $50,000 per beneficiary per
year. U.S. Gov’t Accountability Office, Report to the Ranking Member, Comm. on the Budget, House of
Representatives, 19 Tbl. 4 (Oct. 2015), http://www.gao.gov/assets/680/673304.pdf; see also Judith A. Johnson,
CONG. RESEARCH SERV., Biologics and Biosimilars: Background and Key Issues 2 (Sept. 7, 2016),
https://fas.org/sgp/crs/misc/R44620.pdf.
38 GAO, supra note 37; see also J OHNSON, supra note 37.

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Considering the high and growing costs of biologics, patients would benefit from
increased competition between biologics and biosimilars. Congress has indicated its willingness
to foster biosimilar competition, once top-selling biologics lose their patent exclusivity.39 But
certain FDA regulatory processes may erect undue barriers to biosimilar and interchangeable
development, approval, education, and access. To date, no FDA-approved biosimilar has
obtained an interchangeable designation.
The FTC has experience studying the market for biologic drugs. In 2009, the FTC issued
a report that expressed concerns about the market factors likely to limit biologic competition,
including: (1) lack of state-level automatic substitution laws for biosimilar products; (2) potential
chilling effects if products do not share the same nonproprietary chemical names; and (3) market
acceptance of biosimilar drugs.40 In 2015, FTC staff submitted a comment to the FDA on its
draft guidance on nonproprietary naming of biologics. In that comment, the FTC expressed
concerns that the guidance recommendation for a four-letter “distinguishing suffix that is devoid
of meaning,”41 appended to the active ingredient root name, may hinder consumer acceptance
and biosimilar price competition.42
This section discusses the limited biosimilar competition that has occurred to date and
suggests that the FDA consider certain steps to improve biosimilar and interchangeable
competition. Specifically, we recommend the FDA: (1) continue to create a pathway for
expedited approval of interchangeable biologics; (2) reconsider the current naming guidance for
biologics in light of the Blueprint; and (3) improve the Purple Book.
39 See Rep. Anna Eshoo letter to the FDA (Apr. 20, 2012); Eshoo Statement on First FDA Approval of Biosimilar
Medicine (statement of Rep. Eshoo, Member, Senior Member, House Comm. Energy & Commerce) (Mar. 6, 2015),
https://eshoo.house.gov/issues/health-care/eshoo-statement-on-first-fda-approval-of-biosimilar-medicine/; Senate
Comm. on Health, Educ., Labor & Pensions, Press Release, Lawmakers Praise Committee Passage of Biologics
Legislation, 110th Cong. (June 27, 2007), https://www.help.senate.gov/ranking/newsroom/press/lawmakers-praise-
committee-passage-of-biologics-legislation.
40 FTC FOB REPORT, supra note 13. Prior to issuing this report, the FTC held a public workshop to examine these
issues. See FED. T RADE COMM’N, Public Workshop, Follow-On Biologic Drugs: Framework for Competition and
Continued Innovation (Nov. 21, 2008), https://www.ftc.gov/news-events/events-calendar/2008/11/emerging-health-
care-competition-consumer-issues-competition.
41 FOOD & D RUG ADMIN., Guidance for Industry: Nonproprietary Naming of Biological Products, at 8 (Jan. 2017)
(“A distinguishing suffix that is devoid of meaning and composed of four lowercase letters will be attached with a
hyphen to the core name of each originator biological product, related biological product, or biosimilar product.”),
https://www.fda.gov/downloads/drugs/guidances/ucm459987.pdf.
42 See 2015 FTC Naming Comment, supra note 13. Prior to submitting this comment, the FTC held a public
workshop in 2014 to examine how regulatory proposals regarding state substitution laws and biologic naming
systems may help or hinder biologic competition. See FED. T RADE COMM ’N, Public Workshop: Follow-On Biologics
Workshop: Impact of Recent Legislative and Regulatory Naming Proposals on Competition (Feb. 4, 2014),
https://www.ftc.gov/news-events/events-calendar/2014/02/follow-biologics-workshop-impact-recent-legislative-
regulatory.

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A. 	Limited Biosimilar Competition to Date
Congress passed the BPCIA in 2009 to foster competition between and among biologics,
biosimilars, and interchangeable biosimilars, as well as to support continued innovation of new
biologic products.43 The BPCIA was modeled on the decades-long success of the Hatch-
Waxman Act in facilitating competition by lower-cost generic products in small-molecule
pharmaceutical markets. The BPCIA mandated an abbreviated regulatory approval process for
biosimilars and interchangeables and required the FDA to promulgate guidance implementing
the statute.44 The FDA issued three final industry guidances for biosimilar approval in 2015.45
Since that time, the FDA has approved eleven biosimilars in the United States.46 Only three of
them are commercially available.47
43 See Lawmakers Praise Committee Passage of Biologics Legislation, supra note 39; statement of Rep. Eshoo,
supra note 39 (“Seven years ago, I authored legislation with Senator Edward Kennedy to create a pathway for the
approval of generic versions of biologics, known as ‘biosimilars.’”).
