FDA Releases Congressional Justification For FY 2027 Budget, Including Proposal Regarding Interchangeability Of Biosimilars

The U.S. Food and Drug Administration (“FDA”) recently released its congressional justification for the 2027 Fiscal Year budget. Overall, the FDA proposed a total budget of $7.2 billion, an overall increase of 3.3% above the 2026 Fiscal Year enacted level.

As part of the legislative proposals, the FDA included a new proposal to create efficiencies for review and approval of biosimilar applications, including a significant presumption about the interchangeability of approved biosimilars. See FDA Budget Justification at 18. The FDA stated: “This proposal would streamline the review and approval of biosimilars by amending section 351 of the Public Health Service (PHS) Act to no longer include a separate statutory standard for a determination of interchangeability and deem all approved biosimilars to be interchangeable with their respective reference products.” Id. at 18. The FDA contends that this proposed elimination of the statutory distinction “would make the U.S. biosimilar program more consistent with current scientific understanding,” while making the U.S. market more competitive with its European counterparts. Id.

Currently, to obtain FDA interchangeable biosimilar designation under the Biologics Price Competition and Innovation Act (“BPCIA”), a biosimilar must demonstrate no clinically meaningful differences against the reference product, as well as other criteria under 42 U.S.C. § 262. The recent proposal would eliminate the statutory standard, claiming that it has led to “confusion and misunderstanding” among providers and patients. Id. According to the FDA, the proposal would “create a presumption that a comparative clinical study that includes the assessment of efficacy is unnecessary to support a demonstration of biosimilarity.” Id. at 18–19. The FDA anticipates that this change would “streamline” the review of biosimilar development and provide “clarity” about determining biosimilarity for various products, ultimately leading to lower costs for consumers. Id. at 19.

The FDA’s proposal further seeks to increase efficiency by consolidating reviews in a more streamlined process by removing the requirement that the division responsible for the review and approval of the reference product application also review the biosimilar application. See FDA Budget Justification at 19.