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June 2015, Vol 3, No 6 - The First Word
Donald J. Dietz, RPh, MS
Ann Johnson, PharmD
Dave Schuetz, Rph

In 1984, Congress adopted the Drug Price Competition and Patent Term Restoration Act of 1984—also known as the Hatch-Waxman Act1—and shaped the modern world of generic drugs as we know it. Before the act was passed, generic drug companies were required to perform the same time-consuming and costly clinical trials as brand manufacturers, and were often subjected to costly patent infringement lawsuits. Prior to the Hatch-Waxman Act, abbreviated new drug applications (ANDAs) did not exist, and all drugs were required to navigate the new drug application approval process.2 If this sounds familiar, you were either a practicing pharmacist in 1984, or you have noticed a similarity between the challenges generic drugs initially faced and what is occurring with biologics today. Prior to the creation of the 351(k) biosimilar drug application, bringing “generic” biologics (eg, tbo-filgrastim) to market was time-consuming and expensive.3 With the 351(k) application process, what was old is new again.

History Repeats Itself

When generic drugs were first introduced to the market in the 1980s, product uptake was slow. Physicians and pharmacists were concerned with the quality, sourcing, legality, and potential savings associated with generics. It took almost 5 years for generics to gain wide acceptance and become imbedded in prescribing culture. We are currently seeing the same initial apprehension with biosimilars, as physicians and pharmacists evaluate products’ similarities and savings potential for patients and payers. Much like with the first generic drugs, it may take some time before stakeholders determine whether products are the same. However, with the rapid dissemination of information about the potential cost-savings for biosimilars, we could anticipate a much shorter time frame until acceptance (eg, 1 or 2 years). Will manufacturer differences impact biosimilar products, and will batch variations cause relevant differences? Only time will tell.

The Purple Book

A generation ago, to assist pharmacists and prescribers with becoming comfortable with generic products and their therapeutic equivalence, the US Food and Drug Administration (FDA) issued guidance documents4 and published the Orange Book.5 The Orange Book assured practitioners that generics were therapeutically equivalent and substitutable for corresponding brands. For biosimilars, the FDA has published the Purple Book6 (known as the Orange Book for biologics). Although some states currently use a positive or negative formulary for drug substitution, the Orange Book has become the mainstay in many states’ pharmacy practice laws. As more states begin to pass biologic and biosimilar substitution laws, it is likely that the Purple Book will begin appearing in legislative verbiage as well. Unlike generic drugs, substituting for biosimilars will likely require patient and physician notification in most states; but even now, many state laws require that pharmacies post signs notifying patients of generic substitution requirements.

Cost Implications

The similarities between the first generic drugs and biosimilars are present not only in uptake and prescribing, but also in patient cost implications. During the 1980s, most pharmacy benefits provided coverage for patients at a single-tier level (eg, all drugs cost $5, regardless of their brand or generic status). With time, payers evolved and created plans with multiple tier levels for generics, preferred brands, and nonpreferred brands.7 However, the majority of plans today only provide 1 tier level for specialty drugs. Thus, biologics and biosimilars will likely initially be covered at the same copay/coinsurance level—albeit for a much higher cost than the $5 of the 1980s. In time, it is expected that payers will create additional tier levels to further systemize their payment structure, and it will not be uncommon to see plans with multiple specialty tiers that differentiate biosimilars and traditional biologics.


History seems to be repeating itself in the pharmacy world; the creation of the 351(k) application closely shadows the first ANDA approvals of the 1980s. From substitution, legislative, and payer perspectives, many of the similarities are uncanny. However, although the differences between a brand and generic drug in the 1980s may have produced a cost-savings of $20, the proposition today of a 30% biosimilar savings means that biosimilars could provide a cost-savings of hundreds or even thousands of dollars, which may speed up biosimilar acceptance. We should also expect brand manufacturers to compete with biosimilars by coordinating rebate contracts with payers. As time has shown, pharmacists are well-equipped to adapt to whatever changes they may face.


  1. S.Res.287 - Honoring the 25th anniversary of the enactment of the Drug Price Competition and Patent Term Restoration Act of 1984 (the Hatch-Waxman Act). Accessed May 18, 2015.
  2. S.2926 - Drug Price Competition and Patent Term Restoration Act of 1984. Accessed May 18, 2015.
  3. US Department of Health & Human Services; US Food and Drug Administration; Center for Drug Evaluation and Research; Center for Biologics Evaluation and Research. Guidance for industry reference: product exclusivity for biological products filed under Section 351(a) of the PHS Act. Published August 2014. Accessed May 18, 2015.
  4. US Food and Drug Administration. Guidance documents for drug applications. Updated December 10, 2014. Accessed May 18, 2015.
  5. US Food and Drug Administration. Orange Book preface. Updated March 14, 2014. Accessed May 18, 2015.
  6. US Food and Drug Administration. Purple Book: lists of licensed biological products with reference product exclusivity and biosimilarity or interchangeability evaluations. Updated April 30, 2015. Accessed May 18, 2015.
  7. Blue Cross Blue Shield of Michigan. How do drug tiers work? Accessed May 18, 2015
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Last modified: June 23, 2015
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