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EXAMINING IMPLEMENTATION OF THE BIOLOGICS 

PRICE COMPETITION AND INNOVATION ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

SECOND SESSION 

FEBRUARY 4, 2016 

Serial No. 114–114 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

LARRY BUCSHON, Indiana 

BILL FLORES, Texas 

SUSAN W. BROOKS, Indiana 

MARKWAYNE MULLIN, Oklahoma 

RICHARD HUDSON, North Carolina 

CHRIS COLLINS, New York 

KEVIN CRAMER, North Dakota 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

BEN RAY LUJA ́ N, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

YVETTE D. CLARKE, New York 

DAVID LOEBSACK, Iowa 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

SUBCOMMITTEE ON HEALTH

JOSEPH R. PITTS, Pennsylvania 

Chairman 

BRETT GUTHRIE, Kentucky 

Vice Chairman 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

CATHY MCMORRIS RODGERS, Washington 

LEONARD LANCE, New Jersey 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

LARRY BUCSHON, Indiana 

SUSAN W. BROOKS, Indiana 

CHRIS COLLINS, New York 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

GENE GREEN, Texas 

Ranking Member 

ELIOT L. ENGEL, New York 

LOIS CAPPS, California 

JANICE D. SCHAKOWSKY, Illinois 

G.K. BUTTERFIELD, North Carolina 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

DORIS O. MATSUI, California 

BEN RAY LUJA ́ N, New Mexico 

KURT SCHRADER, Oregon 

JOSEPH P. KENNEDY, III, Massachusetts 

TONY CA ́ RDENAS, California 

FRANK PALLONE, JR., New Jersey (ex 

officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Joseph R. Pitts, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 1 

Prepared statement .......................................................................................... 2 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 3 

Hon. Gene Green, a Representative in Congress from the State of Texas, 

opening statement ................................................................................................ 4 

Prepared statement .......................................................................................... 5 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 6 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 7 

Prepared statement .......................................................................................... 8 

WITNESSES

Janet Woodcock, M.D., Director, Center for Drug Evaluation and Research, 

Food and Drug Admiistration, Department of Health and Human Services .. 10 

Prepared statement .......................................................................................... 12 

Answers to submitted questions 1 ................................................................... 72 

Sean Cavanaugh, Deputy Administrator and Director, Center for Medicare, 

Centers for Medicare and Medicaid Services, Department of Health and 

Human Services ................................................................................................... 24 

Prepared statement .......................................................................................... 26 

Answers to submitted questions ...................................................................... 73 

SUBMITTED MATERIAL

Draft questions for hearing, submitted by Mr. Green .......................................... 51 

Letter of February 3, 2016, from Seth Ginsberg, President, Global Healthy 

Living Foundation, to Mr. Pitts and Mr. Green, submitted by Mr. Pitts ........ 54 

Statement of the National Association of Chain Drug Stores, February 4, 

2016, submitted by Mr. Pitts .............................................................................. 57 

Report of Industry Standard Research, ‘‘ASBM Labeling Survey,’’ February 

2015, 2 submitted by Mr. Shimkus 

Report of Industry Standard Research, ‘‘Biosimilars Naming and Labeling: 

A Study of U.S. Pharmacists,’’ October 2015, 3 submitted by Mr. Shimkus 

Letter of December 21, 2015, from Hon. Brad R. Wenstrup, a Representative 

in Congress from the State of Ohio, to Stephen Ostroff, Acting Commissioner, Food and Drug Administration, submitted by Mrs. Ellmers ............... 64 

Statement of the Coalition of State Rheumatology Organizations, February 

4, 2016, submitted by Mrs. Ellmers ................................................................... 67 

1Dr. Woodcock’s response has been retained in committee files and also 

is available at http://docs.house.gov/meetings/IF/IF14/20160204/104408/ 

HHRG-114-IF14-Wstate-WoodcockJ-20160204-SD005.pdf. 2The information has been retained in committee files and also is available 

at http://docs.house.gov/meetings/IF/IF14/20160204/104408/HHRG-114- 

IF14-20160204-SD010.pdf. 3The information has been retained in committee files and also is available 

at http://docs.house.gov/meetings/IF/IF14/20160204/104408/HHRG-114- 

IF14-20160204-SD009.pdf. 

(1) 

EXAMINING IMPLEMENTATION OF THE BIOLOGICS PRICE COMPETITION AND INNOVATION ACT 

THURSDAY, FEBRUARY 4, 2016 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HEALTH, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:30 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Joseph R. Pitts 

(chairman of the subcommittee) presiding. 

Members present: Representatives Pitts, Guthrie, Whitfield, 

Shimkus, Blackburn, Lance, Bilirakis, Long, Ellmers, Bucshon, 

Brooks, Collins, Barton, Green, Schakowsky, Butterfield, Castor, 

Sarbanes, Matsui, Schrader, Kennedy, Ca ́ rdenas, and Pallone (ex 

officio). 

Staff present: Leighton Brown, Press Assistant; Rebecca Card, 

Assistant Press Secretary; Paul Edattel, Chief Counsel, Health; 

Carly McWilliams, Professional Staff Member, Health; Katie 

Novaria, Professional Staff Member, Health; James Paluskiewicz, 

Professional Staff Member, Health; Graham Pittman, Legislative 

Clerk; Chris Sarley, Policy Coordinator, Environment and the 

Economy; Jennifer Sherman, Press Secretary; Adrianna Simonelli, 

Legislative Associate, Health; Heidi Stirrup, Policy Coordinator, 

Health; John Stone, Counsel, Health; Sophie Trainor, Policy Advisor, Health; Christine Brennan, Democratic Press Secretary; Jeff 

Carroll, Democratic Staff Director; Tiffany Guarascio, Democratic 

Deputy Staff Director and Chief Health Advisor; Samantha 

Satchell, Democratic Policy Analyst; Matt Schumacher, Democratic 

Press Assistant; Kimberlee Trzeciak, Democratic Health Policy Coordinator; Arielle Woronoff, Democratic Health Counsel. 

Mr. PITTS. The subcommittee will come to order. The chairman 

recognizes himself for an opening statement. 

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA 

Biologics are used to treat a number of serious diseases and conditions and have improved the lives of millions of Americans. They 

are produced from living cells using biotechnology and are often 

significantly more time consuming and resource intensive to consistently manufacture than small-molecule, chemical drugs. Due in 

large part to these complexities, biologics tend to be more expenVerDate Mar 15 2010 10:57 Dec 16, 2016 Jkt 037690 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\HIF FILES\WS_FTP\20488.TXT WAYNE
2 

sive and why the traditional generic approval pathway is not suited 

for bringing lower-cost alternatives to market. 

In 2009, this committee passed the Biologics Price Competition 

and Innovation Act, BPCIA, by a vote of 47 to 11. Enacted in 2010, 

BPCIA established a new abbreviated pathway at FDA for biological products determined to be biosimilar to or potentially interchangeable with a previously approved reference product. 

FDA approved the first biosimilar in March 2015. It is convening 

an advisory committee next week to consider a second application. 

And while there are close to 60 additional proposed biosimilar 

products enrolled in FDA’s Biosimilar Development Program, the 

Agency has yet to issue guidance documents on several key policy 

issues that could have a significant impact on patient safety, prescriber decision making, and market competition. 

I look forward to hearing from Dr. Woodcock about where these 

documents are in the review process. And I would like to walk 

away from today’s discussion with a better understanding of the 

Agency’s current thinking on issues such as naming, labeling, and 

interchangeability. 

Meanwhile, in preparation for biosimilars coming to market, the 

Centers for Medicare and Medicaid Services recently issued payment guidance related to Medicare Part B for biosimilars. Members 

will want to understand the implications of this broad-payment policy and if it will account for variations and differences between biosimilar products and moreover, what might that payment policy 

mean for the eventual growth of this market and innovation. 

With both witnesses here, we will be able to explore how could 

or should pending issues before FDA, for example, naming and 

interchangeability, impact the reimbursement policy under the 

Medicare program as well as access and portability for beneficiaries. 

The committee will have an opportunity to hear directly from 

FDA and CMS on their progress with implementation of BPCIA 

and future outlook. 

[The prepared statement of Mr. Pitts follows:] 

PREPARED STATEMENT OF HON. JOSEPH R. PITTS

Biologics are used to treat a number of serious diseases and conditions and have 

improved the lives of millions of Americans. They are produced from living cells 

using biotechnology and are often significantly more time consuming and resource 

intensive to consistently manufacture than small-molecule, chemical drugs. Due in 

large part to these complexities, biologics tend to be more expensive and why the 

traditional generic approval pathway is not suited for bringing lower cost alternatives to the market. 

In 2009, this committee passed the Biologics Price Competition and Innovation 

Act (BPCIA) by a vote of 47 to 11. Enacted in 2010, BPCIA established a new abbreviated pathway at FDA for biological products determined to be ‘‘biosimilar to’’ or, 

potentially, ‘‘interchangeable with’’ a previously approved reference product. 

FDA approved the first biosimilar in March 2015 and is convening an advisory 

committee next week to consider a second application. And while there are close to 

60 additional proposed biosimilar products enrolled in FDA’s Biosimilar Development Program, the agency has yet to issue guidance documents on several key policy issues that could have a significant impact on patient safety, prescriber decisionmaking, and market competition. 

I look forward to hearing from Dr. Woodcock about where these documents are 

in the review process and would like to walk away from today’s discussion with a 

better understanding of the agency’s current thinking on issues such as naming, labeling, and interchangeability. 

3 

Meanwhile, in preparation for biosimilars coming to market, the Centers for Medicare and Medicaid Services (CMS) recently issued payment guidance related to 

Medicare Part B for biosimilars. Members will want to understand the implications 

of this broad payment policy and if it will account for variations in differences between biosimilar products and moreover, what might that payment policy mean for 

the eventual growth in this market and innovation. 

With both witnesses here we will be able to explore how could or should pending 

issues before FDA, for example, naming and interchangeability, impact the reimbursement policy under the Medicare program as well as access and affordability 

for beneficiaries? 

The committee will have an opportunity to hear directly from FDA and CMS on 

their progress with implementation of BPCIA and the future outlook. 

I yield the balance of my time to the chairman emeritus, Mr. Barton. 

Mr. PITTS. I yield the balance of time to Chairman Emeritus Mr. 

Barton. 

OPENING STATEMENT OF HON. JOE BARTON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BARTON. Thank you, Mr. Chairman, for holding this hearing. 

And thank you for holding it at 10:30 where I can actually be on 

time. I appreciate that. 

Six years ago, I co-authored, along with Congresswoman Anna 

Eshoo, the Biologics Price Competition and Innovation Act, commonly known as BPCIA, which just as an aside you would have 

thought we would have come up with a better name than something like that. 

Today, we sit as a subcommittee with numerous concerns about 

the implementation or more appropriately the lack thereof of this 

important piece of legislation. Only one biosimilar has been approved. Numerous products are waiting to proceed through the approval process and many physicians, patients, and concerned individuals like myself are concerned with the lack of progress. 

