The Food and Drug Administration wants to focus on improving pricey biotech drugs so that replacing them later with cheaper "biosimilars" would be easier.
Biosimilars are generic versions of biologic medicines, which are complex and aren't easily replicable like typical drugs. They treat serious illnesses like cancer and autoimmune diseases.
One problem for companies trying to create these medicines is that branded biologics can change over time, requiring them to test more patients to prove biosimilars are as effective as their branded peers, FDA Commissioner Scott Gottlieb said in an interview with Meg Tirrell at CNBC's "Healthy Returns" conference on Wednesday.
To combat this, the FDA wants drugmakers to minimize the variables in the manufacturing of branded biotech drugs. That would help bolster the biosimilars markets because less variance should mean faster approval of the medications.
It's expensive to produce biosimilars because they include living organisms and are more complex than small molecule drugs. Gottlieb has warned that the current market may not give companies enough incentive to invest in producing them.
However, it's still the early days of biosimilars, he said. The FDA has approved nine biosimilars, with the first in 2015.
"I think we will see a lot of biosimilar competition come onto the market and we will also see consumer and provider acceptance," he said.
Gottlieb has been vocal about his mission to lower drug prices and the agency's role in helping foster a competitive market.
He has voiced his concern that industry consolidation and current payment systems may be stifling their development.
Another possible challenge in the current market is market access, Gottlieb said. Pharmacy benefit managers and insurers may stick with branded biologics because they receive discounts from manufacturers on these treatments. That can prevent biosimilars from gaining enough market share and possibly dissuade companies from producing them, he said.
"I think the provider piece needs to make a decision whether or not they're willing to move away from some of those structures in order to create this market because if we don't see soon the ability of biosimilars to come to the market and actually build market share, I'm worried they're going to look at this market and say, 'This is too hard. We can't get more than 10 percent market share so we're not going to make the investment,'" Gottlieb said.
The Pharmaceutical Care Management Association, an industry group for pharmacy benefit managers, said contrary to Gottlieb's remarks, it supports legislation to prevent branded drugs from blocking biosimilar competition.
"Allowing generic and biosimilar drugs to get to market more quickly will reduce overall drug costs," the group said in a statement.
During his remarks, Gottlieb acknowledged the challenge.
"There's no silver bullet here in terms of trying to really make this market more competitive," he said. "I think it's going to be a slow build."