44 Under the BPCIA, the FDA is authorized to approve biosimilar versions of the reference biologics if it finds that
“that the biological product is highly similar to the reference product notwithstanding minor differences in clinically
inactive components” and that “there are no clinically meaningful differences between the biological product and the
reference product in terms of the safety, purity, and potency of the product.” 42 U.S.C. § 262 (i)(2). To meet the
higher standard of “interchangeability,” an applicant must demonstrate that the biosimilar can be expected to
produce the same clinical result as the reference product in any given patient and, if the biologic is administered
more than once to an individual, the risk in terms of safety or diminished efficacy of alternating or switching
between the use of the biological and the reference product is not greater than the risk of using the reference product
without such alternation or switch. 42 U.S.C § 262 (i)(3). Interchangeable biosimilars may be substituted for the
reference product by a pharmacist without the intervention of the prescribing healthcare provider. 42 U.S.C.
§ 262(i)(3). While biosimilars are not automatically substitutable at the pharmacy, interchangeable biosimilars are
capable of automatic substitution if such substitution is permitted under the relevant state's pharmacy law. See also
FOOD & D RUG ADMIN., Guidance for Industry on Biosimilars: Q&A’s Regarding Implementation of the BPCIA of
2009: Background, https://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/-
ucm259806.htm.
45 FOOD & D RUG ADMIN., Biosimilars, http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/-
Guidances/ucm290967.htm.
46 Sue Sutter, US FDA’s Biosimilars Program: Five Years in, Complete Response Letters Still Outnumber
Approvals, P INK SHEETS (May 29, 2018), https://pink.pharmaintelligence.informa.com/PS123179/US-FDAs-
Biosimilars-Program-Five-Years-In-Complete-Response-Letters-Still-Outnumber-Approvals. As of June 13, 2018,
FDA had approved 11 biosimilars. See FDA, Biosimilar Product Information, https://www.fda.gov/biosimilarlist.-
htm.
47 Avalere, Use of Step Through Policies for Competitive Biologics Among Commercial US Insurers (May 2018),
http://avalere-health-production.s3.amazonaws.com/uploads/pdfs/1525698973_Use_of_Step_Through_-
Policies_for_Competitive_Biologics_Among_Commercial_US_Insurers.pdf. As of January 2018, 60 biosimilars
were enrolled in the FDA’s Biosimilar Development Program, targeting 27 different reference biologics products.
Of the 11 biosimilars FDA-approved for marketing in the United States, only three are currently marketed. No
interchangeables have been approved yet. Gottlieb, supra note 33 (“Despite our efforts, however, of the nine
products we’ve approved for marketing in the U.S., only three are currently marketed. Delays may be attributed, in
part, to ongoing litigation.”).

11
When Congress passed the BPCIA nine years ago, the Congressional Budget Office
estimated that the statute would reduce total U.S. expenditures on biologics by $25 billion over a
ten-year period, with $5.9 billion of those savings accruing to the federal government.48 But the
market for biosimilars and interchangeables has evolved more slowly than predicted, and those
savings have yet to fully materialize. Recent analysis estimates the actual savings from
biosimilar competition to be $240 million over a nine-year period – a fraction of the originally
anticipated savings.49 Several factors, discussed below, may have contributed to limited market
penetration of biosimilars, including FDA regulatory choices that have imposed barriers relating
to interchangeability and naming.50
Although market penetration of biosimilars has been limited, the three biosimilars
launched in the United States have generated estimated discounts ranging from 15 to 45 percent
off reference biologic prices.51 In Europe, biosimilar laws were passed several years before the
BPCIA, and the European Medicines Agency (“EMA”) (the FDA equivalent agency in Europe)
has approved 43 biosimilars.52 While there are several reasons that European market dynamics
are different from those in the United States,53 biosimilar competitors in the EU have reportedly
48 CONGRESSIONAL B UDGET O FFICE , Cost Estimate: S. 1695 Biologics Price Competition and Innovation Act of
2007, (2008), https://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/94xx/doc9496/s1695.pdf.
