On October 29, 2025, the U.S. Food and Drug Administration (FDA), in coordination with the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS), announced a new strategy aimed at dramatically reducing the cost and timeline of biosimilar development (U.S. Food and Drug Administration,FDA Moves to Accelerate Biosimilar Development and Lower Drug Costs, Oct. 29, 2025). The proposed reforms, introduced through a new draft guidance,[1] would eliminate many comparative clinical efficacy studies, previously required for biosimilar approval, and thereby simplify the process for obtaining an interchangeability designation.
A Shift Away from Comparative Clinical Trials
Under the draft guidance, developers of new biosimilar compounds will generally no longer be required to conduct human comparative efficacy studies when analytical testing can sufficiently demonstrate biosimilarity (U.S. Food and Drug Administration, Scientific Considerations in Demonstrating Biosimilarity, Draft Guidance, 2025). These previously required studies typically last one to three years and may cost more than $20 million per product. However, in the draft guidance, the FDA asserts that such trials add “little scientific value” relative to advanced analytical assessments of molecular structure and function. (U.S. Food and Drug Administration, Fact Sheet: Bringing Lower-Cost Biosimilar Drugs to American Patients, Oct. 29, 2025). In its statement of the problems being addressed, HHS pointed to the much higher rate of biosimilars approval in Europe, which we have highlighted on our blog.
FDA Commissioner Marty Makary, M.D., stated that the agency’s goal is to “cut the development time of biosimilars … in half while lowering drug prices” (Pharmacy Times, FDA, HHS Move to Accelerate Biosimilar Approvals, Oct. 29, 2025). According to the agency’s accompanying fact sheet, the shift could save developers tens of millions in research costs and shorten the approval window from the current five-to-eight-year average to as few as two to four years (U.S. Food and Drug Administration, Fact Sheet: Bringing Lower-Cost Biosimilar Drugs to American Patients, Oct. 29, 2025).
The FDA also announced that it “now generally does not recommend switching studies,” which test the safety of alternating between reference and biosimilar products, in order to support interchangeability. The agency emphasized that these additional studies are unnecessary given the maturity of analytical science and the extensive postmarket data confirming biosimilar safety and efficacy (U.S. Food and Drug Administration, FDA Moves to Accelerate Biosimilar Development and Lower Drug Costs, Oct. 29, 2025).
Implications for Market Competition
Biologics represent just five percent of prescriptions in the United States but account for more than half of all drug spending (U.S. Food and Drug Administration, Fact Sheet: Bringing Lower-Cost Biosimilar Drugs to American Patients, Oct. 29, 2025). Despite approval of 76 biosimilars since 2015, market penetration in the U.S. remains under 20 percent. Myriad factors, including high development costs, complex patent litigation, and payer coverage challenges have slowed biosimilar entry and adoption.
Thus, by eliminating unnecessary clinical requirements and easing interchangeability, the FDA aims to promote greater price competition and enable pharmacists to substitute biosimilars without prescriber intervention, which was previously limited to interchangeable products (Pharmacy Times, FDA, HHS Move to Accelerate Biosimilar Approvals, Oct. 29, 2025). The agency anticipates that this change will lead to substantial cost savings for patients and payers, perhaps mirroring the effects of the Hatch-Waxman framework that transformed the generic drug market in the 1980s.
Patent and Regulatory Considerations
The FDA’s proposal also intersects with key issues under the Biologics Price Competition and Innovation Act (BPCIA). While the regulatory burden for demonstrating biosimilarity may ease, patent litigation under the “patent dance” framework would not change. As noted by the New York Times, many approved biosimilars have faced years of delay in reaching the market due to patent settlements and injunctions that prevent commercial launch even after FDA approval (The New York Times, F.D.A. Moves to Speed Approvals for Cheaper Copycat Drugs, Oct. 29, 2025).
Reducing development costs may incentivize more manufacturers to initiate biosimilar programs earlier in a biologic product’s patent term, increasing the number of applicants poised to challenge patents. Conversely, by lowering the barriers to market entry, the FDA’s action could also intensify earlier patent challenges, design around efforts, and freedom-to-operate analyses, spurring companies to engage in more proactive intellectual property due diligence.
Moreover, elimination of switching studies for interchangeability may have pronounced downstream effects on interchangeability-related exclusivity. Under the BPCIA, the first biosimilar approved as interchangeable with a given reference product enjoys a one-year marketing exclusivity period, during which the FDA may not make effective the approval of another interchangeable product referencing the same biologic (see 42 U.S.C. § 262(k)(6)). While the proposed guidance does not alter this exclusivity, with interchangeability now more easily attainable, the lowered evidentiary burden for achieving interchangeability (of allowing developers to rely primarily on analytical and functional comparability data instead of costly switching studies) may drive more applicants to be able to secure interchangeability designations earlier, potentially clustering approvals and narrowing the first mover’s practical commercial advantage.
The Path Ahead
Although the reforms represent a substantial regulatory shift, some analysts caution that they do not fully address other structural barriers, including payer contracting practices and the persistence of “patent thickets” around blockbuster biologics (The New York Times, F.D.A. Moves to Speed Approvals for Cheaper Copycat Drugs, Oct. 29, 2025). Still, the changes mark the most consequential FDA policy development for biosimilars in a decade.
If adopted, the guidance could accelerate biosimilar development timelines, attract new entrants into the market, and potentially increase the number of lower-cost biologic therapies – while also intensifying the strategic interplay between regulatory approval and patent enforcement. For manufacturers and investors alike, navigating this evolving landscape will require close coordination among regulatory, IP, and market access teams to ensure that the promise of biosimilars translates into practical patient savings. We will continue to monitor further developments on these proposed changes and provide insight and updates as they become available.
Disclaimer: The information contained in this posting does not, and is not intended to, constitute legal advice or express any opinion to be relied upon legally, for investment purposes or otherwise. If you would like to obtain legal advice relating to the subject matter addressed in this posting, please consult with us or your attorney. The information in this post is also based upon publicly available information, presents opinions, and does not represent in any way whatsoever the opinions or official positions of the entities or individuals referenced herein.
[1] Draft Guidance is available at https://www.fda.gov/media/189366/download.