Biologics are revolutionizing the pharmaceutical industry, and in doing so, garnering an increasing share of antitrust attention. In recent years, the FTC, FDA, and antitrust plaintiffs’ bar have raised concerns about a perceived lack of biologics competition. In particular, these groups have observed that biosimilars have not taken substantial market share from their corresponding biologics or caused significant price erosion; thus, biosimilars have not replicated the impact of generic competition on small molecule brand drugs. This observation has prompted some to claim that biologics manufacturers are stifling competition by disparaging those biosimilar products, which may raise antitrust concerns.1
To properly analyze alleged biosimilar disparagement, it is first helpful to understand the statutory framework for biosimilars. Biologics differ from small molecule drugs, which are required to have the same active ingredients as those of their brand competitors. By contrast, biologics are derived from natural biologic sources. Therefore, biosimilar sponsors must perform studies that demonstrate that there are no clinically meaningful differences between the biosimilar and the original or reference biologic product. In addition, the manufacturing processes for biosimilars are costly and require more research and development investments than generic drugs. This poses a substantial barrier to biosimilar manufacturers looking to compete with biologics already on the market. On account of this problem, the statutory framework for FDA approval of biologics differs from small molecule drugs.2 Several important definitions from the Biologics Price Competition and Innovation Act3 include:
- A “biologic” refers to “a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein, or analogous product, or arsphenamine or derivative of arsphenamine (or any other trivalent organic arsenic compound), applicable to the prevention, treatment, or cure of a disease or condition of human beings.”4
- A “biosimilar” in reference to a biologic means “that the biological product is highly similar to the reference product notwithstanding minor differences in clinically inactive components; and 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.”5
The statute makes a distinction between “biosimilars” and “interchangeable biosimilars.” Interchangeable biosimilars are those that “can be expected to produce the same clinical result as the reference product in any given patient”;6 and “for a biological product that is administered more than once to an individual, the risk in terms of safety or diminished efficacy of alternating or switching between use of the biological product and the reference product is not greater than the risk of using the reference product without such alternation or switch.”7 If these standards are met, then “the [biosimilar] may be substituted for the reference product without the intervention of the health care provider who prescribed the reference product.”8 However, thus far, none of the biosimilars that the FDA has approved have been designated as interchangeable products.9
The FTC, FDA, and antitrust plaintiffs’ bar claim that there is insufficient competition in biologics, and have specifically directed their focus on the biologics manufacturers who stand to benefit if competition is stymied. In this light, the group has identified biosimilar disparagement as a problem, and claim biosimilar disparagement as anticompetitive conduct. Product disparagement has been analyzed as anticompetitive conduct in other contexts, which provides a potential framework here.10
Potential “disparagement” includes assertions that biosimilars “act differently” than their reference biologic. For instance, adversaries may attempt to claim disparagement when biologic manufacturers assert that biosimilars act differently without also indicating that the FDA only approves biosimilars that are “highly similar”11 and have “no clinically meaningful differences”12 from the reference biologic. Likewise, statements by biologics manufacturers asserting that biosimilars are “not identical” to their reference biologics could be found to be misleading to potential consumers, even though such statement may be true. Adversaries may also take issue with biologics manufacturers advertising that biosimilars are not interchangeable with their reference biologics. Even if accurate, the FTC, FDA, and antitrust plaintiffs’ bar may challenge these statements as misleading to consumers because interchangeability is not the standard for effectiveness.
Seemingly harmless statements by biologics manufacturers about biosimilars may create antitrust scrutiny and even breed litigation. The biosimilar sector in the U.S. is not robust.13 There are many factors that have contributed to this, including substantial barriers to entry and the complicated regulatory framework, but as biosimilar competition remains sparse, biologics manufacturers need to be wary of antitrust risk. Particularly, a biologic that does not already face significant competition could be deemed to have monopoly power, such that engaging in exclusionary conduct may be found to violate state and/or federal antitrust law.
Any antitrust analysis focused on alleged disparagement by biologics manufactures will query two points separate from any alleged disparagement. First is whether the alleged disparagement has or will cause an antitrust injury, a question of causation. If the complicated nature of biologics, the confusion about interchangeability, and the critical conditions that require biologics have created a level of hesitance or resistance that may explain the lagging adoption of biosimilars, then alleged disparagement is not the root of the problem. Why not focus on the fact the FDA is yet to approve a biosimilar as interchangeable? Second, the antitrust law at issue is Section 2 of the Sherman Act and state equivalents, which prohibit monopolization. Paramount to this analysis is whether the biologic at issue can be alleged to have monopoly power, or a dangerous probability of achieving monopoly power, an essential Section 2 element which will be lacking where a biologic faces substantial competition from other products. Proving material disparagement is only the first step of any antitrust inquiry.
The key implication of the disparagement narrative is that biologics manufacturers must be cautious when referencing competing biosimilars. The FTC, FDA, and antitrust plaintiffs are targeting the lack of biosimilar adoption, and specifically focusing on alleged disparagement as a key causal factor—particularly as one that enables the FTC and antitrust plaintiffs to target biologics manufacturers. Even statements that may be true on their face may be alleged to be deceptive if they have the potential to mislead.