49 See Avalere, supra note 47. Biosimilars could generate $54 billion in savings over 10 years, according to some
estimates. See Andrew Mulcahy et al., Biosimilar Cost Savings in the United States, RAND (Oct. 23, 2017),
https://www.rand.org/pubs/perspectives/PE264.html; Delivering on the Potential of Biosimilar Medicines. The Role
of Functioning Competitive Markets. IMS Institute for Healthcare Informatics, IQVIA (Mar. 2016),
https://www.iqvia.com/-/media/iqvia/pdfs/institute-reports/delivering-on-the-potential-of-biosimilar-medicines.pdf.
50 Richard Frank, Friction in the Path to Use of Biosimilar Drugs, NEJM (Mar. 2018), https://www.nejm.org/-
doi/full/10.1056/NEJMp1714908?query=featured_home.
51 See Ben Hirschler & Michael Shields, Novartis launches first U.S. ‘biosimilar’ drug at 15 percent discount,
REUTERS (Sept. 3, 2015), https://www.reuters.com/article/us-novartis-drug/novartis-launches-first-u-s-biosimilar-
drug-at-15-percent-discount-idUSKCN0R30C220150903 (“the 15 percent discount is the same price gap when
Zarxio was launched in Europe in 2009, although the discount in Europe has since widened to an average or around
20 to 30 percent.”); see also Mulcahy, supra note 49; Kesselheim, et al, The High Cost of Prescription Drugs in the
United States: Origins and Prospects for Reform, 316 (8) J AMA 858–71 (Aug. 23–30, 2016) (economic studies
showing that pre-rebate price reductions for biosimilars are as great as 30-45 percent below the reference biologics
list price).
52 See European Medicines Agency, European Public Assessment Reports (EPAR) on Biosimilars,
http://www.ema.europa.eu/ema/index.jsp?curl=pages%2Fmedicines%2Flanding%2Fepar_search.jsp&mid=WC0b01
ac058001d124&searchTab=searchByAuthType&alreadyLoaded=true&isNewQuery=true&status=Authorised&key
word=Enter+keywords&searchType=name&taxonomyPath=&treeNumber=&searchGenericType=biosimilars&gen
ericsKeywordSearch=Submit (visited Jun. 25, 2018); Ian Schofield, EU Biosimilar Action: New Competitors for
Remicade/Herceptin, Four More Products Await CHMP OK, P INK SHEET (May 30, 2018), https://pink.-
pharmaintelligence.informa.com/PS123181/EU-Biosimilar-Action-New-Competitors-For-RemicadeHerceptin-Four-
More-Products-Await-CHMP-OK.
53 See Fiona Scott Morton et al., The Impact of the Entry of Biosimilars: Evidence form Europe, H ARVARD B US.
SCH. T ECH & O PER . M GMT, at 43 (Working Paper No. 16-141) (Apr. 2018) https://papers.ssrn.com/sol3/papers.-
cfm?abstract_id=2812938 (in European countries after biosimilar entry “[q]uantities and dollar amounts of
biosimilars that are purchased trend upward across almost all countries over time. . . . Prevailing market prices fall
over time at an average rate of about 3.5 percentage points per year following biosimilar entry, and this decline is

12
generated price concessions of up to 75 percent off reference biologic prices due, in part, to
greater biosimilar approvals and interchangeability.54
B. 	FDA Approval of Interchangeable Biologics Will Improve Biosimilar
Competition
In January 2017, the FDA issued draft guidance for the approval of interchangeable
biosimilars.55 The agency has announced that it will issue its final guidance by May 2019.56 The
FTC encourages the FDA to issue final regulations on interchangeable biosimilars as quickly as
possible, to encourage investment in interchangeable biosimilars by enhancing regulatory
predictability. Experience with generic drugs teaches that automatic substitution is crucial for
successful generic drug entry, market acceptance, and consumer savings. Interchangeable
biosimilars are most likely to be eligible for automatic substitution at pharmacies. Automatic
substitution likely will increase market acceptance and market penetration of biosimilars,
resulting in more substantial consumer savings. Without an interchangeable designation,
however, a biosimilar product must be specifically prescribed by a health care provider and
even steeper in Epoetin and Filgrastim markets.”); Henry Grabowski, Biosimilar Competition: Lessons from Europe
and Prospects for the US, OHE (Oct. 2014), https://www.ohe.org/publications/biosimilar-competition-lessons-
europe-and-prospects-us#.
