The U.S. government announced on Wednesday that it will expedite the approval process for complex biosimilars and relax the requirements for biosimilars developed using live cell technology, no longer requiring human trials as a prerequisite for developing biosimilars.

This policy is expected to threaten some of the most profitable products in the U.S. pharmaceutical industry. Pharmaceutical industry leaders had previously lobbied intensely, spending millions of dollars to block the change, but ultimately failed.

The U.S. Food and Drug Administration's (FDA) move to expedite the approval of generic drugs is based on the recent agreement reached between U.S. President Trump and pharmaceutical companies to lower drug prices, which undoubtedly puts greater pressure on the pharmaceutical industry's profits.

So far this year, US pharmaceutical stocks have significantly underperformed the S&P 500 index, with Eli Lilly...Pfizer​Companies like Merck have issued pessimistic outlooks due to uncertainty surrounding US policies, warning investors of potential profit risks.

Costs dropped significantly

Traditional generic drugs are usually made from chemical substances, but many advanced drugs utilize living organisms such as cells or tissues, including bacteria, yeast, and animal cells. This inherently makes them more variable than chemically synthesized drugs and also makes the production process more complex.

Therefore, biopharmaceuticals require a special FDA approval process, and biosimilars—alternatives to branded drugs—have long been treated differently from other generic drugs. Furthermore, due to the complexity of the process, it is more difficult for generic drug manufacturers to produce so-called biosimilars at lower prices.

In many cases, pharmacists cannot directly substitute generic drugs for brand-name biologics when dispensing medication unless the drug is classified as "interchangeable" and permitted by local state law.

However, the FDA stated that biosimilars saved the U.S. healthcare system $20 billion last year, with prices averaging half that of brand-name biologics. Due to a lack of competition, the prices of brand-name biologics typically rise over time, which the current U.S. administration considers tantamount to price gouging.

FDA Commissioner Marty Makary further pointed out that biosimilars are generally more affordable and are expected to significantly reduce healthcare costs in the United States. The proposed reforms would help pharmaceutical companies halve the time it takes to bring biosimilars to market and save $100 million in research and development costs.

However, the industry lobbying group, the Pharmaceutical Research and Manufacturers of America (PhRMA), argues that relaxing and accelerating the approval process for biosimilars would be a huge gift to companies that manipulate the generic drug market for profit. Instead of promoting competition and reducing drug costs, it would create more opportunities for intermediaries to profit while reducing treatment options for patients.

Source: https://finance.eastmoney.com/a/202510303549840842.html