We all agree that it is important for FDA to get it right, but most 

of us think it is also time for FDA to get on down the road and 

decide exactly how to proceed with the approval process. There 

have been seemingly unending delays that are frustrating to legislators, innovators, doctors, and patients. I have sent letters to the 

FDA, OMB, and CMS, expressing these frustrations. I am concerned that the CMS decision regarding reimbursement for 

biosimilars to be the average sales price for all biosimilars plus 6 

percent of the Reference Product ASP. This approach undermines 

the real intent of the legislation. 

We want to foster a robust biosimilar market. CMS’ approach 

eliminates any financial incentives in reimbursement for 

biosimilars by potentially forcing doctors and patients to use one 

non-interchangeable biosimilar in place of another based on price 

alone. This is detrimental because all biosimilars, as we all know, 

are not equal. By definition, they are not equal. I cannot overstate 

the importance of treating each biosimilar individually rather than 

as if they were a generic drug. 

I am also concerned about the lack of FDA guidance regarding 

interchangeability in naming. Due to the absence of any such guidance, the FDA approved a biosimilar, Zarxio, with a placeholder 

name 6 years after the bipartisan, bicameral BPCIA was signed 

into law. We are still waiting and this is simply unacceptable. 

Thank you, Mr. Chairman. 

4 

Mr. PITTS. The Chair thanks the gentleman and now recognizes 

the ranking member on the subcommittee, Mr. Green, for 5 minutes for his opening statement. 

Mr. GREEN. Thank you, Mr. Chairman. Before I start, I would 

like to have unanimous consent to place in the record a letter from 

Biosimilar Council and ask unanimous consent. 

Mr. PITTS. With no objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

OPENING STATEMENT OF HON. GENE GREEN, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. GREEN. Thank you and good morning. Dr. Woodcock, welcome again, and Mr. Cavanaugh, thank you for being here. 

Today’s hearing is the first we have had in the House of Representatives on biosimilars since the passage of the Biologics Price 

Competition and Innovation Act, or BPCIA, as part of the Affordable Care Act in 2010. It is particularly timely because the FDA 

is both developing the standards for approval of biosimilars and reviewing and acting on a growing number of applications for approval. At the same time, CMS recently released its final Physician 

Pay Schedule, PFS rule, which detailed the Medicare Part B payment methodology for biosimilars. Determinations on biosimilars 

that are approved, regulated, and reimbursed is critical to the success of this new and emerging market and must be in alignment 

to facilitate our robust, safe, and competitive marketplace. 

As we know, biologics place an important and growing role in our 

healthcare system. They arguably represent the future of therapeutics and hold immense promise to further transform the way we 

treat and prevent diseases. 

According to the RAND Corporation, world-wide sales of biologics 

were $46 billion in 2002, representing 11 percent of the global 

pharmaceutical market. Experts are predicting that by 2017, biologics are expected to grow to between $205 to $235 billion, representing approximately 20 percent of the global pharmaceutical 

marketplace. 

Recognizing a need for non-innovative biologics is analogous to 

the generic drug market facilitated by Hatch-Waxman. And I 

worked with then Representative Tammy Baldwin and former representative and now Governor, Jay Inslee, years ago to introduce 

a bill proposing a pathway for approval of biosimilars, not long 

after the BPCIA became law, paving a way for injection of competition in the biologics space. 

I know we all agree that competition is good for patient safety, 

consumer choice, and drive savings for consumers and the 

healthcare system at large. There are a number of outstanding 

issues on how these will be evaluated and treated by the FDA including naming, interchangeability, labeling, and exploration. 

The complexity of these issues are difficult to overstate and I 

thank FDA for their on-going efforts to develop policies on these 

questions. However, decisions on these major questions should not 

be on a case-by-case basis and it is time for the FDA to articulate 

clear guide rails and principles to industry and the public so that 

rules of the road are established and understood. 

5 

Public and provider trust in the safety of biosimilars is vital to 

the success of this market. Acceptance of some generics did not 

happen overnight. Only through a public, transparent process of 

developing guidelines and rulemaking will the public trust be 

earned. 

I look forward to hearing from FDA on the status of these policies and how the Agency is moving these efforts forward. 

Recently, CMS detailed how biosimilars would be treated under 

Medicare Part B and I have serious concerns about the final rule. 

While I appreciate the Agency’s desire to control costs, I fear that 

in this instance it would undermine this infant market and create 

a race to the bottom. If all biosimilars are on the same blended 

code, we actually disincentivize companies for investing in further 

trials for additional indications and would drive folks away from 

this market that we are trying to foster. 

Robust competition will ultimately realize the most sustainable, 

significant savings for the program and the best for patients. This 

rule seems in conflict with the efforts of the FDA to foster the 

biosimilars marketplace. I look forward to hearing from CMS on 

how this determination was made, responses to the concerns about 

potential undermining of the biosimilars market and I thank you 

all for being here today. And I yield back the balance of my—well, 

does anybody want a minute on our side? No? OK. I yield back my 

time, Mr. Chairman. 

[The prepared statement of Mr. Green follows:] 

PREPARED STATEMENT OF HON. GENE GREEN

Good morning and thank you all for being here. 

Today’s hearing is the first we have had in the House of Representatives on 

biosimilars since passage of the Biologics Price Competition and Innovation Act 

(BPCIA) as part of the Affordable Care Act in 2010. 

It is particularly timely because the FDA is both developing the standards for approval of biosimilars and reviewing and acting on an increasing number of applications. 

At the same time, CMS recently released the final Physician Fee Schedule (PFS) 

rule, which detailed the Medicare Part B payment methodology for biosimilars. 

Determinations on how biosimilars are approved, regulated and reimbursed at all 

critical to the success of this new, emerging market, and must be in alignment to 

facilitate a robust, safe, and competitive marketplace. 

As we know, biologics play an important and growing role in our health care system. 

Arguably, they represent the future of therapeutics and hold immense promise to 

further transform the way we treat and prevent disease. 

According to the RAND Corporation, worldwide sales of biologics were $46 billion 

in 2002, representing 11 percent of the global pharmaceutical market. 

Experts are predicting that by 2017, sales of biologics are expected to grow to between $205–235 billion, representing approximately 20 percent of the global pharmaceutical marketplace. 

Recognizing the need for non-innovator biologics analogous to the generic drug 

market facilitated by Hatch-Waxman, I worked with then Representative Tammy 

Baldwin and former Representative Jay Inslee years ago to introduce a bill proposing a pathway for the approval of biosimilars. 

Not long after, the BPCIA became law, paving the way for the injection of competition into the biologics space. 

I know we all agree that competition is good for patient safety and consumer 

choice, and drives savings for consumers and the health care system at large. 

There are a number of outstanding issues on how biosimilars will be evaluated 

and treated by the FDA, including naming, interchangeability, labeling and extrapolation. 

6 

The complexity of these issues is difficult to overstate, and I thank FDA for their 

ongoing efforts to develop policies on these questions. 

However, decisions on these major issues should not be made on a case-by-case 

basis, and it is time for FDA to articulate clear guardrails and principles to industry 

and the public so that the rules of the road are established and understood. 

Public and provider trust in the safety of biosimilars is vital to the success of this 

market. 

Acceptance of generics did not happen overnight—only through public, transparent processes of developing guidances and rulemaking will the public trust be 

earned. 

I look forward to hearing from FDA on the status of these policies and how the 

agency is moving these efforts forward. 

Recently, CMS detailed how biosimilars will be treated under Medicare Part B, 

and I have serious concerns with the final rule. While I appreciate the agency’s desire to control costs, I fear that in this instance, it could undermine this infant market and create a race to the bottom. 

If all biosimilars are in the same blended code, we actually disincentive companies 

from investing in further trials for additional indications, and will drive folks away 

from this market we are trying to foster. 

Robust competition will ultimately realize the most sustainable, significant savings for the program and new options for patients. 

This rule seems in conflict with the efforts of FDA to foster the biosimilars marketplace, and I look forward to hearing from CMS about how this determination was 

made and responses to concerns about the potential undermining of the biosimilars 

market. 

Thank you all for being here today, and I yield back the balance of my time. 

Mr. PITTS. Thank you. And I would like to ask unanimous consent to submit the following documents for the record: statements 

from the Global Healthy Living Foundation and the National Association of Chain Drug Stores. Without objection, so ordered. 

[The information appears at the conclusion of the hearing.] 

The Chair now recognizes the vice chair of the full committee, 

Ms. Blackburn, for 5 minutes for her opening statement. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Ms. BLACKBURN. Thank you, Mr. Chairman. And I want to say 

welcome. We are delighted to have you all here. And we do have 

some questions about what is transpiring. 

And Dr. Woodcock, I want to come to you first. As you have 

heard from statements on both sides, we realize that this is essential, that the biosimilars are going to fill a place. It is an emerging 

component, but I want to go to one thing you said in your written 

testimony. And that is this, ‘‘Stakeholder confidence is essential to 

the success of the biosimilar program.’’ This is something I am 

going to come back to you on. 

When I talk to innovators that are in Tennessee, what they are 

confused about is the lack of certainty. The chairman mentioned to 

you about the documents and the lack of guidance, where you all 

are in the process. So the hearing today is important because of 

that. These innovators are looking to get some certainty. These are 

complex decisions. We appreciate that. We know that this is a new 

class of medicines. 

And that brings me to my second point and Mr. Cavanaugh, I 

will discuss this with you as we move forward with the hearing. 

Looking at the realization, biosimilars and generics are not the 

same thing. And we want to be certain that you all are addressing 

7 

this in the appropriate manner. We appreciate your written testimonies. We look forward to digging down with you on some questions and maybe some things that we are going to request for a 

written answer. 

And Mr. Shimkus, I am going to yield the balance of the time 

to you. 

Mr. SHIMKUS. You are so kind. Thank you. Because I want to 

make sure that we submit for the record, Mr. Chairman, I have 

two surveys both by—for the Alliance for Safe Biologic Medicines 

and one is a physician survey. One is a pharmacist survey. If our 

goal is to ensure access to these products and to the marketplace, 

shouldn’t we enact a transparent labeling policy that creates confidence in the healthcare market? So if you would share these with 

the minority and accept these, I would for the record appreciate it. 

And that is all I have. Thank you. 

Mr. PITTS. All right, they will take a look at them and we will 

come back to that. 

The Chair now recognizes the ranking member, Mr. Pallone, for 

5 minutes for an opening statement. 

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. PALLONE. Thank you, Mr. Chairman. I want to thank you for 

holding this hearing and also thank Dr. Woodcock and Director 

Cavanaugh for being here to discuss the implementation of the Biologics Price Competition and Innovation Act. 

Biosimilars hold enormous potential to offer patients with serious 

and life-threatening diseases access to more treatment options and 

potentially lower cost options. And I look forward to hearing your 

testimony today about how FDA and CMS are working to establish 

a clear pathway for approval, as well as an appropriate reimbursement structure. These are both critical elements to ensuring the 

success of this market. 