54 See e.g., Ronny Gal, Biosimilars:Adoption update in EU and US, BERNSTEIN G LOBAL SPECIALTY P HARMA & US
B IOTECH (Apr. 2018); Eric Palmer, Deep Discounts Allow Remicade Biosimilar to grab 50% of Norway’s Market,
FiercePharma (Apr. 22, 2015), https://www.fiercepharma.com/m-a/deep-discounts-allow-remicade-biosimilar-to-
grab-50-of-norway-s-market ,(reporting 70 percent discount); Makkiko Kitamura, Bullied in Norway, Merck Sees
Sales of Blockbuster Dive, B LOOMBERG B USINESS (Apr. 22, 2015), https://www.bloomberg.com/news/articles/2015-
04-22/merck-gets-bullied-in-norway-with-remicade-price-war ,(“[W]hen Norway called for bids for this year, it
widened its discount from 39 percent a year earlier to 69 percent of the original drug’s $10,600-a-year tab. Hospira
lost out by offering a price cut of only 51 percent, according to Madsen [Medical Director, Norwegian Medicines
Agency]”); Grabowski, supra note 53; Morton, supra note 53; Pawal Kawalec et. al., Pricing and Reimbursement of
Biosimilars in Central and Eastern European Countries, FRONT P HARMACOL. (June 8, 2017),
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5463127/.
55 FOOD & D RUG ADMIN., Considerations in Demonstrating Interchangeability with a Reference Product: Guidance
for Industry (Jan. 2017), https://www.fda.gov/downloads/Drugs/GuidanceComplianceRegulatoryInformation-
/Guidances/UCM537135.pdf.
56 FDA Commissioner Gottlieb announced an intention to publish a biosimilars action plan to enhance regulatory
predictability for biosimilar development, encourage market acceptance, and foster competition. Additionally, the
action plan would update the agency’s January 2017 draft guidance on interchangeability, including allowing for
easier extrapolation across indications. See Cathy Kelly, US FDA Biosimilar Guidance Update Will Relax
Interchangeability Standards, P INK SHEET (Apr. 21, 2018), https://pink.pharmaintelligence.informa.com-
/PS122952/US-FDA-Biosimilar-Guidance-Update-Will-Relax-Interchangeability-Standards (“one major issue that
has arisen is the draft's strong recommendation that biosimilar developers only use US reference products to
demonstrate interchangeability . . . an agency official recently indicated FDA may be open to use of non-US
reference products in some cases.”). Recently, the FDA has also withdrawn its guidance on biosimilar analytical
studies. See Ed Silverman, Frustrated at the Pace of Biosimilar Development, FDA Yanks a Draft Guidance, RAPS
(June 21, 2018), https://www.statnews.com/pharmalot/2018/06/21/fda-withdraws-biosimilars-guidance/; see also
Michael Mezher, FDA Withdraws Guidance on Biosimilar Analytical Studies, RAPS (June 21, 2018),
https://www.raps.org/news-and-articles/news-articles/2018/6/fda-withdraws-guidance-on-biosimilar-analytical-st.

13
cannot be automatically substituted for a reference biologic at the pharmacy level.57 Thus, the
lack of FDA guidance on interchangeable biosimilars likely hinders automatic substitution, along
with the associated market acceptance and consumer cost savings.
FDA guidance is crucial to clinical trial development for interchangeable biosimilars. In
the absence of final FDA guidance, companies face significant uncertainty regarding how to
construct and conduct the pivotal clinical trials that would prove interchangeability.58 Indeed, no
FDA-approved biosimilar has yet obtained an interchangeable designation, suggesting that the
absence of guidance may be contributing to delays in the investment, application, approval, and
entry of interchangeable biologics that otherwise would likely provide the greatest price
competition in these markets. FDA Commissioner Gottlieb has recognized that “greater scientific
and regulatory clarity for sponsors, and greater efficiencies in the review of biosimilar and
interchangeable applications,” would increase competition and benefit American consumers.59
As an additional barrier to interchangeability, current draft FDA guidance strongly
recommends that companies complete switching studies using only samples of reference
biologics sourced in the United States.60 But, similar to REMS tactics discussed above, U.S.
manufacturers of reference biologics may not be making enough samples available – even at full
price.61 And, even though the FDA has allowed biosimilar developers to conduct switching
studies using internationally sourced samples of reference biologics as long as they analytically
bridge each batch and lot to the U.S. reference,62 these bridging studies are expensive and time-
consuming.
57 See FOOD & D RUG ADMIN., Purple Book: Lists of Biological Products with Reference Product Exclusivity and
Biosimilarity or Interchangeability Evaluations (page last updated Jul. 2, 2018),
https://www.fda.gov/drugs/developmentapprovalprocess/howdrugsaredevelopedandapproved/approvalapplications/t
herapeuticbiologicapplications/biosimilars/ucm411418.htm.
