Future of Biosimilars at Issue in Latest Supreme Court Affordable Care Act Case

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On Tuesday, November 10, 2020, the Supreme Court heard oral argument in California v. Texas, a challenge to the Affordable Care Act (the “ACA”) brought by Republican Attorneys General and the Trump Administration.  The central issue in California v. Texas is whether the ACA’s individual mandate remains constitutional now that it is no longer backed by a tax penalty.  However, the fate of the Biologics Price Competition and Innovation Act (“BPCIA”) also hinges on the Supreme Court’s decision in the case.

The BPCIA, the statute that created the regulatory pathway for approval of biosimilars, was passed not as a standalone statute, but rather as Title VII to the ACA.  For this reason, a decision striking down the ACA would invalidate the BPCIA and its regulatory pathway for biosimilar marketing approval.

If the Supreme Court rejects this latest challenge to the ACA, the BPCIA of course will remain in force.  But if the Supreme Court holds the individual mandate unconstitutional, the BPCIA’s survival will depend on the issue of severability, meaning whether the ACA should fall in its entirety or other portions of the ACA should remain in force.  The severability inquiry centers on congressional intent, and specifically the question of whether Congress would want other provisions of the ACA, such as the BPCIA, to remain intact if the individual mandate were struck down.

During oral argument, Chief Justice Roberts and Justice Kavanaugh signaled that they may find the individual mandate severable from the remainder of the ACA, in large part because in 2017 Congress eliminated the tax penalty associated with the individual mandate but left the remainder of the ACA intact, suggesting that the mandate is not essential to the statutory scheme.  Additionally, several justices raised concerns during oral argument that the plaintiffs lack standing to pursue the case, which could provide another ground for the Supreme Court to let the ACA stand.  There are therefore good reasons to think the BPCIA will remain intact following California v. Texas.

If the Court were to strike down the entire ACA, including the BPCIA, the push by industry and other stakeholders for Congress to re-enact the BPCIA in some form would be considerable.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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