The use and sale of biologics continues to rise here in the United 

States and elsewhere. By 2017, sales of biologics are estimated to 

be between $205 and $235 billion, approximately 20 percent of the 

global pharmaceutical marketplace. And this is why encouraging 

and facilitating competition is so critical. 

While biosimilars have been available in Europe for some time, 

Congress did not establish an abbreviated pathway here in the U.S. 

until the passage of the act as part of the Affordable Care Act in 

2010. And I supported the creation of the pathway for biosimilars 

and for empowering FDA with the authority and resources to ensure that biosimilars are safely available here in the United States 

for the patients that need them most. 

I was pleased when FDA approved the first biosimilar, Zarxio, in 

March 2015. And this action demonstrated that the approval process is working. But I have also heard that greater clarity is needed 

from the FDA. 

Since 2012, FDA has issued important guidance meant to inform 

industry sponsors that they consider developing biosimilar products 

including scientific and quality considerations. Additional guidance 

is still needed though, particularly in the areas of developing and 

8 

marketing biosimilars, guidance on interchangeability, labeling, 

and naming are still outstanding. And FDA’s thinking in this area 

will be vital to companies looking to enter the biosimilars market. 

We have seen how our healthcare system has benefitted from the 

competition that comes with a robust market. Competition has 

helped to lower healthcare costs for small- molecule drugs, saving 

the U.S. health system $254 billion in 2014. And it is my hope that 

we continue to do all we can to lay the foundation for these types 

of savings. 

Our Federal health programs will also play a large role. CMS 

has the ability, through both Medicare and Medicaid, to encourage 

this new marketplace and that is why I was concerned that CMS 

finalize the Part B payment policy for biosimilars last year combining all biosimilars into one average sale price calculation and 

payment code. I worry that this inappropriately treats biosimilars 

like generic drugs and will disincentivize manufacturers from entering the biosimilars marketplace because biosimilars are not 

generics. Each is its own unique product. And biosimilars go 

through a much more stringent approval process. In fact, Medicare 

Part D and Medicaid both acknowledge this in their respective programs. 

This marketplace is only just emerging with only one approved 

biosimilars, so it is important that we hear from both FDA and 

CMS, not only about what they are doing in the space, but how 

they are coordinating to ensure that the biosimilar marketplace is 

both safe and robust. 

I just wanted to add one thing. I think all of you know that the 

issue of drug pricing continues to rise in terms of the concerns of 

the American public. Our Democratic Steering and Policy Committee actually had a hearing on drug pricing. And at that hearing, 

I was concerned to hear—I think I asked a question about generics 

and I was told by the witnesses there that generics increasingly are 

not a way of reducing prices because of the changes that are occurring in the marketplace. And so I do worry that it is important in 

the case of biosimilars or generics that that continue to be a way 

of reducing drug pricing. If it isn’t, then we are going to have even 

more of an outcry that prices are too high and that there should 

be some kind of intervention by Congress or by the Federal Government in the marketplace. 

So I think that this is an issue. Even though we are talking 

about biosimilars today, Mr. Chairman, this is part of a larger 

issue of Americans being very concerned about drug pricing. And 

of course, it has entered into the presidential sweepstakes or whatever, as well. So you know, this is an important hearing, not only 

in terms of what is happening to biosimilars, but just the larger 

issue of drug pricing. Thank you, Mr. Chairman. 

[The prepared statement of Mr. Pallone follows:] 

PREPARED STATEMENT OF HON. FRANK PALLONE, JR. 

Good morning. Thank you Mr. Chairman for holding this hearing today, and 

thank you to Dr. Woodcock and Director Cavanaugh for being here to discuss the 

implementation of the Biologics Price Competition and Innovation Act. 

Biosimilars hold enormous potential to offer patients with serious and lifethreating diseases access to more treatment options, and potentially lower cost options. I look forward to hearing your testimony today about how FDA and CMS are 

9 

1The information has been retained in committee files and also is available at http:// 

docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=104408. 

working to establish a clear pathway for approval, as well as an appropriate reimbursement structure. These are both critical elements to ensuring the success of this 

market. 

The use and sale of biologics continues to rise here in the United States and elsewhere. By 2017, sales of biologics are estimated to be between $205 and $235 billion, approximately 20 percent of the global pharmaceutical marketplace. This is 

why encouraging and facilitating competition in this space is so critical. 

While biosimilars have been available in Europe for some time, Congress did not 

establish an abbreviated pathway here in the U.S. until the passage of BPCIA as 

a part of the Affordable Care Act in 2010. I supported the creation of a pathway 

for biosimilars, and for empowering FDA with the authority and resources to ensure 

that biosimilars are safely available here in the U.S. for the patients that need them 

the most. I was pleased when FDA approved the first biosimilar, Zarxio, in March 

2015. This action demonstrated that the approval process is working, but I’ve also 

heard that greater clarity is needed from FDA. 

Since 2012, FDA has issued important guidance meant to inform industry sponsors as they consider developing biosimilar products, including scientific and quality 

considerations. Additional guidance is still needed, though, particularly in the areas 

of developing and marketing biosimilars. Guidance on interchangeability, labeling, 

and naming are still outstanding, and FDA’s thinking in these areas will be vital 

to companies looking to enter the biosimilars market. 

We’ve seen how our health care system has benefited from the competition that 

comes with a robust market. Competition has helped to lower health care costs for 

small-molecule drugs, saving the U.S. health system $254 billion in 2014. It is my 

hope that we continue to do all we can to lay the foundation for these types of savings. 

Our Federal health programs will also play a large role. CMS has the ability 

through both Medicare and Medicaid to encourage this new marketplace. And that’s 

why I was concerned that CMS finalized its Part B payment policy for biosimilars 

last year combining all biosimilars into one average sales price calculation and payment code. I worry that this inappropriately treats biosimilars like generic drugs 

and will disincentivize manufacturers from entering the biosimilars marketplace. 

Biosimilars are not generics; each is its own unique product, and biosimilars go 

through a much more stringent approval process. In fact, Medicare Part D and Medicaid both acknowledge this in their respective programs. 

This marketplace is only just emerging, with only one approved biosimilar. So it’s 

important that we hear from both FDA and CMS not only about what they’re doing 

in this space, but how they are coordinating to ensure that the biosimilar marketplace is both safe and robust. 

I look forward to hearing more today. Thank you. 

Mr. PITTS. The Chair thanks the gentleman. That concludes the 

prepared opening statements. As usual, all members’ written opening statements will be made a part of the record. 

Without objection, the two documents that Mr. Shimkus asked to 

enter in the record are ordered to be entered into the record. 1

We have one panel today. On our panel, we have Dr. Janet 

Woodcock, Director, Center for Drug Evaluation and Research, 

Food and Drug Administration; and Sean Cavanaugh, Deputy Administrator and Director, Centers for Medicare and Medicaid Services. Thank you very much for coming today. Your written testimony will be made a part of the record. You will each have 5 minutes to summarize your written testimony. 

And Dr. Woodcock, you are recognized first for 5 minutes. 

10 

STATEMENT OF JANET WOODCOCK, M.D., DIRECTOR, CENTER 

FOR DRUG EVALUATION AND RESEARCH, FOOD AND DRUG 

ADMINISTRATION, DEPARTMENT OF HEALTH AND HUMAN 

SERVICES, AND SEAN CAVANAUGH, DEPUTY ADMINISTRATOR AND DIRECTOR, CENTER FOR MEDICARE, CENTERS 

FOR MEDICARE AND MEDICAID SERVICES, DEPARTMENT OF 

HEALTH AND HUMAN SERVICES 

STATEMENT OF JANET WOODCOCK 

Dr. WOODCOCK. Thank you, Mr. Chairman and members for allowing me to be here today and testify. 

Biological products are used to treat patients who have serious 

and life threatening medical conditions such as rheumatoid arthritis, cancer, serious gastrointestinal diseases, and so forth. It is important for the health of the public to have access to safe, effective, 

and affordable biological products. Biosimilars can provide more 

treatment options to patients and possibly lower treatment costs 

resulting in better access. 

FDA, in general, and I personally have long supported getting 

the availability of a biosimilar pathway and we were very pleased 

when Congress enacted this pathway. I have been involved in the 

developing of biological therapeutics myself for about 30 years, and 

I have seen the transformation they have caused in healthcare in 

some areas. 

I am a rheumatologist, and biologics have totally changed the 

face of rheumatology. We used to have patients in wheelchairs 

lined up in our clinics. And we were talking about joint replacements. We were talking about nursing home care. And now instead 

of talking about that, we talk about treating to remission, how to 

make the disease go away, how to make those folks function as if 

they weren’t sick. It has been a miraculous transformation. But 

this needs to be accessible to all Americans, not inaccessible to 

some because of cost. 

Since the biosimilars pathway was created in 2010, we have actually seen a lot of progress. Now much of this progress is under 

the hood, so to speak, because the law required that biosimilar 

drugs be found biosimilar to a reference U.S. product, which meant 

that they had to study it to the products that were on the U.S. 

market, and it takes an amount of time. But we did approve the 

first biosimilar in 2015. 

We have an advisory committee coming up next week for another 

biosimilar for the advisory committee to consider, and there are almost 60 programs under development in various stages. They have 

talked to us and we know of perhaps several dozens of others 

where they have reached out to us, but haven’t engaged in our 

process. 

I know people are anxious to see more progress and more certainty. I do understand that about the pathway. 

Now, if you look at small-molecule generics, as we just said, they 

have been successful. Over 88 percent of dispensed prescriptions in 

the U.S. are generic drugs and actually they are continuing to save 

a lot of money. There are a small number of products that do not 

have generic competition still and they may have price increases. 

But this has been a very successful program, the generic program. 

11 

But if we compare it, we did not have success overnight in that 

program. It took a while to establish the parameters, to get the industry to the state they need to be and to get the acceptance of the 

clinical community. So I think maturity of the industry and gaining 

confidence of the healthcare community was really critical to this 

88 percent of dispensed prescriptions being generics. 

To earn and to sustain both physicians’ and patients’ confidence 

in biosimilars and interchangeable products, we must apply a scientifically rigorous review process and approval standard that people believe in and trust because these products have been life 

changing for many people and they don’t want to sacrifice any performance. And we don’t intend that they would sacrifice any performance if they take a biosimilar. 

Although the first biosimilar is now marketed, there are a lot of 

legal, technical, and policy challenges ahead. Some of them you 

have raised, about various policy issues that must be resolved. We 

fully recognize that and intend to do it, but I will assure you that 

there is a bright future ahead for our biosimilars program and I believe it is going to provide the same access to important medications that our current generics program is doing and really a benefit of the health of the public. 

I am happy to answer questions. 

[The statement of Dr. Woodcock follows:] 

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Mr. PITTS. The Chair thanks the gentlelady. 

I now recognize Mr. Cavanaugh for 5 minutes for your summary. 