58 Derrick Gregory, Industry May Like FDA’s Biosimilar Guidance Withdrawal, But Not the New Information
Vacuum, P INK SHEETS (June 22, 2018), https://pink.pharmaintelligence.informa.com/PS123350/Industry-May-Like-
FDAs-Biosimilar-Guidance-Withdrawal-But-Not-The-New-Information-Vacuum.
59 Gottlieb, supra note 33.
60 FOOD & D RUG ADMIN., Considerations in Demonstrating Interchangeability with a Reference Product: Guidance
for Industry, at 16 (Jan. 2017), https://www.fda.gov/downloads/Drugs/GuidanceCompliance-
RegulatoryInformation/Guidances/UCM537135.pdf.
61 According to media reports, one of the main reasons for the withdrawal of the guidance had to do with industry
complaints regarding the FDA requirement for a minimum of ten lots of US-sourced reference product to be
sampled in order “to establish meaningful similarity acceptance criteria.” Industry participants raised concerns about
the potential for lot-to-lot variability and the statistical methods for evaluating analytical similarity proposed in the
guidance especially where access to reference product lots is limited. “‘The goal is for future draft guidance to
address potential challenges faced by biosimilar sponsors in designing studies that are intended to demonstrate that a
proposed biosimilar product is highly similar to a reference product, including consideration of appropriate methods
to analyze analytical data to account for potential lot-to-lot variability of the reference product,’ according to the
FDA.” Mezher, supra note 56.
62 See Cathy Kelly, Interchangeability Standards, supra note 56; see also Credit Suisse, Global Pharmaceuticals, at
56 (May 25, 2018). This is similar to the denial of reference product samples for certain REMS products described
above in Section II. The FTC believes that the FDA’s final guidance on interchangeable biosimilars should address

14
Recently, FDA Commissioner Scott Gottlieb acknowledged that reference biologic
manufacturers are “gaming the system to try to block competition,” and suggested that the FDA
may be considering ways to make interchangeable designations easier and less expensive to
obtain.63 Some scientists have demonstrated that one source of a branded biologic could serve as
the global reference for all biosimilars, when the U.S.-sourced and ex-U.S. sourced reference
products were approved based on the same clinical studies. This approach would eliminate the
need for the analytical bridging studies.64
Commissioner Gottlieb also recently announced withdrawal of draft biosimilar guidance
in order to ensure the final guidance takes into consideration the most current and relevant
science.65 He stated that he was concerned about the slow development of biosimilar competition
and that FDA policies should encourage growth. The FTC agrees. Specifically, Commissioner
Gottlieb stated:
FDA can do more to support the development of biosimilars, as well as promote
the market acceptance of these products . . . . As the cost to develop a single
biosimilar product can reach hundreds of millions of dollars, it’s important that
we advance policies that help make the development of biosimilar products more
efficient, and patient and provider acceptance more certain.66
The FTC encourages the FDA to consider incorporating into its final interchangeable and
biosimilar guidances ways to reduce barriers to entry and to expedite the approval of biosimilars
and interchangeables.
C. 	To Improve Competition, the FDA Should Reconsider the Final Naming
Guidance for Biologics
In 2015, FTC staff responded to the FDA’s request for comment on its draft guidance
addressing nonproprietary names for biologics.67 In the draft guidance, the FDA had proposed
this concern, to ensure that sufficient quantities of reference biologic samples are available to biosimilar developers
in a timely manner.
63 Sarah Jane Tribble, Liz Starab, FDA Head Vows to Tackle High Drug Prices And Drugmakers ‘Gaming the
System, Kaiser Health News, (Feb. 15, 2018), https://khn.org/news/fda-head-vows-to-tackle-high-drug-prices-and-
drugmakers-gaming-the-system/.
64 See Christopher Webster & Gillian Woollett, A ‘Global Reference’ Comparator for Biosimilar Development,
31(4) B IODRUGS 279-86 (2017), https://link.springer.com/content/pdf/10.1007%2Fs40259-017-0227-4.pdf.
65 Derrick Gregory, Industry May Like FDA’s Biosimilar Guidance Withdrawal, But Not the New Information
Vacuum, P INK SHEETS (June 22, 2018), https://pink.pharmaintelligence.informa.com/PS123350/Industry-May-Like-
FDAs-Biosimilar-Guidance-Withdrawal-But-Not-The-New-Information-Vacuum.
66 See Gregory, supra note 65.
67 2015 FTC Naming Comment, supra note 13.

