Who determines substitution factors?

Minneapolis patent attorney Jim Nelson of Schwegman, Lundberg & Woessner discusses how substitution factors are determined.

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The United States is a complicated country because we have federal law, we have state law. Federal law is restricted law. State law is general law. And as everybody knows, there’s states’ rights, there’s federal rights. Of course, the Food and Drug – the US Food and Drug Administration is a federal administrative agency and it’s subject to federal law, but when it comes to administration of a biological, who’s gonna do it? It’s your local doctor and it’s the local hospital. Usually these biologicals are administered in hospitals because you can’t take a pill. They usually give you IVs. They stick needles in your arms and you sit there for two or three hours getting this infusion of the biological like Herceptin. In any event, that’s regulated by the state.

So the FDA approves a biological and says, “All right. All of you people out there in the various states, the 50 states, now this biosimilar can be used in substitution for the original biological.” But the states say, “Wait a minute. We’ve got the right to decide on substitution.” And so the states then have the final say on substitution. And so in this situation, there are some fifteen states that have said, “If the FDA says this is okay, then you can go ahead and substitute. You can substitute the biosimilar for the original biological.” The majority of states say, “No. You can’t do that. We’re gonna do further checking. We’re gonna do further review. You’ve got to submit a new – you, Mr. Doctor, you need to submit a new request to the state medical agency or the hospital and you got to start all over again.” You can’t just go into the pharmacy and pick the biosimilar and say, “Well, we’re gonna use this instead of the original.” Can’t do it. Most of the states say no.

So there’s this federal-state dichotomy and federal-state controversy about who can do what, and it’s another problem for getting biosimilars approved in the United States.