STATEMENT OF SEAN CAVANAUGH 

Mr. CAVANAUGH. Thank you, Mr. Chairman, and members of the 

subcommittee. I appreciate you inviting me here today to talk 

about Medicare Part B payment policy for biosimilars. 

As you know, the Affordable Care Act created an abbreviated 

pathway for approval of biosimilars by the FDA and it created a 

provision for the establishment of Medicare payment policies for 

these products. Biosimilars hold great promise for all Americas including Medicare beneficiaries and we are committed to policies 

that will provide fair payment in a healthy marketplace. In 2014, Medicare Part B spent $21.5 billion on prescription drugs with the top 15 products accounting for $11.5 billion in its 

total. Eleven of those 15 products were biologics and the top 6 

products were all biologics and each one of those contributed over 

$1 billion in spending. 

CMS has an obligation to make sure taxpayers’ dollars are used 

responsibly. This includes creating good payment policy and making appropriate coverage decisions that provide access to innovative 

services and treatments while incentivizing these treatments and 

delivery models that are efficient. 

When the first biosimilar entered the market last year, we quickly assigned a billing code to facilitate Medicare beneficiaries’ access 

to this new therapy. And we began an outreach process to the provider community to make sure we could share with them guidance 

on how to submit claims for the new biosimilar product. 

Also as several of you have noted, last year in our annual Physician Fee Schedule rulemaking, we proposed and finalized a policy 

that promotes fair payment in a healthy marketplace. It was important that we implement a Medicare payment policy for 

biosimilars now before the second biosimilar for any reference product becomes available to provide certainty for providers and suppliers who will be billing Medicare for these products in the near 

term. 

The statute provides for payment for biosimilar products in the 

same manner as the statutory methodology for multi-source drugs 

where more than one drug product is included in the same billing 

code. We are confident that our interpretation of the law is sound 

and it represents good policy that will facilitate innovation and 

competition in the market. 

We implemented this new policy through our normal rulemaking 

process. We solicited, thoroughly reviewed, responded to, and in 

some cases modified our proposed policy based on comments from 

the public. For example, in collaboration with our colleagues at the 

FDA and in response to public comments, we implemented a requirement for claims for biosimilars to include a modifier that identifies the manufacturer of the specific product. We recently published guidance on the use of this modifier on our Web site. This 

will allow us and others to track which specific biosimilars a beneficiary receives. 

Overall, the availability of generic drugs in competition with 

each other and with branded products, has improved price and 

25 

availability of drugs. Competition among biosimilars can do the 

same for Medicare beneficiaries. Like multiple-source drugs, CMS 

sees biosimilars competing for market share with each other as 

well as competing with the referenced product. Encouraging this 

competition reflects a top priority at CMS. 

The field of biosimilars holds great promise for future improvements in health, value, and outcomes. We believe patients, manufacturers, providers, insurers, and Government all share a common 

goal to foster a healthcare system that leads in innovation, delivers 

affordable high quality medicines, and results in healthier people. 

CMS policies will continue to ensure Medicare beneficiaries have 

access to biosimilars and other innovative treatments. 

As more biosimilars are approved, we will monitor developments 

in the market and consider refinements to our policy as needed 

based on experience with this new segment of the market. We look 

forward to continuing to work with this committee, to gathering information from providers, suppliers, and other stakeholders to better inform our guidance and regulations in the future. 

Thank you, and I look forward to your questions. 

[The statement of Mr. Cavanaugh follows:] 

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Mr. PITTS. The Chair thanks the gentleman. Thank you for your 

opening statements. I will begin the questioning. I recognize myself 

for 5 minutes for that purpose. 

Dr. Woodcock and Mr. Cavanaugh, can you please explain how 

your two agencies have been coordinating on implementation efforts and discussing policies that could impact each of your agencies’ decisions? 

Dr. Woodcock. 

Dr. WOODCOCK. Yes. We work very closely together on those matters where our jurisdictions may interact with one another or 

where they impact. We certainly have had long conversations about 

the need for safety tracking of these products and I think CMS was 

very helpful to us in enabling this identifier so that claims data 

will have some sort of identification so that we can track these 

products that are paid for by Medicare. 

We have worked together on numerous activities where needed, 

but generally, we are on a scientific track and they are taking care 

of beneficiaries. 

Mr. CAVANAUGH. Yes, I would add to that that as the FDA has 

worked through its processes for the naming convention for 

biosimilars, they have repeatedly kept us in the loop to make sure 

we understood what was going on, solicited comments. We actually 

don’t take a position on the naming convention, but they have been 

generous in their consultation. 

And biosimilars, our collaboration really builds on a legacy of 

work. We collaborate in the regulation of lab safety. We recently 

implemented a process of parallel review, when the FDA is approving products and we can do a coverage decision for Medicare at the 

same time. So I am sure there are improvements, but there is a 

history here of working together and a commitment to continuing 

that. 

Mr. PITTS. Has FDA ever sat down with CMS to walk through 

the many fundamental differences between biosimilars and generic 

drugs? 

Dr. WOODCOCK. Yes. Yes, many times. Medical staff at CMS are 

very well aware of all these and have been privy to many of our 

discussions about them. 

Mr. PITTS. Dr. Woodcock, FDA has spent several years now grappling with policy decisions on how a biosimilar should be named 

and labeled in relation to its reference product, particularly if it is 

approved for different indications and if there are other biosimilars 

for the same disease or condition. Are you concerned that these 

nuanced decisions could be undermined by CMS’ decision to lump 

them all together for coverage and reimbursement purposes like 

they were generic drugs? 

Dr. WOODCOCK. Being able to track for purposes of safety and 

attributability is different than the payment. So the issue of tracking has been resolved by what CMS has done with the modifiers. 

And I am not competent to talk about how reimbursement is arranged. 

Mr. PITTS. Mr. Cavanaugh, in its draft naming guidance, FDA 

seems to make the case that distinguishing biosimilars from their 

reference product and other biosimilars is critical to patient safety. 

33 

If this is the case, why did CMS not share this view and take the 

opportunity to have different billing codes? 

Mr. CAVANAUGH. As Dr. Woodcock said, they have been very generous in their time helping us make sure we understand completely 

the clinical and therapeutic distinctions between generics and 

biosimilars. What CMS has put policy out on, though, is on payment and coding and physicians don’t typically look through billing 

codes in order to understand which product they are ordering. It 

is a very different process. 

So as Dr. Woodcock suggested, and I would agree with, there is 

really no disagreement here and no conflict in that payment policy 

which has to be informed by the clinical, but it doesn’t have to be 

entirely reflective of the clinical distinctions. 

Mr. PITTS. Well, combining all products under one code inherently removes some incentive for biosimilar companies to develop 

data on specific indications or seek interchangeability. Did CMS 

consider these impacts on innovation? 

Mr. CAVANAUGH. We did. The purpose of our policy was to spur 

innovation and we believe it will do that. You know, the fact that 

there are multiple products under the same billing code in the generic market has not, I think, depleted innovation or competition. 

In fact, the history of the generic market is robust competition and 

a lot of products being developed, not immediately as Dr. Woodcock 

said, but we think it is a sound policy and we think it will spur 

innovation, not hinder it. 

Mr. PITTS. Thank you. The Chair now recognizes the gentleman, 

Mr. Pallone, for 5 minutes for questions. 

Mr. PALLONE. Thank you, Mr. Chairman. I wanted to ask Dr. 

Woodcock some questions. FDA has been criticized for not being 

transparent in the development and implementation of the BPCIA. 

FDA has also been criticized for not releasing guidances more 

quickly and not doing enough to educate patients and healthcare 

professionals. Obviously, these critiques are significant, given that 

the BPCIA was enacted in 2010. I guess we had an estimate from 

the Congressional Budget Office of the $7 billion savings in the 

first 10 years, OK? So a lot is at stake. And of course, I talked earlier about the whole issue of drug pricing, being sort of a national 

priority right now. 

So how much money did Congress appropriate for the program 

that has the potential to provide so much savings? And will the 

funding FDA has received from Congress and industry be sufficient 

to keep up with the growing interest in the development of 

biosimilars? 

Dr. WOODCOCK. Congress did not appropriate any additional 

funding for us to do the biosimilar program. 

Mr. PALLONE. I didn’t hear you, Dr. Woodcock. 

Dr. WOODCOCK. Congress did not appropriate any additional 

funding for the biosimilar program. They put in place the ability 

2 years later for us to enact a user fee program. When that user 

fee program was put in place, it was stipulated that we take $20 

million out of our existing BA budget and put it into the base. But 

that was not additional funds. Those were the funds we had to take 

from other activities such as OTC monographs, compliance activities, and so forth. 

34 

And of course, when we put the user fee program into place, 

there really wasn’t an existing market, unlike the prescription drug 

user fee. 

Mr. PALLONE. Right. 

Dr. WOODCOCK. Or the MDUFA or GDUFA, and so we couldn’t 

bill an industry that didn’t exist. So we put in place a staggered 

fee structure for development meetings that we have been enacting 

and we have collected monies from that to help build the program. 

But of course, that has been only in the latter parts of the program. 

Mr. PALLONE. Well, then I guess the larger question which I am 

trying to get at is to what extent is this funding or lack of funding 

not working and making it more difficult in terms of having a backlog of applications, increasing review time lines, and contributing 

in some way to some of the criticism? And what do you need? What 

do you suggest we do so that you have enough money? 

Dr. WOODCOCK. We have begun to collect more monies under the 

user fee program. In FY13, we finally had collected $6 million, so 

that was the extent of the program. In fiscal year ’14, we collected 

$13 million; and last year, FY15, $23, million, $23.8 million. So we 

are beginning to build. And as drugs get on the market, biosimilar 

drugs, we will be able to have a different, perhaps more robust 

funding for this program. But this program was not funded by appropriations. 

Mr. PALLONE. OK, but I guess what I wanted to ask and I don’t 

have a lot of time, specifically, to what extent, because you don’t 

have this money, is that contributing to the backlog, you know, the 

not releasing guidance, not having enough education, development 

implementation of the program? And what do you suggest we do 

in order—we are getting all these criticisms, and it sounds to me, 

although you haven’t said so, that part of it is a lack of funding? 

Dr. WOODCOCK. Well, you know, what has been is water under 

the bridge. Going forward, we do expect to release drafts or many 

finals of this guidance in this current year, this coming year. So 

hopefully, some of these criticisms will be addressed, although 

these are controversial issues. 

Clearly, had we had more staffing and funding at the get-go, and 

we could have set up a program in 2010, then we would have been 

better off now. However, what I am concerned about is that this 

program is going to explode, that we are going to have—we are seeing multiple entries potentially for many of the existing 

biosimilars. Those top 6 or 11 or whatever. Naturally, there are 

people who would like to have a part of that market or compete 

into that market. And I am concerned that we will not have the 

staff because we are always waiting to catch up. 

Mr. PALLONE. All right, well, this sounds—I have got 3 seconds 

left. Sounds to me like you need some kind of appropriation and 

having the industry pay a fee is not good enough. But I guess you 

are not going to tell me you need the appropriation. 