15
adding a new, random suffix to the nonproprietary name of each biological product.68 The
purpose of the FDA’s naming convention was to improve pharmacovigilance and minimize
possible inadvertent substitution of biological products that the FDA had not determined to be
interchangeable.69
Building on the FTC’s extensive experience in evaluating health care competition and
studying competitive issues affecting biologics, the 2015 FTC staff comment suggested that the
FDA’s naming convention, which departed from FDA tradition, could cause physicians to
believe mistakenly that the products have clinically meaningful differences. Such confusion
arising from the naming convention may dissuade physicians from prescribing the biosimilar and
consequently diminish competition in biologic drug markets.70 The comment also noted ways in
which the naming proposal may create unnecessary costs and conflicts with efforts toward global
naming harmonization.71 Finally, the comment suggested an alternative approach for achieving
the FDA’s goal of: (1) avoiding inadvertent substitution; and (2) improving the reporting to the
FDA adverse events involving biologics.72
In 2017, the FDA adopted final guidance consistent with its 2015 draft guidance. In
particular, the FDA’s final Nonproprietary Naming of Biological Products: Guidance for
Industry (“Naming Guidance”) assigned a “distinguishing suffix that is devoid of meaning.”73
Because the FTC continues to believe that the FDA naming convention for biologic drugs may
reduce price competition in biologic drug markets and may create unnecessary costs, the
Commission renews the points raised in the earlier FTC staff comment. In particular, in response
to the Blueprint’s request for comment on means to improve competition in biopharmaceutical
markets and to reduce out-of-pocket spending for patients,74 the FTC recommends that the FDA
reconsider the Naming Guidance in light of the HHS Blueprint goals.
First, the FDA’s Naming Guidance may hinder biosimilar competition. As FTC staff
noted in 2015, the FDA’s decision to assign different suffixes to the drug substance names of
biosimilars and their reference biologics could result in physicians incorrectly believing that
biosimilars’ drug substances differ in clinically meaningful ways from their reference biologics’
drug substances. That is especially the case since differences in drug substance names have
68 FOOD & D RUG ADMIN., Notice of Nonproprietary Naming of Biological Products: Draft Guidance for Industry;
Availability, 80 Fed. Reg. 52,296 (Aug. 28, 2015), https://federalregister.gov/a/2015-21383.
69 Id.
70 2015 FTC Naming Comment, supra note 13.
71 Id.
72 Id.
73 FOOD & D RUG ADMIN., Nonproprietary Naming of Biological Products, Guidance for Industry, at 8 (2017),
https://www.fda.gov/downloads/drugs/guidances/ucm459987.pdf.
74 See, e.g., Blueprint, supra note 2, at 22,692.

16
traditionally connoted meaningful differences in drug substances.75 As former HHS Assistant
Secretary for Planning and Evaluation and current Harvard University economist Richard Frank
noted recently:
One concern is that such naming creates the impression that the clinical effects of
a biosimilar may differ meaningfully from the reference product. Perceived
differences between competing products weaken price competition, and the
existing evidence suggests that such perceptions are having this effect in the
biosimilar market.”76
That concern is supported by standard economic theory, which holds that perceived
differences between products may diminish price competition. When products are (or are
perceived to be) differentiated, they compete along more dimensions than just price. The
corollary is that closer economic substitutes typically drive more intense price competition, and,
accordingly, lower prices.77 Biosimilars are required to be highly similar to, and have no
clinically meaningful differences in safety and efficacy from, their reference biologic – meaning
they should be competing vigorously with reference biologics on price. But this price
competition between reference biologics and biosimilars may be less vigorous if physicians
incorrectly believe that there are clinically meaningful differences between biosimilars and their
reference biologics based on different suffixes attached to the same, shared root name. These
naming conventions thus may diminish biosimilar price competition, which, in turn, could lead
to higher prices.
For this reason, in 2014, the American Medical Association (“AMA”) recommended
further research: “Any change in current nomenclature rules or standards should be informed by
a better, and more complete, understanding of how such changes, including requiring a unique
identifier for biologic INNs [International Nonproprietary Names], would influence prescriber
attitudes and patient access, and affect post marketing surveillance.”78 As the AMA noted,
actions that act as barriers to clinical uptake are counterproductive.79
75 The Biologics Price Competition and Innovation Act (“BPCIA”) requires a “biosimilar” to be “highly similar to
the reference product notwithstanding minor differences in clinically inactive components,” with “no clinically
meaningful differences between the biologic product and the [FDA-licensed biological] reference product in terms
of safety, purity, and potency of the product.” 42 U.S.C. § 262(i)(2).
76 Frank, supra note 50 (“One concern is that such naming creates the impression that the clinical effects of a
biosimilar may differ meaningfully from the reference product.”).
