On June 4th, 2025, the Biosimilar Red Tape Elimination Act was reintroduced into Congress. This bill, now in its third year of introduction, could have major implications for the biologics market. While it has not been passed yet, the bill is just one reflection of a recent shift in the United States’ approach towards interchangeability.
The FDA Biologics Regulatory Scheme
Biologics are medications that are isolated from natural sources (e.g. human, animal, microorganism), often composed of substances such as sugars, proteins, nucleic acids, or living organisms themselves.[1] Examples of biologics include vaccines, gene therapies, and immunotherapies. As biomedical science has advanced, biologics have become some of the most cutting-edge therapies available and many promise success for diseases where traditional drugs are lacking.
While the FDA has the authority to regulate biologics under the Federal Food, Drug, and Cosmetic Act (FD&C Act), biologics additionally have their own regulatory scheme under the Biologics Price Competition and Innovation Act (BPCIA).[2] Biologics are distinguished from drugs for regulatory purposes because unlike most traditional drugs with a known chemical structure, biologics are often very complex and thus cannot be easily characterized. This makes for a significant difference when it comes to establishing safety and efficacy as well as biosimilarity.
Of particular note is the “biosimilar” and “interchangeable” classification scheme for biologics. Biosimilars are biologics that are highly similar to an existing biologic with FDA approval, also known as the original biologic. This is essentially the biologics version of a generic drug. However, because of the complexity of biologics, biosimilars are not usually identical to the original biologic, unlike generic drugs with their branded drug counterparts. Biosimilars do still have to be similar enough in that there are no clinically meaningful differences and must be as safe and effective as the original biologic. Proving biosimilarity thus still involves a rigorous evaluation by the FDA, with careful review of clinical data, even though it relies on the safety and efficacy of the original biologic.
An interchangeable biosimilar is a biosimilar that may be substituted for the original biologic without consulting the prescribing healthcare practitioner, like how generic drug substitution works. To gain interchangeability status under the BPCIA, a biosimilar must meet two additional requirements: the biosimilar must (1) produce the same clinical result as the original biologic in any given patient, and (2) if administered more than once, show that there is no greater risk in switching between the original biologic and the biosimilar than just using the biosimilar. This second requirement historically required “switching studies,” which involve patients alternating between the original biologic and the biosimilar. Although the second requirement of switching is not required for all interchangeable biosimilars, the first requirement is. It is important to note that the first requirement for interchangeability (being the same clinical result in any given patient) is a higher evidentiary standard than the one for biosimilarity (being no clinically meaningful differences).
The Biosimilar Red Tape Elimination Act
The Biosimilar Red Tape Elimination Act (S. 1954) was first introduced in 2023 in the Senate and has now been introduced for a third time.[3] The bill mainly seeks to “improve the requirements for making a determination of interchangeability of a biological product and its reference product” by amending Section 351(k) of the BPCIA. The bill does this by removing the additional approval requirements for interchangeability and instead automatically deeming all biosimilars to be interchangeable.
Potential Legal Impacts and Downstream Effects
The main impact of this bill is that it removes the FDA’s discretionary authority to determine interchangeability on a case-by-case basis. This flattens the current two-tier framework under the BPCIA. Interchangeable biosimilars will no longer have a higher evidentiary standard than non-interchangeable biosimilars. FDA will likely have to shift from using interchangeability evaluation as an additional gate to post-market monitoring to ensure switching safety.
The interchangeability approval process also affects market substitution, so automatic designation could accelerate competitive entry and compress patent litigation timelines. The current BPCIA “patent dance” and litigation strategies are key to biosimilar market timing.[4] In contrast to Hatch-Waxman (the legal framework governing generic drugs) patent litigation for generic drugs, BPCIA patent litigation is much more complicated and uncertain, as it also requires determining which biologic patents themselves are at issue. One immediate impact of the bill on patent litigation and competition is the elimination of one-year exclusivity for the first interchangeable, since this provision becomes inoperable under an automatic interchangeability scheme. The resulting expedited substitution will likely accelerate commercial launches and provoke earlier or more aggressive patent litigation.
The bill, by extension, will likely also encourage simultaneous market entry, which may increase competition and lower biologic medication costs. All approved biosimilars will function like generics for substitution purposes. This could likely lead to steeper price declines. Studies on the price effects of biosimilars found that there was a 10% to 13% decrease in originator price ratio for each additional biosimilar introduced into competition.[5] The biosimilar market prices have already been significantly declining since 2015 due to existing competition, but there is a possibility that this is not sustainable. Long-term effects of this decline could mean a later reduction in competition and subsequent increase in originator prices if sustained low pricing reduces incentives for developing newer original biologics or biosimilars.
There are similar concerns that while broader substitution could yield significant healthcare cost savings, this may not be worth the decrease in patient safety. Interchangeability was designed as a patient protection mechanism by ensuring that automatic switching is safe and effective. If that safeguard is removed, the emphasis rests solely upon post-market monitoring. Some clinicians may resist automatic substitution absent enough individualized safety data, especially given the complexities of biologics.
Recent Changes to FDA Guidance on Biosimilars
Congress is just one government player currently considering a shift in policy toward interchangeability. On October 29th, 2025, the FDA released a new draft guidance on biosimilar development.[6] This guidance proposes a major update to simplify biosimilar studies by no longer requiring comparative efficacy studies for demonstrating biosimilar efficacy. The FDA cites the improvements in sensitivity in analytical assessments that are less resource intensive as a better alternative. The FDA also had already in a 2024 draft document stated that they were seeking comments regarding lessening the switching studies requirement, and following from that, they now generally do not recommend switching studies for interchangeable biosimilar approval.[7] This policy stems from studies showing that the safety risk for single or multiple switches was insignificant enough to warrant a requirement of switching studies.
Conclusion
These changes show that both Congress and the FDA are attempting to streamline the biosimilarity and interchangeability approval process across the board to eliminate regulatory costs from resource-intensive studies traditionally required for approval. While this is not the same amount of regulatory slashing that the Biosimilar Red Tape Elimination Act proposes, it is in line with a general trend toward lowering the regulatory hurdles needed to approve biosimilars and interchangeable biosimilars in the hopes of improving patient affordability of biologic medications.
[1] U.S. Food and Drug Admin., What Are "Biologics" Questions and Answers (Feb. 6, 2018), https://www.fda.gov/about-fda/center-biologics-evaluation-and-research-cber/what-are-biologics-questions-and-answers.
[2] 42 U.S.C. § 262.
[3] S. 1954, 119th Cong. (2025).
[4] Robin Feldman & Gideon Schor, Dance of the Biologics, 39 Berkeley Tech. L.J. 841, 867-68 (2024).
[5] Mireia Jofre-Bonet et al., The Price Effects of Biosimilars in the United States, 28 Va. Hal. 742 (2025).
[6] U.S. Food and Drug Admin., FDA Moves to Accelerate Biosimilar Development and Lower Drug Costs (Oct. 29, 2025), https://www.fda.gov/news-events/press-announcements/fda-moves-accelerate-biosimilar-development-and-lower-drug-costs.
[7] U.S. Food and Drug Admin., FDA Updates Guidance on Interchangeability (June 20, 2024), https://www.fda.gov/drugs/drug-safety-and-availability/fda-updates-guidance-interchangeability