Dr. WOODCOCK. I can’t comment on that. 

Mr. PALLONE. I know you can’t. But that is what it sounds like. 

Thanks. 

Mr. PITTS. All right. The gentleman’s time has expired. The 

Chair now recognizes the chair emeritus of the full committee, Mr. 

Barton, 5 minutes for questioning. 

35 

Mr. BARTON. Thank you, Mr. Chairman, And I wish that Congresswoman Eshoo was a member of the subcommittee because, 

while I know a little bit about this, Anna is really the expert on 

this issue. She and I are the authors of the bill that got put into 

the Affordable Care Act. 

It looks to me like we have two issues here. We have an FDA 

issue, you are right, seeing Ms. Woodcock. We have an FDA issue 

about how to approve them and then we have a CMS issue on how 

to charge for them. If you don’t get the approval process right, it 

doesn’t matter what you charge for them because there is nothing 

to be used. But if we can get the approval process right, it doesn’t 

matter unless we get the charging reimbursement process right because if you set a reimbursement process that there is no incentive 

to create the drug in the first place, the biosimilar, nobody is going 

to do it. 

And on the approval, I would give the FDA a C+, maybe a B- 

. I think your heart is in the right place. I know you, ma’am, based 

on my interchanges with you in the past, plus what you said in 

your opening statement, you want to get it right and you want to 

get it done. 

With regard to CMS, I would give you a D-minus. The only reason I won’t give you an F is because at least you are trying. You 

have got something out there. I guess to go back to the FDA, we 

need some labeling guidance. 

The first biosimilar, Ms. Woodcock, that the FDA has approved, 

the labeling is just not as complete as it should be, as transparent 

as it should be. Could you comment on that? Does your agency plan 

to address the labeling issue and try to get it better? 

Dr. WOODCOCK. Yes. We do plan to issue draft guidance. We 

have many opinions on how the label should be. We have received 

much input from stakeholders and that is one of the guidances that 

we would like to get out this year as a draft. 

Mr. BARTON. So to clarify, you do plan on changing that specific 

label? 

Dr. WOODCOCK. We will issue a draft and then we need to issue 

a final and get a policy together. And then the labels will conform, 

all labels would conform to that. If you recall, the statute that was 

enacted was considered to be self-implementing, as I understand, 

without guidance. 

Mr. BARTON. But you still have to do it. 

Dr. WOODCOCK. Well, we are approving, as they become available, we will approve biosimilars regardless whether we have final 

guidance out or not. That does create more ambiguity and so perhaps the language in the statute that considered, it was a self-implementing program, was a little optimistic in the sense that—— 

Mr. BARTON. That is true. I will accept that. 

Dr. WOODCOCK. There were a lot of policy issues that we needed 

much more detailed discussion and settling on to move forward 

with the robust program, and I think that always happens with 

these types of complex programs. But we do plan to get labeling. 

I have been personally involved in many discussions about this. We 

understand the issues and the positions of the various parties and 

we will put something out that people can comment on. 

36 

Mr. BARTON. OK, now I need to ask Mr. Cavanaugh a question, 

but before I get off of FDA, can you comment on the interchangeability that basically nothing has happened with regard to interchangeability and what the FDA’s plans are? I am talking to the 

FDA representative. 

Dr. WOODCOCK. Yes. We also plan to put out guidance on interchangeability, draft guidance. We have discussed interchangeability in our scientific considerations and our Q&A guidances already that are out there. So there is quite a bit of discussion because companies may need to do the scientific work during their 

development program. But we plan to put out a specific guidance 

on interchangeability and we hope to get that out this year as well 

as a draft. 

Mr. BARTON. And finally, Mr. Cavanaugh, I apologize for lack of 

time here, but I understand where CMS is coming from. You want 

to have a fair pricing scheme, reimbursement scheme, but 

biosimilars are different than generics. You understand that and 

your agency understands that? 

Mr. CAVANAUGH. We do. 

Mr. BARTON. If you don’t allow for some differentiation since it 

is more expensive to create, you are not going to create an incentive to do the drug and to do the biosimilar in the first place. Does 

your agency have any plans to go back and revisit their initial decision on how these are priced? 

Mr. CAVANAUGH. Thank you for the question. In the regulation 

we published last year, we did indicate that we would monitor the 

market closely and that we would do rulemaking in the future. We 

thought that our payment policy was not accomplishing what we 

were expecting it to. So there is that possibility. 

I want to return to your point, though. From a clinical perspective, you are right and CMS knows biosimilars are not the same 

as generics. However, from a regulatory and market perspective, 

there are some similarities. These similarities were pointed out in 

the Senate Committee Report that they are approved in similar 

processes and that they refer to an existing product’s evidence. 

They are going to compete with a reference product and against 

each other. So from a market and a regulatory perspective, there 

are similarities. From a clinical therapeutic perspective, there are 

similarities and differences. And we recognize all of that and we 

think that translates into the payment policy. 

We created similarities to how generics are priced, but there are 

differences as well. We don’t have the original reference product in 

the same code with the same ASP. So there are differences, but we 

did think the analogy to generics from a payment perspective was 

reasonable. 

Mr. BARTON. My time has expired. I thank the Chair for the 

courtesy. 

Mr. PITTS. The Chair thanks the gentleman and now recognizes 

the gentleman from Oregon, Mr. Schrader, for 5 minutes for questions. 

Mr. SCHRADER. Thank you, Mr. Chairman, I appreciate that. I 

appreciate the witnesses being here. 

I am concerned about the market developing. You have testified, 

both of you, to that effect and it seems to be a nascent market that 

37 

has yet to be mature and don’t want to stifle the competition, don’t 

want—and you are struggling with payment policy, trying to figure 

out what is the best way to encourage good competition, hopefully 

to build the market and ultimately at the end of the day, drive 

down prices safely for people. It is nice that the ACA allows this 

opportunity and we are able to get this type of legislation and apparently it has been on a dais, if you will, for a long, long time. 

So that is good. 

Dr. Woodcock, you are not in the payment policy business particularly, but could you talk a little bit about interaction between 

you and CMS in terms of how to interpret the previous generic 

policies and since this is not a generic situation, how you came 

about working with Mr. Cavanaugh, your contemporary on the 

other side, to develop the best payment policy for the biosimilars? 

Dr. WOODCOCK. CMS consulted us more on what the biosimilars 

were medically and clinically rather than how they should be paid 

for because that is not our expertise. And we interact with their 

medical staff who have a very clear understanding, I think, of the 

parameters of how we are analyzing the biosimilarity, what the 

standards are for biosimilarity and what the standard is going to 

be for interchangeability and the clinical performance that is expected from both of those. And the fact that in some cases we may 

not include all the indications in a biosimilar’s label that are in the 

innovator label for various reasons. So they are aware of all of the 

scientific and clinical parameters in the course of making their decisions. 

Mr. SCHRADER. I guess for Mr. Cavanaugh, you talked a little bit 

about these modifiers. Could you elaborate? I am concerned by 

lumping all the biosimilars together that if there is adverse reactions and stuff that can happen to any product, for goodness sakes, 

how are you going to tease that out? Could you elaborate a little 

bit? 

Mr. CAVANAUGH. Certainly, and thank you for the question. This 

is an issue that we were sensitized to through our conversations 

with the FDA which is when they are trying to monitor adverse reactions, they often look in large databases of claims to try to figure 

out which patients receive which product and then look in future 

claims or in other databases to see whether they had adverse reactions. And they made us sensitive to if the only indicator of multiple biosimilars was a common number, they would not be able to 

distinguish between the product which is important here. 

So what we did was, working with them, say, well, we will keep 

the same billing code, but we will have a modifier that is specific 

to each manufacturer so that when you do query our databases and 

you see a patient that had an adverse consequence, you will know 

which manufacturer’s product they got. And so that is how we expect it to work and we have confidence that it will work. 

Mr. SCHRADER. Biosimilars are paid for by the Government in 

several different programs, such as Medicaid Part D and Part B, 

apparently. Why do we have different methodologies in each of 

those? I understand some are intrinsic to the programs themselves, 

but there is enough variation. Biosimilars are treated, frankly, very 

differently in the other two programs than they are here. And they 

are kept individual. One biosimilar is not treated the same as anVerDate Mar 15 2010 10:57 Dec 16, 2016 Jkt 037690 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 F:\HIF FILES\WS_FTP\20488.TXT WAYNE
38 

other biosimilar. Why have you chosen to do it differently in Part 

B? 

Mr. CAVANAUGH. Thank you for that question. The answer is, as 

you were suggesting, there are different programs, but more importantly than being different programs, there are different statutes 

behind each of the programs. I have responsibility for both Medicare Part B, but also Part D. 

The statute that created the payment methodology for 

biosimilars in Part B is Section 1847A, large A. That is very specific to Part B and has nothing to do with Part D and rebates and 

payment prices there. So I think it all derives from very different 

statutes. In an ideal world, you would have harmonization across 

these, but occasionally we find that there are not consistencies 

across programs and that is not always a bad thing. I think here 

it created an opportunity for good policy. 

Mr. SCHRADER. I think the policy is being put ahead of the marketplace right now, maybe down the line as you alluded to, but 

that might be appropriate. But I am very worried that with all the 

differences that we currently have, it is confusing and makes it difficult for drug manufacturers to step up and try and create these 

wonderful drugs for our citizens. With that, I will yield back, Mr. 

Chairman. 

Mr. PITTS. The Chair thanks the gentleman. I now recognize the 

gentleman from Kentucky, Mr. Guthrie, for 5 minutes for questions. 

Mr. GUTHRIE. Thank you, Mr. Chairman. Thank you both for 

coming. I guess my questions are similar to what Mr. Pitts has said 

and what Mr. Barton asked Mr. Cavanaugh. And it is the payment 

policy. We are using a similar policy for generic small-molecule 

drugs are you said for biosimilars. And you said, I think to Mr. 

Barton, there are similar market characteristics you are looking at 

and you recognize there are different clinical characteristics that 

the FDA is concerned with. And that gets to all biosimilars are not 

tied—not all biosimilars are tied to the same product or the same 

reference product. 

And so my question is this. It is the concern about the payment 

policy and the clinical differences that you recognize exist? And we 

have heard from physicians. We have heard from patient groups, 

biosimilar manufacturers, a lot of different—at least one insurer, 

that this policy could lead to a couple of unintended consequences. 

One would be inappropriate switching between biosimilars, switching to a lower cost that is not the same, and as well as a less vibrant biosimilar market altogether. 

I believe some of these were stakeholder concerns that were 

raised during the process and wonder why you moved forward and 

did you consider these warnings? 

Mr. CAVANAUGH. Thank you for these questions. We did consider 

these because we received these in the public comment process and 

we thought very deeply about each of those issues. 