77 See D ENNIS W. CARLTON & J EFFREY M. P ERLOFF, M ODERN I NDUSTRIAL O RGANIZATION 225 (4th ed. 1994)
(“the greater the perceived difference between two firms’ products, the more each firm can charge.”).
78 See Pub. Comment from Am. Med. Ass’n to the Fed. Trade Comm’n at 3 (Feb. 28, 2014),
https://www.ftc.gov/system/files/documents/public_comments/2014/02/00023-88679.pdf; N. AM . CTR . FOR
CONTINUING M ED. E DUC . , CME Survey on Biosimilars 4 (May 24, 2013), http://www.naccme.com/2013-
biosimilars-cme-survey-results-full-report; see, e.g., Kevin McCaffrey, Most Docs Are in the Dark About
Biosimilars: Survey, M ED. M ARKETING & M EDIA (Aug. 13, 2015), http://www.mmm-online.com/-
dataanalytics/most-docs-are-in-the-dark-about-biosimilarssurvey/article/432650/ (researchers polled 120 prescribing
specialists regarding knowledge gap on biosimilars: most specialists wanted educational information about safety
and efficacy to better understand biosimilars).

17
Second, as FTC staff noted in 2015, experience with biosimilars in Europe suggests that
biosimilars with distinct nonproprietary names are less commercially successful than biosimilars
with the same nonproprietary name as the reference biologic.80 Biosimilar manufacturers
presented evidence at the 2014 FTC workshop that, in Europe, the market penetration of
biosimilars with a different active ingredient name than the reference biologic trails the market
penetration of biosimilars with the same active ingredient name as the reference biologic.81
Third, FTC staff continue to believe that reliance on trade names would address the
FDA’s pharmacovigilance concerns and address the FDA’s concerns with unintended switching
of products not determined by the FDA to be interchangeable. Likewise, as discussed below,
using the Purple Book in the same manner as the Orange Book, together with
physician/prescriber consent to substitution, provides an existing mechanism to prevent
inadvertent substitution.
Finally, while not raised in the 2015 comment, with respect to interchangeable biologics,
the FDA could implement a biologics naming system for interchangeables similar to the one
used for generic equivalents. Such a system would require unique brand names for all biologics,
while preserving the same active ingredient name across all therapeutically substitutable
products in the same biologic category.82
79 Id; see also Frank, supra note 50.
80 Delivering on the Potential of Biosimilar Medicines: The Role of Functioning Competitive Markets, IMS
I NSTITUTE , at 24, https://www.medicinesforeurope.com/wp-content/uploads/2016/03/IMS-Institute-Biosimilar-
Report-March-2016-FINAL.pdf (“In October 2015, PharmaPhorum surveyed doctors in France, Spain and the UK
and found that: fewer than 25 per cent of them report prescribing biosimilars and, while almost half have reported
that they expect they will prescribe them in the future, biosimilars are expected to account for only 17 per cent of
their prescriptions over the next three years . . . .The main reason that biosimilars are not prescribed is that many
physicians continue to express concern over the efficacy and safety of these agents.”).
81 See Sumant Ramachandra, Senior V.P. , Hospira, Presentation at FTC Follow-On Biologics Workshop: Lessons
for the United States: Biosimilar Market Development Worldwide at 8 (Feb. 4, 2014), https://www.ftc.gov/system/-
files/documents/public_events/FollowOn%20Biologics%20Workshop%3A%20Impact%20of%20Recent%20Legisl
ative%20and%20Regulatory%20Naming%20Proposals%20on%20Competition/ramachandra.pdf.
82 Europe has used this type of naming system (brand names, same active ingredient, no suffix, NDC codes) since
2006. This system was recently adopted by Australia. This system has worked well to increase biosimilar
competition that benefits consumers. Naming of Biosimilars, G ENERIC PHARM . ASS’N, http://www.gphaonline.-
org/gpha-media/gpharesources/1naming-biosimilars (last visited June 11, 2018) (“the [nonproprietary names]
assigned to biosimilars and already used in Europe, Japan, and other highly regulated markets match that of their
reference.”); see Sreedhar Sagi, Hillel Cohen, & Gillian Woollett, Pharmacovigilance of Biologics in a Multisource
Environment, 23(12) J. M ANAG. C ARE SPEC . P HARM . 1249-5 (2017), https://www.jmcp.org/doi/10.18553/-
jmcp.2017.23.12.1249, (European safety surveillance systems work using brand name and NDC codes and no need
for suffix); EPAR, Biosimilars, supra note 52; Biosimilar Council, IGBA Congratulates the Australian Government
for Maintaining Their Biologics Naming Convention and for Strengthening Pharmacovigilance,
https://biosimilarscouncil.org/igba-congratulates-the-australian-government-for-maintaining-their-biologics-naming-
convention-and-for-strengthening-pharmacovigilance/ (the Australian Government decision is to maintain the
existing naming convention for biological medicines: “that is to continue using the Australian biological name
(without a suffix) and to strengthen the adverse event reporting including mandatory trade name, as well as the non-

18
Consequently, the FTC recommends that HHS and the FDA revisit the FDA Naming
Guidance in light of the Blueprint, and consider alternative approaches that achieve the FDA’s
objectives without hindering competition.
