FDA Biosimilars Regulation: A Deontological Moral Analysis

Introduction to Biologics and Biosimilars

The Food and Drug Administration (FDA) is responsible for regulating medical products and treatments, including the emerging area of biologics. This product category falls under the CBER (Center for Biologics Evaluation and Research) wing of the FDA. There are a number of different types of biologics, each defined roughly as medical products derived by biological means, rather than chemical (drugs) or mechanical (medical devices). Examples of biologics include vaccines, blood and blood components, allergenics, gene therapy, tissues, and recombinant therapeutic proteins. The most important ethical dilemma with respect to biologics concerns the treatment of biosimilars.

Biosimilars are the biologic equivalent of generic drugs. To offset the high development cost of pharmaceuticals — these costs typically run into the hundreds of millions of dollars — manufacturers are granted by the FDA a period of exclusivity with respect to marketing their drugs. This allows drug companies to earn enough profit from successful drugs to cover development costs, as well as costs associated with drugs that never reach the market. After the period of exclusivity ends, other companies are allowed to manufacture the drug. These are known as generic drugs, and they have identical chemical composition to the original. Generic drugs benefit consumers because competition in the industry drives down the price. The regulatory pathway for generics is short and inexpensive relative to the pathway for the original drug, because there is no need to duplicate clinical trials for an identical product.

The biosimilar operates on the same principle as a generic drug, but applies to biologics. The critical difference is that, for a number of reasons, it is impossible to make a biological product exactly identical to the original. Consequently, there is currently no abbreviated regulatory pathway for biosimilars — they must all undergo the same testing as any other biologic. This means there are no cost advantages to entering this market, and prices cannot be low because development costs are always high. This poses a problem for the FDA, however, because the primary customer for biologic treatments is the federal government, through Medicare and Medicaid. There is a conflict of interest between the FDA's obligation to properly and thoroughly regulate biosimilars and the federal government's desire to reduce health care costs — a high priority given the country's long-run deficit challenges (Van Arnum, 2010). The FDA is currently seeking guidance on the best approach to a biosimilars regulatory pathway in order to resolve this dilemma.

Stakeholders and Policy Alternatives

There are roughly three types of alternatives available in this situation. The first two involve assigning moral priority to one side of the argument. A safety-first approach holds that the FDA's role is to uphold consumer safety as the highest standard of its activities. The second is a more utilitarian approach that weighs cost and access alongside safety. In the middle is a third alternative: a compromise pathway similar to what is already in place in the European Union. To analyze these alternatives properly, it is essential to consider the key stakeholders.

The main stakeholders are the consumers of the drugs, the federal government and taxpayers, and the companies that develop biologics. The latter group divides roughly into two categories: those that develop and market originator biologics, and those that develop and market biosimilars. From the consumer perspective, the balance between quality and cost is an important one, and not all consumers will agree on the appropriate tradeoff. The FDA, for its part, is charged with safeguarding the safety and efficacy of products under CBER. This mandate can be understood as a categorical imperative for the agency — it is not only a written directive, but also the ethical guidepost by which the FDA should operate. The history of the FDA demonstrates that consumer protection is the very reason the agency was brought into existence. The fact that some consumers may be willing to accept a price-quality tradeoff is not relevant from the standpoint of the agency's mandate.

The federal government and the American taxpayer constitute the largest consumer group. This status alone makes this stakeholder especially significant, but the fact that the FDA is a federal agency — subject to government financing and legislation — only increases the importance of this stakeholder's interests. The needs of this group are twofold: under Medicare and Medicaid, it seeks to facilitate positive health outcomes for a large segment of Americans; at the same time, the federal government faces a long-run deficit crisis, an aging population, and health care costs that now account for approximately 19% of GDP — a figure expected to continue rising.

The final stakeholder group consists of the competing commercial forces within the industry. Each side has a vested financial interest in this dilemma, but from a commercial rather than ethical perspective. The fundamentally amoral nature of these stakeholders' financial interests means their concerns are subordinate to those of consumers and the federal government.

The first alternative fulfills the FDA's obligation to the consumer, particularly given that the agency's mandate sets aside questions of drug access and pricing. The second alternative, however, requires making a potential sacrifice to the safety objective in order to meet cost objectives — an approach explicitly demanded by the second stakeholder group. The third alternative attempts to balance these two objectives, though current European Union legislation on biosimilars remains oriented primarily toward safety, with only a slightly shorter market exclusivity period that in theory encourages biosimilar development by improving profit potential.