First of all, the concern about a less vibrant market. I mentioned 

some statistics earlier, but in Part B the top six drugs that we 

spend money on are all biologics. We spend over $1 billion on each 

of them. I think that alone creates the opportunity for a very viVerDate Mar 15 2010 10:57 Dec 16, 2016 Jkt 037690 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 F:\HIF FILES\WS_FTP\20488.TXT WAYNE
39 

brant market in biosimilars and I think that is why you are seeing 

the level of interest that the FDA is seeing in approving products. 

As far as inappropriate switching, first and foremost, physicians 

do not order biologics or other drug products by billing code. And 

Dr. Woodcock is a physician and can extrapolate on that. And similarly, pharmacists do not derive what switching they are allowed 

to do based on billing codes. There are other conventions in place. 

So we fought long and hard about that concern. We talked to our 

pharmacists. We talked to our physicians. We talked to the FDA 

and thought that we had heard that publicly that that was not a 

concern. 

Mr. GUTHRIE. So FDA is not concerned that that could come to 

pass, those—the two things I just mentioned could happen? 

Dr. WOODCOCK. Well, again, what we are seeing would be that 

a biosimilar would be either written by a physician, by the name, 

right, or it would be switched. If it were interchangeable, it would 

be switched at the pharmacy level based on our Purple Book where 

we said it was interchangeable. So those are the processes we see 

and with the e-prescribing and so forth, there are menus that come 

up and those have to do with the name of the product. 

Now I don’t know, I have been out of practice too long to know 

how this reimbursement loop which has really gotten very complex 

recently, how that would impinge. But that is how the ordering 

would be done. 

Mr. GUTHRIE. Well, thanks. I have another question. So Mr. 

Cavanaugh, I noticed that you treat biosimilar as a multi-sourced 

product for the purpose of payment. However, they are treated as 

a single source for the purpose of the Medicaid rebate. Can you explain the contradiction or apparent contradiction, I guess? 

Mr. CAVANAUGH. Certainly. It all derives from these being different programs and different statutes that authorize payment. I 

am on the Medicare side of CMS so I am not as conversant in the 

Medicaid statute, but as I mentioned earlier, the statute that created the authority for payment for biosimilars is very specific to 

Part B drugs. And so it by definition would not apply to Medicaid 

or Part D and so I think any difference is derived from the statutory differences. 

Mr. GUTHRIE. It is kind of a contradiction to have multi-source 

one way and single the other. Something needs to be corrected or 

fixed. Maybe it needs to be fixed statutorily? 

Mr. CAVANAUGH. They are not consistent, but again, the statutory authorities are different. 

Mr. GUTHRIE. OK. Well, Mr. Chairman, I yield back the balance 

of my time. 

Mr. PITTS. I thank the gentleman. I now recognize the gentlelady 

from Illinois, Ms. Schakowsky, for 5 minutes for questions. 

Ms. SCHAKOWSKY. It is really exciting that in recent years that 

we have seen such breakthroughs in drugs entering the market 

that creates such hope for treatment or cure for illnesses of millions of Americans. But the cost of these drugs, I want to focus on 

that because I think it is simply unaffordable for far too many people. In 2013, the average cost of specialty drugs was over $53,000, an 

increase of 193 percent from 2005. And this average drug cost is 

40 

greater than the median U.S. household income, more than double 

the median income for Medicaid beneficiaries and nearly time and 

a half—as much as the average Social Security retirement benefit. 

And a recent Kaiser poll found that 73 percent of Americans believe the cost of prescription drugs is just simply unreasonable. 

And so it is clear that we need additional Federal authorities to 

combat this growing problem and that is why I introduced the 

Medicare Fair Drug Pricing Act which would require HHS to negotiate the price of biologics and sole-sourced drugs covered by Medicare Part D, one possible solution. 

The high drug costs are a problem for both Medicare Part D and 

Part B. Mr. Cavanaugh, you well know, in 2010 biologics accounted 

for $8.3 billion or nearly 43 percent of all Part B drug spending 

and that number is likely to rise. High-cost biologics are continued 

to enter the market. I am happy that the biologics are entering the 

market. Medicare beneficiaries are also struggling to afford the 

copays that are associated with these drug prices. 

In addition to enhancing HHS’s ability to control drug costs, we 

need to ensure that we have a robust marketplace for biosimilars. 

Several studies estimate the projected savings from the approval of 

biosimilars for current high-cost biologics to be anywhere from $44 

billion to $250 billion over 10 years. We have an opportunity here 

to expand access to life-saving drugs and lower costs for patients. 

Dr. Woodcock, as a rheumatologist, you were talking about the 

exciting new drugs, but you were also talking about the cost. Are 

you aware of people who have been actually turned down, in other 

words, walking away from the pharmacy? I have talked to some 

pharmacists about people who do walk away. 

Dr. WOODCOCK. Yes, I am aware of it. And I am aware of what 

my colleagues currently go through now to try to get their patients 

drugs that are indicated for the condition by FDA. 

Ms. SCHAKOWSKY. It is a huge concern. Mr. Cavanaugh, how 

have biologics, I know you talked a bit about that, contributed to 

the increase in Part B spending on drugs, Medicare Part B? 

Mr. CAVANAUGH. So Part B, like the rest of the drug world, has 

been going up faster than the rest of the healthcare economy. It 

has put a strain on the Medicare program. The biologics in Part B 

are the vast majority of the spending. I mentioned that the top six 

drugs in total spending, each individually is over $1 billion, and 

they are all biologics. 

And so the Agency shares your concern and I think you have expressed the right balance which is as Dr. Woodcock said, therapeutically some of these are terrific products and they change lives 

and improve lives and we don’t want to lose that at all. But we 

want to balance it with making sure everybody has access and that 

comes through affordability. 

Ms. SCHAKOWSKY. I just want to say in some ways I feel like the 

feelings of an individual that is almost worse and more painful to 

know that there actually is a treatment or a cure out there that 

they can’t afford and thinking there isn’t one. It is right there, I 

can see it, I can feel it, I know it would help me, but I simply can’t 

afford to get that. And I think that we have to address that problem. 

41 

What are the solutions so that Part B, Part D is not going to go 

bankrupt, that insurance companies will be able to afford to provide the help that people are going to get. What are we going to 

do? Either one, both. 

Mr. CAVANAUGH. Again, I just want to reiterate that we share 

your concerns. As you may know, last year, Secretary Burwell and 

Administrator Slavitt convened a listening session. So we have 

been hearing from patients, from pharmaceutical manufacturers, 

from pharmacies and others about ideas they have. And we are 

hopeful that some of those ideas can come to fruition. I don’t know 

that the silver bullet has been discovered yet, but I think there is 

a conversation going on that could produce something that we 

could all support and achieve that balance that we are looking for 

between affordability, but still have access to these life-changing 

drugs. 

Ms. SCHAKOWSKY. Well, I know that members want to be part of 

that conversation, so I appreciate that. I know you recognize the 

problem and I yield back. 

Mr. PITTS. The Chair thanks the gentlelady and now recognizes 

the gentleman from Kentucky, Mr. Whitfield, for 5 minutes for 

questions. 

Mr. WHITFIELD. Thank you, Mr. Chairman, and I thank both of 

you for being with us today. We all recognize the important responsibility that you have, both of you. 

I am going to touch on something a little bit different. Certainly, 

it is my understanding that biosimilars are many times more complicated to consistently produce than generic drugs, but a couple of 

days ago I was reading an article and there have been many articles about drug shortages. And the American Society of Health System Pharmacists currently lists inadequate supplies of more than 

150 drugs and therapeutics for reasons ranging from manufacturing problems to Federal safety crackdowns, to drug makers 

abandoning low profit products. As a result of that, doctors and 

hospitals are doing rationing and sometimes they make decisions 

about who gets a drug based on weight, sometimes on the age of 

the patient. And in this same article, it talks about that in a survey of cancer doctors, 83 percent of them said over the last 6 

months that they had had to—they were unable to provide the preferred chemotherapy agent at least once during the last 6 months 

and that a third of them said they had to delay treatment and 

make the difficult choice of which patient they are going to give it 

to, so rationing these shortages, 

So both of you are well respected in your field. Would you just 

make a brief comment about this shortage problem and whether or 

not you all are working with manufacturers because biosimilars is 

even more complicated than generics? 

Dr. WOODCOCK. Clearly, this situation is unacceptable, that people with cancer or others would not be able to access life-saving 

treatment. We have had a very robust shortage program for many 

years where we try to anticipate and respond. I think the fundamental problem is the number of drugs that have a single source 

or perhaps maybe only one competitor. 

If you look at this chart, this shows all the drugs, and I can put 

this in the record, Mr. Chairman. 

42 

Mr. PITTS. Without objection. 

Dr. WOODCOCK. And you can see that, for the 99 drugs that we 

have, there is only one generic competitor. All right? So there are 

only two on the market. 

And then we have another chart here that shows for 125 innovator drugs, they have no patent or exclusivity protection, there are 

no generics. And this isn’t a result of FDA’s backlog or anything. 

Nobody sent in any applications. 

So there is a problem in the market that other entrants don’t 

come in and sometimes we get generic entrants and they don’t 

market the drug. And so then if the single manufacturer has a 

problem or they decide to raise the price greatly, there is no competition there. 

Now our generic user fee program is accelerating the approval of 

generics overall to a 10-month clock for review. So that will help 

somewhat with new entrants, but in the meantime it may be that 

no one is interested in entering that market even though it is a 

critical shortage of a life-saving drug. And I can’t tell you why that 

is. I don’t understand those factors, but that is the reality that we 

are facing. 

Mr. CAVANAUGH. I would concur with everything that Dr. 

Woodcock said and just add that if folks believe that there are 

CMS policies that are contributing to shortages, I would like to 

know and I would like to think about what we could do to be part 

of the solution. The reason many of us came to work at CMS is to 

help our beneficiaries. And if they are being denied because of market failure, because of policies, we would like to be part of that solution. So I appreciate you raising the issue. It is of concern to me. 

Mr. WHITFIELD. Thank you. I yield back my time. 

Mr. PITTS. The Chair thanks the gentleman. I now recognize the 

gentleman, Mr. Butterfield, for 5 minutes for questions. 

Mr. BUTTERFIELD. Thank you so much, Mr. Chairman. Mr. 

Chairman, let me first talk about my district and then build out 

from there. The health disparities that face African-American communities in my district in eastern North Carolina and across the 

country are absolutely alarming. The FDA knows that. Anyone who 

watches this, knows it for sure. We could just talk endlessly about 

the chilling statistics that show black Americans are more susceptible to serious illnesses than another demographic. Serious diseases such as HIV, diabetes, and cancer more frequently occur in 

African-American communities. Rare diseases like sickle cell anemia occur more often in African Americans. The sooner that affordable, safe, and reliable treatments are discovered, the better we are 

all going to be. 

Like most, I see the potential that biosimilars can have in combatting health disparities. The Affordable Care Act is helping to 

make that possibility a reality. And so the Biologics Price Competition and Innovation Act which is part of the ACA has helped set 

up a framework to enable the development of new biosimilar drugs. 

