The Baby, Biosimilars, and the Bath Water, Part 2

Exactly one year ago, we covered the ruling by Texas District Court Judge Reed O’Connor, which threatens the existence of the Affordable Care Act (ACA), and along with it, the statutory legislation that founded biosimilar regulation and approval. As the nefarious character Vizzini often said in The Princess Bride, “inconceivable!

Wallace Shawn as Vizzini in “The Princess Bride”

On December 14, 2018, Judge O’Connor decided that in State of Texas vs. USA, the ACA without the individual mandate should not be allowed to stand, and although worried, we expected that the appeals court would take a more measured view. Its ruling should be issued very soon, but as Kaiser Health News warns, two of the three appellate court judges hearing the case in July 2018 seemed to be leaning towards repeal of the ACA. This may invalidate the entire ACA legislation. Potentially, the Court of Appeals could take a surgical view, applying its knife to only the ACA’s exchanges and financing. If the court upholds Judge O’Connor’s ruling, it is doubtful that the justices will want to wade neck high into a quagmire that includes not only the BPCIA, but also the Centers for Medicare and Medicaid Innovation (think accountable care organizations and value-based contracting), the Medicare part D coverage gap, the Patient-Centered Outcomes Research Institute (to conduct comparative-effectiveness research), and work done to advance prevention in public health. Inconceivable!

Of course, a ruling upholding the District Court will be appealed to the US Supreme Court, where it will likely be overturned, right? Based on the composition of the Supreme Court, anything can happen. Even if the Supreme Court affirms the lower court’s ruling, surely the Senate and House of Representatives will quickly develop and pass new legislation that separates and saves the bipartisan biosimilar pathway, among these other important features of the BPCIA? Inconceivable!

Well, here’s a couple of things we do know. If the ACA is upended as a whole, Capitol Hill will not be able to move swiftly to alleviate the ensuing chaos—not with its current divide. Even if there is general agreement to reinstate the BPCIA, this could open up an opportunity for not only changing BPCIA provisions (for good or bad) but also for attaching other unrelated legislative priorities that could slow the process for passage to a standstill.

Second, if the Appellate Court rules against the ACA, it will likely be some time before the Supreme Court can hear the case and then decide on it. In the meantime, this will detract confidence from both the ACA and biosimilar regulatory processes. In fact, if the Supreme Court repeals the ACA, what would happen immediately to any biosimilar applications already filed with the Food and Drug Administration? Does it affect the parties litigating patent infringement and market exclusivity? I’m guessing this would also throw the long-simmering interchangeability issue into chaos. Inconceivable!

Even stranger, how does that affect the status of the 26 biosimilars approved to date in the US? It would make Vizzini’s head spin.

If I were leading a biosimilar development company, what are my options? Conduct business as usual and hope for the best? Turn your attention towards other, more stable global markets? Or delay further expenditures until some semblance of rationality becomes evident?

It is very difficult to believe that the present administration has been so blind as to allow this suit to continue on. It has nothing at all to gain and only chaos to sow. Very conceivable.