Most people are familiar with generic drugs – often cheaper copies of brand-name drugs – but biosimilars are a relatively new concept in the U.S., although they’ve existed in Europe for several years. That all changed last week when the FDA made a groundbreaking decision to approve the first biosimilar product in the United States.

Regular generic drugs have the same active ingredient as their name-brand counterpart, and offer the same dosage, safety, strength, administration, quality, efficacy and intended use. Biosimilars, on the other hand, are highly similar to an already FDA-approved biological product, and must been shown to have no clinically meaningful difference in safety and efficacy from the name-brand product.

Biosimilars may offer affordable solutions to patients and help contain healthcare costs. However, drugmakers are concerned about the impact biosimilars may have on their branded biological products. Despite their concern, there are multiple barriers to entry for biosimilars.

1. Biosimilars are set at an extremely high standard. Most biological products are complex in nature and made up of large molecules or combinations of molecules that are impossible to replicate. Therefore biosimilars are intrinsically different from the brand-name product and are prone to variation. Even the slightest variation in the biosimilar product can affect activity in humans and compromise the safety. The FDA is in the process of carefully constructing a rigorous regulatory pathway for the consideration and approval of biosimilar products.
2. Biosimilar manufacturing is timely and costly. Developers of biosimilars must conduct clinical trials – an expensive step not required of generics – and secure manufacturing equipment more complex than that of small molecule drugs. However, it is estimated that biological products with sales of $100 billion will be exposed to biosimilar competition due to patent expiration by 2020; so a growing number of developers see biosimilars as a worthwhile investment.
3. Biosimilars face doubt. According to a study by Tufts Center for the Study of Drug Development, it may take some time for biosimilars to take off in the United States. Study author Joshua Cohen credits a lack of familiarity with biosimilars by physicians as the number one speedbump for biosimilars. He cites slow uptake in Europe, where 17 biosimilars have been approved since 2006. We can likely expect biosimilar developers to execute marketing plans focused on educating physicians and payers, and building confidence in their biosimilar products.

Drugmakers looking to circumvent the potential threat of biosimilar competition on their name-brand products have the option to develop financial assistance programs that help patients afford expensive branded treatments. They may also pursue development of safer, more effective treatments that improve upon existing standards of care or provide unique quality of life benefits.

All in all, the approval of the first biosimilar in the U.S. is a watershed moment in the biopharma space, potentially offering a less expensive option for patients, but not without regulatory and safety concerns.