Since 2010, the FDA has worked diligently to implement the program. Biosimilars are complex and we have heard that testimony 

today. And I agree with Dr. Woodcock that their regulation must 

be bullet proof. It is critical, therefore, that the public can depend 

on approved biosimilars and that we encourage the development of 

43 

new treatments. And so it is my hope that the creation of new 

biosimilars can make safe treatments more affordable for those in 

need. 

I thank both of the witnesses for their testimony today. 

Dr. Woodcock, it is my understanding that current FDA guidance 

allows biosimilar applicants to extrapolate efficacy information 

based on the reference product. I don’t fully understand that, but 

I am sure that you do. If you would expand on that, please. 

Dr. WOODCOCK. Well, basically, the biosimilar pathway itself is 

an extrapolation, all right? What is done is, it is an abbreviated 

pathway. So if you can show your product is biosimilar through 

various means that we have established to the reference product, 

then you may be able to, depending on what you have shown, have 

a label that looks exactly like the innovator label. Or you may only 

have some of the indications, depending on what you have shown. 

So there are two kinds of extrapolations people are talking about. 

One is the basic abbreviated pathway which means we find the evidence that is submitted by the biosimilar and we say yes, this 

means that you have the same properties as an innovator drug. 

And then many of the brand drugs have multiple indications. For 

example, next week it would be ulcerative colitis, Crohn’s Disease 

and rheumatoid arthritis, all right? Those are different diseases. 

And so what many people are talking about is extrapolation across 

from one disease to another. 

What amount of data that we need to grant all those indications 

is a scientific matter and may be of some dispute, obviously, because there is a lot at stake there. But I will tell you, we are not 

going to approve biosimilar drugs that we don’t think have the 

same performance as the innovator. That is what we are going to 

do. If a patient is started on a biosimilar, they should expect the 

same results as if they had started on a brand drug. 

Mr. BUTTERFIELD. Now there are a lot of stakeholders and a lot 

of people have an interest in this subject. I am beginning to appreciate that and I see the room full today and I am sure there are 

a lot of people here who are listening very carefully. 

Are there concerns that stakeholder groups have? And are there 

any concerns that have been shared about extrapolating clinical 

safety and efficacy data for biosimilars which treat special populations including children or certain fields including rheumatology? 

Dr. WOODCOCK. Certainly. People have concerns still about 

generics and there are certain groups such as the neurology community still isn’t convinced they should do generic substitution. Recently, we have sponsored studies to show that there is no outcome 

difference between a generic and an innovator drug for seizures. So 

there is going to be concern and there is going to be ongoing concern regardless of what we do. But right now we do extrapolate 

often for regular drugs, for the brand drug. We may extrapolate to 

children based on dosing information if the disease is similar 

enough, rather than subjecting children to randomized clinical 

trials. If we have enough scientific data, we will extrapolate after 

finding out what the right dose with the equivalent doses are in 

children of different ages. 

Mr. BUTTERFIELD. Thank you. I yield back, Mr. Chairman. 

44 

Mr. PITTS. The Chair thanks the gentleman. I now recognize the 

gentleman from Illinois, Mr. Shimkus, for 5 minutes for questioning. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I know we are getting 

close to calling of votes, but I want to first of all address Mr. 

Cavanaugh. 

I appreciate your answers, but I don’t think they are totally accurate because I think under the law and especially the report language of the bill passed, the report language and the congressional 

intent was that there would be separate billing codes for reimbursement at the ASP of biosimilars. So I mean your comment saying I can’t do this because of statutory intent we feel is inaccurate. 

So I am going to move most of my comments to there and I hope 

you would take that back because we think you do have the authority to do that. 

And the other thing just as a comment, listening to testimony, 

biosimilars, the efficacy and the ability, the cost benefit, the return 

on investment, Dr. Woodcock, as you mentioned earlier as a 

rheumatologist and wellness versus treatment, there is a great return on that investment that somehow has to be put into this pricing decision, right? 

But I want to get to a couple of questions in this whole process. 

Let me start, Dr. Woodcock. I understand the FDA has not provided details on specifics of interchangeable products. Is it possible 

that FDA might approve an interchangeable product without first 

issuing guidance or interchangeability? 

Dr. WOODCOCK. Yes, it is. As an interchange with Mr. Barton, 

the statute allows us to execute the statute without guidance, is 

my understanding. 

Mr. SHIMKUS. Under current law, a new biologic product can be 

brought to market either by being approved as a new drug or being 

licensed a biological product. How, if at all, does a manufacturer’s 

decision to use one pathway or another affect pre-market review of 

a product? 

Dr. WOODCOCK. The body of evidence that is submitted for a biological license application, a standalone, right, is different than the 

body of evidence that is submitted for a biosimilar. 

Mr. SHIMKUS. So how? 

Dr. WOODCOCK. OK, a biological—— 

Mr. SHIMKUS. So what is the answer? 

Dr. WOODCOCK. I am sorry. A biological product, stand-alone, 

must demonstrate free-standing safety and efficacy of that product. 

A biosimilar must demonstrate biosimilarity to a reference listed, 

already approved biological product. Those are conceptually, fundamentally, two different things. 

Mr. SHIMKUS. So really the question is if they choose one pathway or the other—I mean right now, how are they making the decision which pathway to choose or how can they? 

Dr. WOODCOCK. We have around—— 

Mr. SHIMKUS. Let me just go to the next question because they 

are all kind of in line. What about the post-market obligations if 

they choose one pathway or another? 

Dr. WOODCOCK. It is unlikely a biosimilar product would not 

have additional questions that would be post-market commitments, 

45 

but they have the same safety surveillance requirements as other 

marketed products. 

Mr. SHIMKUS. Let me just go to another one then and I will tell 

you why I am asking these specific questions. Does the FDA consider the Purple Book to be part of a biological product’s labeling? 

Dr. WOODCOCK. Does it consider what? 

Mr. SHIMKUS. Do you consider the Purple Book to be a part of 

the biological products labeling? 

Dr. WOODCOCK. No. 

Mr. SHIMKUS. OK, so these are all questions asked by U.S. Senators in your testimony in November which they still have as they 

have asked me to restate these questions. Do you know why? Because you all haven’t responded to their questions in writing. 

Dr. WOODCOCK. Well, OK. Well, we will certainly do that. 

Mr. SHIMKUS. And the point being is there is great confusion out 

there in the healthcare sector on how we are going to move forward. And this hearing is going to have follow-up questions and 

they just need to be answered. And so again, all these are followup, and there was a lot more. I have got four or five pages of them 

from bipartisan questions that need to be addressed so we can 

help—that is actually the same questions that you are being asked 

by the stakeholders. And so I would ask you to respond timely to 

the questions posed by my colleagues. And I yield back my time, 

Mr. Chairman. 

Mr. PITTS. The Chair thanks the gentleman. I now recognize the 

gentleman, Mr. Ca ́ rdenas, for 5 minutes for questions. 

Mr. CA ́ RDENAS. Thank you very much, Mr. Chairman. Thank 

you, Dr. Woodcock and Deputy Administrator Cavanaugh, for joining us today. 

Dr. Woodcock, under BPCIA, interchangeable biologic products 

must demonstrate that they can be expected to produce the same 

clinical result as the reference product in any given patient. A biosimilar determined to be interchangeable can be substituted. So 

therefore my question is will you discuss generally the types of 

questions the Agency is thinking through as they are considering 

guidance to industry in this space? 

Dr. WOODCOCK. Certainly. This issue was before us even before 

the statute was passed, which is one of the differences between biologics and most generics, is something called immunogenicity. In 

other words, the ability to stimulate an immune response in a patient, a reaction. And this can be insignificant or it can cause serious problems. And one of the concerns is under a scenario of interchangeability, what we see in the generics world people get all different kind of products, generics, they switch at the pharmacy 

based on their plan. And the concern is if you are switching back 

and forth could you set up an immune response that would be negative to the person? And how you have to address that concern for 

interchangeability is contingent on a number of factors. A number 

of these drugs are not—biologic drugs—are not that immunogenic. 

And some of them they are, but the consequences have not been 

severe. Others, the consequences could be catastrophic. So we take 

all those factors in in talking to companies about how much evidence they have to show that switching back, people back and 

forth, wouldn’t cause terrible harm. 

46 

And the problem we have is the science isn’t far enough advanced for us to predict this from, say, test tube experiments. We 

have to look in people because we don’t understand the immune 

system well enough. So there has to be some human testing of 

switching ordinarily to give confidence that, in fact, if you switch 

the people back and forth, they are not going to have some unprecedented problem. 

Mr. CA ́ RDENAS. Thank you. This question is to Deputy Administrator Cavanaugh. I would like to reiterate the concerns voiced by 

my colleagues on both sides of the aisle and the final rule for the 

physician fee schedule, which places biosimilars that reference the 

same biologic into a single HCPCS code. Biosimilars are not generic drugs because they are not the same copies of one another, 

and I appreciate how hard you and your colleagues at CMS are 

working to create a robust biosimilars market. 

However, because biosimilars are so complex, I fear that this 

may discourage manufacturers from entering the biosimilars market. How do you feel about those dynamics? 

Mr. CAVANAUGH. So thank you for the question. I think it is important to recognize a couple of things. As I said, the important 

therapeutic differences which the FDA has educated us about and 

we recognize them, but there are also regulatory and marketplace 

similarities. And in fact, the congressional history here shows that 

the approval processes were mirrored or paralleled off of generic 

approval processes. We expect them to work in the marketplace 

much like generics in that there will be a low-cost alternative to 

a higher cost innovative product. And for that reason and also for 

statutory reasons, the statute said that for products where there 

are multiple products under the same billing code, they should 

have the ASP average. 

I want to emphasize why we think this is a successful policy. 

One, to Congress’ credit from the physician perspective when they 

are ordering the drug, Congress created a payment where they are 

still getting the 6 percent markup from the innovative product. So 

the physician is not invested in a higher cost product. They are 

made whole either way, and I think that was a terrific policy that 

Congress made. 

But secondly, they are going to choose the therapeutically successful product at a fair price and we will have these biosimilar 

products competing on price with each other. So the last thing I 

would say is even though they are using a methodology similar to 

generics, that doesn’t mean the resulting price will be similar to 

generics. The biosimilar companies set their own average sales 

price. So they can set it at a market-bearing price that results their 

costs whether it is research or other input costs. So I don’t think 

the fact that they are the same methodology means you will end 

up with the same price. 

Mr. CA ́ RDENAS. Thank you. With my 5 seconds I just want to remind the American public that what we are talking about here cannot be put in one page, so I want to thank my colleagues and also 

the process for understanding that laws aren’t necessarily one or 

two paragraphs. These are very important issues, and protection of 

the public is very important to our country. 

Thank you so much, Mr. Chairman. 

47 

Mr. PITTS. The Chair thanks the gentleman. We are voting on 

the floor, so we will continue as long as we can. The Chair recognizes Mr. Collins for 5 minutes for questions. 