D. 	Improving the Purple Book Will Benefit Biosimilar Competition
The Commission supports the FDA’s efforts to improve the Purple Book,83 which lists
biological products, including any biosimilar and interchangeable biological products licensed by
the FDA. As the FDA notes, the Purple Book publishes information about biological products
that is useful to prescribers, pharmacists, patients, and other stakeholders.84 This information
includes any biological product licensed by the FDA, the date licensed, and whether the FDA
evaluated the biological product for reference product exclusivity.85 Timely and detailed
information about reference product exclusivity promotes biosimilar competition because it
allows potential competitors to more fully understand the regulatory landscape.
The FDA has emphasized that it does not intend the Purple Book to be equivalent to the
Orange Book, as the legal regimes governing licensure of biologics and approval of drugs are
different. Despite such differences, the Purple Book could be more useful if it included a search
functionality similar to that of the FDA’s Orange Book.86 For example, a user can search the
FDA’s Orange Book website by active ingredient name, proprietary name, dosage form, route of
administration and other features.87 By contrast, the Purple Book is in a static PDF format and
does not contain the same information.88 Analogous information in the Orange Book that is
currently not included but should be included in the Purple Book would include applicant name,
date application filed, active ingredient name (not product proper name), patents if any, applicant
holder (if different than applicant), and or application number. These changes would make it
proprietary name, a mandatory field when reporting an adverse event to the Australian Therapeutic Goods
Administration”).
83 Blueprint, supra note 2, at 22,696.
84 Id.
85 See FOOD & D RUG ADMIN., Purple Book: Lists of Biological Products with Reference Product Exclusivity and
Biosimilarity or Interchangeability Evaluations, https://www.fda.gov/drugs/developmentapprovalprocess/howdrugs-
aredevelopedandapproved/approvalapplications/therapeuticbiologicapplications/biosimilars/ucm411418.htm (last
updated Jul. 2, 2018).
86 Id. (“How could the Purple Book be more useful to health care professionals, patients, manufacturers, and other
stakeholders.”).
87 FOOD & D RUG ADMIN., Orange Book: Approved Drug Products with Therapeutic Equivalence Evaluations,
https://www.accessdata.fda.gov/scripts/cder/ob/.
88 See, e.g., FOOD & D RUG ADMIN., Purple Book: Lists of Licensed Biological Products with Reference Product
Exclusivity and Biosimilarity or Interchangeability Evaluations, https://www.fda.gov/drugs/development-
approvalprocess/howdrugsaredevelopedandapproved/approvalapplications/therapeuticbiologicapplications/biosimila
rs/ucm411418.htm.

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easier for health care professionals, patients, manufacturers, academics, attorneys, and other
stakeholders to evaluate relevant information, which would, in turn, allow parties to understand
better the competitive landscape for biosimilar drugs.
The FDA also could reorganize information presented in the Purple Book to increase its
utility.89 As described above, the FTC has expressed concern with the FDA’s Naming Guidance
because the “meaningless suffix” may lead to physician confusion, and negatively affect
prescriber attitudes, patient access, and post-marketing surveillance. The FDA could ameliorate
these concerns by emphasizing the root name of biologic products and reducing the prominence
of the FDA-designated suffixes. For example, the FDA could place a biologic product’s active
ingredient name and its FDA-designated suffix in separate columns in the Purple Book. This
editorial change would make it clearer to physicians when a biosimilar shares an active
ingredient name with the reference product, reducing any physician confusion.
IV. 	Conclusion
The Commission appreciates this opportunity to provide its views on the Blueprint. As
explained above, we support HHS and the FDA’s efforts to examine ways to increase
competition in health care markets and to address abuses of government processes that facilitate
maintenance of market power after patent expiry. The Commission and its staff look forward to
continuing to work with HHS and the FDA on these and other issues related to competition and
consumer welfare.
89 Blueprint, supra note 2, at 22,696 (“What additional information could be added to increase the utility of the
Purple Book?”).