What’s in a name? Billions of dollars in tech costs for biosimilars

A new US FDA guidance on how biological products licensed under the Public Health Service Act (PHS Act) need to be named is playing havoc with a number of healthcare organizations.

According to this naming convention, the nonproprietary name designated for “each originator biological product, related biological product, and biosimilar product will be a proper name that is a combination of the core name and a distinguishing suffix that is devoid of meaning and composed of four lowercase letters.”

According to the healthcare organizations, this step will cost the health care system billions of dollars in technology costs.

According to a healthcare data provider — Wolters Kluwer Health — healthcare organizations (such as hospitals, insurers, and physician practices, as well as government agencies) will “collectively, spend billions of dollars to redesign and reprogram information technology systems to accommodate this new mandate.” The organization mentioned this in a letter to the White House Office of Management Budget.

The FDA guidance may force hospitals, insurers, physician practices, and government agencies, to spend billions to redesign information systems.

A number of health care organizations are complaining that a final guideline the US Food and Drug Administration recently released for naming both biologic medicines and identical, but lower-cost biosimilar versions will cost the health care system billions of dollars in technology costs.

How so? The guideline is designed to make it easier for health care providers to track side effects by requiring drug makers to add four-letter suffixes to the drug names. But different types of health care organizations say this one small step will force hospitals, insurers, and physician practices, as well as government agencies, to spend countless hours and dollars on redesigning their information systems.

These entities will, "collectively, spend billions of dollars to redesign and reprogram information technology systems to accommodate this new mandate," Wolters Kluwer Health, a health care data provider, wrote in a Feb. 9 letter to the White House Office of Management Budget. The firm wants the OMB to suspend the guidance until the economic impact is understand and alternatives are explored.

In its guidance, the FDA estimated that a total of 420 hours would be needed per product application to comply with its naming requirements, but the company contends the estimate "only applies to applicants or sponsors of the new biological product. It does not include the enormous cost burden imposed on other healthcare industry stakeholders to comply with the new mandate, especially those involved directly in patient care."

Specifically, the firm pointed to existing electronic health records, billing and pharmacy systems, and databases that will need to be revised, because they are used for ordering, clinical reviews and claims administration. "All these systems will need to be modified to comply with FDA's new naming convention," Wolters Kluwer wrote. "Millions of patient records containing old drug names will also need to be updated."

Several other organizations expressed the same concern in letters that were filed since the FDA issued its guidance on Jan. 12. Among them was First Databank, which publishes health care data; The National Council for Prescription Drug Programs, a non-profit that sets standard codes for electronic health care transactions; and CVS Health, one of the largest pharmacy benefits managers.

The letter from the National Council for Prescription Drug Programs, which represents drug makers, wholesalers and pharmacies, among others, cited Erin Fox, director of the Drug Information Service at the University of Health Care, who forecast it could take as much as 50 to 70 hours per product to upgrade systems to accommodate the addition of suffixes, plus any unforeseen costs.

The Office of Management and Budget "said there would be zero cost for pharmacies and hospitals to go back and change the names of every biologic product to have a new nonsense suffix. That is absolutely not true," Fox wrote us. "It will be a huge project. Most systems don't ‘talk' to each other, so it's not just like uploading a single file and all 20 to 30 systems will be updated."

These concerns are only the latest outgrowth of the debate over biosimilar naming as the FDA weighed whether biosimilars should be given the same International Proprietary Name, or INN, as brand-name biologics. The global INN system is overseen by the World Health Organization, but its recommendations are not mandatory, which means that regulators in different countries can pursue different approaches.

In the US, the topic has largely played out behind the scenes, but generated considerable maneuvering because so much is at stake. At issue is the extent to which a different name for a biosimilar would hamper substitution or compromise patient safety. Health care providers often refer to the INN, or the chemical name for a medicine, rather than the commercially known name, when discussing treatments.

Brand-name drug makers that sell biologics have wanted biosimilars to have unique names and argued this would make it easier to track adverse events in patient records and side effect reports filed with regulators. Of course, a distinct name also gives these companies a marketing advantage, since established product identities are unlikely to confuse physicians or pharmacists

For their part, generic drug makers have argued that such rationales are really just a smokescreen designed to blunt competition. After all, lower-cost biosimilars are forecast to save the US health care system between $27 billion and $58 billion by 2021, according to the QuintilesIMS Institute for Healthcare Informatics.

Nonetheless, the FDA guidance relies on the use of different suffixes for biologics and biosimilar versions, appears to favor brand-name drug makers. Admittedly, this process is cumbersome and not the sort of thing that patients will ever encounter, but consider the implications after looking at this hypothetical situation:

For instance, a biologic could be known as OLDDRUG (MEDICINE-ABCD), while the biosimilar could be called NEWDRUG (MEDICINE-EFGH). But to physicians, who are largely only familiar with OLDDRUG (the brand name of the original biologic), it will look like NEWDRUG (the brand name of the biosimilar) has a different active chemical ingredient. This may prompt some doctors to prescribe the OLDDRUG instead.

The upshot is that the companies that must absorb the cost of revising and redesigning electronic record keeping complain that face an expensive task to accommodate the guidance.

"There is a legitimate concern," said Christian Frois, a vice president in the health care practice at Analysis Group, an economic and strategic consulting firm. "By enforcing this change on existing products, not just future biosimilars, it will create a substantial burden for the system as a whole, because the way our health care system is set up, it's not designed to support that."

Posted with permission from STAT Plus