Mr. COLLINS. I want to thank the chairman and I know we are 

now trying to hold the votes down so thank you for letting us cut 

into this just a bit. I thank both the witnesses, Dr. Woodcock, Mr. 

Cavanaugh, for coming. 

I think what I have heard is some 30,000 foot Cliff Notes discussions on biosimilars, generics, biologics, etcetera. 

And Dr. Woodcock, as you are sitting there, I know you must 

have some level of frustration because we are under time constraints to get the point out. And so in my time, I think we have 

pretty much established that generic is for all practical purposes, 

99.999 percent the same as the brand name. It is a compound. It 

is usually a pill. It is the same and therefore doctors prescribe that. 

But Dr. Woodcock, in what testimony you have given, in thinking 

about the differences in a biologics and a small-molecule which are 

two different worlds and a biosimilar which will never, ever, ever 

be the same, and while you have explained and I think it is true, 

the FDA’s emphasis is safety and efficacy and I guess you would 

say safety, safety, safety, safety, safety. And we have got to know 

it works as well. But safety is always first. 

In 2 or 3 minutes, for the purpose of this committee educationally, what would you like to add as far as how the FDA is looking 

at and even maybe explain to the committee the basic difference 

in why a biosimilar will never be a generic and even the manufacturing process of a biologic, the sterility process or give us 2 or 3 

minutes of education which I think would be helpful to this committee having heard already some of the questions. 

Dr. WOODCOCK. Well, the biologics are very large molecules. In 

other words, it would be like maybe a little house compared to the 

Empire State Building as far as the comparative size of a regular 

drug to a biologic. And if you just think about the brand biologics, 

most of them are not exactly the same from batch to batch. I know 

that is very disappointing, but they are made by cells, usually. 

Mr. COLLINS. The manufacturing process is unique. 

Dr. WOODCOCK. Yes, they are biosynthesized by cells and those 

cells are subject to conditions we don’t understand very well fully 

or can’t fully control. And so they are slightly different from batch 

to batch to batch. Our job in regulating them is to make sure that 

those variabilities in the brand product, I am still talking about, 

don’t affect safety, safety, safety or effectiveness, OK? So that they 

stay in a band where from the clinic, if you are a doctor treating 

patients, it doesn’t make any difference. But it isn’t like the small 

molecule where, every tablet, we know exactly what is in there. 

Mr. COLLINS. And to interrupt, isn’t it also true that in the intellectual property protection, etcetera, a manufacturer is not required to tell the world exactly how they are making it? 

Dr. WOODCOCK. Never, and that is true with the generics as well. 

Mr. COLLINS. And that is what I think some people miss. You 

have to put enough information in your intellectual property to say 

I can replicate it, but you don’t—a manufacturer is going to protect 

his price point. 

Dr. WOODCOCK. Well, it is considered trade secret. 

48 

Mr. COLLINS. Right, and it will always be trade secret. So when 

a generic or a biosimilar comes out, they don’t know the 16 steps 

that the brand name is doing to make that product. 

Dr. WOODCOCK. Right. 

Mr. COLLINS. And hence, in the case of a biosimilar, it can never 

be the same. 

Dr. WOODCOCK. What they do and what we found, OK, is for the 

generics does this too. They have to buy the reference product on 

the market and reverse engineer it and then develop a process of 

their own that will replicate that avoiding any patents that might 

be preexisting that may be on process and so forth. 

Mr. COLLINS. And it is just like reverse engineering anything. 

You don’t know and don’t have the prints of the original company 

to know the tolerances of every item and how they interact. 

Dr. WOODCOCK. That is correct. 

Mr. COLLINS. So I think in defense of the FDA and what they 

are doing in the safety, safety, safety, but also looking at efficacy, 

the folks making a biosimilar don’t have the prints. They don’t 

have the process. 

Dr. WOODCOCK. That is correct. 

Mr. COLLINS. They are trying to reverse engineer it and yet the 

FDA has to make sure in reverse engineering it safety is not compromised, efficacy is there. And that is why it is—you have got a 

very, very, very difficult job in bringing biosimilars to market 

knowing that the person making it doesn’t have the benefit of the 

drawings, the process. They are guessing. They are reverse engineering. They are hoping they get it right and you have to make 

sure at the end of the day it is safe and the efficacy is there. 

Dr. WOODCOCK. And also what we found to your point, it is a 

very good point, what we found as we work with these companies 

they are going to have to get more lots of the reference drug because generics usually—— 

Mr. COLLINS. The variation. 

Dr. WOODCOCK. Because they have to be within the variation. If 

you just pick a small sample, it might be outliers. 

Mr. COLLINS. My time is up. I thank you for that. I think the 

education piece is very valuable. 

Mr. PITTS. Thank you. I am sorry to rush you. We have 8 minutes left. So we are going to have to try to hurry as much as possible. Dr. Bucshon, you are recognized for 5 minutes. 

Mr. BUCSHON. Yes, Mr. Chairman, I will be brief and just make 

a comment and maybe a brief question. I am glad that you are both 

here. Thank you very much for your work. 

That said, Mr. Cavanaugh, this is kind of directed at CMS. It appears to me, as a physician—and I was a practicing cardiovascular 

surgeon—that CMS has become the rate-limiting step in getting innovative products to the marketplace and to patients. A brief example, a treatment for glioblastoma for brain tumors, for example; a 

bionic prosthetic to benefit veterans and others. And it also seems 

to me that frequently on reimbursement decisions that comments 

and recommendations of experts outside of CMS have been ignored. 

And unfortunately in my view, decisions are being based on financial reasons, not based on medical benefit of the products. 

49 

I am talking about products that have been approved by the FDA 

and other organizations around the world and subsequently are 

also reimbursed frequently by the private sector insurers and then 

are not reimbursed by CMS or it has been dragged out so long that 

some of the innovative companies have almost gone bankrupt because CMS hasn’t approved their payment. 

So the question I have is is it the role of CMS or the FDA to determine the safety and efficacy of medical products including 

biosimilars? 

Mr. CAVANAUGH. To me, sir? 

Mr. BUCSHON. Yes. 

Mr. CAVANAUGH. No. It is the role of the FDA to determine that. 

Mr. BUCSHON. OK, so once these are proven to be safe and show 

efficacy for patients, why is frequently CMS dragging its feet on reimbursing it? What is the reason? 

Mr. CAVANAUGH. Is the question specific to biosimilars or broadly? 

Mr. BUCSHON. Broadly. 

Mr. CAVANAUGH. First of all, as I said, on the first biosimilar, we 

acted very quickly and in fact, we had a billing code and coverage 

guidance before it was actually even marketed. You have raised 

other examples though that are broader than biosimilars. 

Mr. BUCSHON. I was just throwing those out there. Let me just 

tell you as a physician, many, many people talk to me about medical issues, right, because I was a practicing physician. And it is 

not just—I mean I have literally heard from hundreds of people 

frustrated with CMS because there have been—and these are coming from patients, from physicians, from companies, everywhere, 

telling me that these products are approved by the FDA. They are 

frequently reimbursed by the private sector and that CMS has either decided to not reimburse them or dragged their feet or put up 

a price that is not competitive for the production and maintenance 

of a company or the product to be actually on the market place at 

all. And it is very frustrating for me as a physician to know that 

there are products out there to benefit patients. 

And I know you have a tough job. I am just on my soap box a 

little bit here. But I just don’t get it because if things are approved 

by the FDA, they are frequently approved by the same organizations in the European Union and around the world, and these patients are not available to people in the United States because not 

that they are not proven to be effective and safe, but Medicare 

hasn’t decided how they are going to pay for it. 

And so if you are not making decision on safety and efficacy, how 

can you decide not to pay for it? 

Mr. CAVANAUGH. Sure. I think it is a terrific question and allows 

me to talk about the Medicare process. FDA approves safety and 

efficacy. When it comes to Medicare, there are two standards they 

need to meet, any product or service. One is, it has to meet one of 

the statutorily defined benefit categories. So the statute has to say 

this falls into a category that applies to Medicare coverage. 

Mr. BUCSHON. I am going to briefly interrupt you. That has already been determined by the FDA. There has been clinical studies 

that they have gotten that have shown efficacy, that have shown 

benefit to patients. So that seems like reinventing the wheel to me. 

50 

Mr. CAVANAUGH. With all due respect, the benefit category is not 

about safety and efficacy. The Medicare statute specifies the covered services and benefits. And what I am saying is, no matter how 

safe and effective FDA finds it, it can only come into Medicare if 

it meets the statutory definition of something that Medicare covers. 

And after it makes it past that criterion, the secondary criterion is, 

is it reasonable and necessary for—— 

Mr. BUCSHON. Understood. Since I only have 10 seconds, I just 

want to say that, in my view, every product that is approved by 

the FDA should be available to America’s seniors and the limiting 

factor should not be the ability of CMS to stonewall and not pay 

for it. And I am just telling you it is a very frustrating situation. 

I yield back. 

Mr. PITTS. The Chair thanks the gentleman. There are 3 minutes 

left on the floor clock. The Chair recognizes Ms. Ellmers for questioning. 

Ms. ELLMERS. Thank you, Mr. Chairman, and I will be very brief. 

I want to thank the panel. Thank you, Dr. Woodcock, for being 

here again, and Mr. Cavanaugh. 

I actually just have two letters that I would like to submit and 

ask unanimous consent to do so. 

Mr. PITTS. Without objection, so ordered. 

Ms. ELLMERS. One is actually from our Doctors Caucus. Twelve 

members of the Doctors Caucus submitted a letter on December 

21st to the acting Secretary, excuse me, Commissioner Ostroff. And 

we have not yet received a response to those questions. 

And so Dr. Woodcock, we will be submitting questions for you, 

and I know that this is an interim, but we would look forward to 

some of the answers. You both have answered many of the questions that we have already had. 

Now, the other letter that we have that I would like to submit 

under unanimous consent is from the Coalition of State 

Rheumatology Organizations. This is a letter that I would like to 

submit. 

Mr. PITTS. Without objection, so ordered. 

[The letters appear at the conclusion of the hearing.] 

Ms. ELLMERS. Thank you very much. And again, thank you to 

our panel. This is a very, very important issue to all of us, and I 

know that we all agree that we need to get to the bottom of this 

so that we can help those folks out there that need the help. Thank 

you. 

Mr. PITTS. The Chair thanks the gentlelady. That concludes the 

questions that we have here. We have follow-up questions. We will 

submit those to you in writing. We ask that you please respond 

promptly. Members have 10 business days to submit questions for 

the record, so members should submit their questions by the close 

of business on Thursday, February 18th. 

A very important hearing, thank you very much for your testimony today. Without objection, the subcommittee is adjourned. 

[Whereupon, at 12:02 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

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Dr. Woodcock’s response has been retained in committee files 

and also is available at http://docs.house.gov/meetings/IF/IF14/ 

20160204/104408/HHRG-114-IF14-Wstate-WoodcockJ-20160204- 

SD005.pdf. 


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Æ 


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