The insulin market has increasingly attracted scrutiny from politicians, regulators and patient groups, as prices ramp higher for the hormone that millions of diabetics depend on to stay alive.

Food and Drug Administration head Scott Gottlieb has advocated for greater competition in the pharmaceutical industry as a means of bringing down drug costs. But, for insulin, changing legal rules have effectively created a "regulatory dead zone," hindering generic drugmakers filing applications for copycat versions of the biologic drug.

That's because when Congress established a path to regulatory approval for biosimilars in 2010, lawmakers created a gray area for manufacturers seeking OKs for insulin copies prior to March 2020. With that transition date approaching, drugmakers run the risk of being caught between two legal frameworks governing approval of copycat insulin products.

The FDA hasn't solved the problem, saying it's restricted by law from converting pending applications under the older legal pathway to the new framework governing biosimilars. As a result, generic drugmakers may be best served by waiting to pursue approval of lower-cost versions of insulin until early 2020. In the roughly 14 months until then, the market for insulins looks set to remain relatively unchallenged by competition.

"We are in the middle of that right now," Scott Lassman, a partner at the law firm Goodwin, said in an interview with BioPharma Dive. "A period where there's not going to be any regulatory action or any development of these types of products."

In an email to BioPharma Dive, an FDA spokesperson said the agency is simply interpreting the law and its intent. The spokesperson added the agency has met with sponsors of proposed products that could be affected to discuss their specific development programs.

Even as the regulatory wrinkle persists, Gottlieb has touted the agency's approach toward biosimilars, calling the 2020 change-over a "watershed moment for insulin products" in a Dec. 11 speech in Washington. He predicted a future in which interchangeable biosimilars of insulin help to improve patient access and bring down prices. The agency head also noted drugmakers have known about this transition for years, saying "they've had time to prepare."

But when the 2020 deadline passes, biosimilar insulin won't magically appear. Companies which subsequently file for approval of biosimilar insulin would need to wait months more for a regulatory decision.

Not many companies appear ready to do even that. A review of the pipelines of leading generic and biosimilar drugmakers found them particularly thin on copycat insulin. While Mylan has a version currently under review via the older framework, several other major biosimilar players did not list any insulin products in development.

Officials at the American Diabetes Association declined to comment on the issue, but flagged a burdensome regulatory environment and manufacturing challenges as key factors crimping competition in written congressional testimony last year based on the findings of a group of ADA staff and other experts.

Biosimilars versus follow-on biologics

Suppose you're a pharma exec with an copycat insulin in your drug pipeline. Today, your R&D head comes into your office and gives good news — clinical testing is done and the therapy is set to be submitted for regulatory approval.

Your drug could feasibly reach the market under two legal frameworks.

Framework A: The Hatch-Waxman pathway, which would treat your product as a "follow-on biologic," not legally a biosimilar but functionally analogous.

But there's a risk: The FDA has stated it won't approve such applications for insulin products after March 23, 2020. If your product submitted via Hatch-Waxman legal pathways doesn't get a regulatory OK by then, you'll have to withdraw and start over with Framework B, which means paying more user fees and waiting even longer for approval.

Framework B: The biosimilar pathway, created in 2010 through the Biologics Price Competition and Innovation Act.

Your drug would be treated as a biosimilar, if approved. However, biosimilars, like generics, need reference products. And all the branded insulin products were approved under Framework A, Hatch-Waxman, meaning you can't use those as a reference product for a biosimilar until the FDA converts those licenses on March 23, 2020. Effectively, you can't submit your copycat insulin as a biosimilar until then.

Neither framework is of much use to you today.

With Framework A, the Hatch-Waxman route, you risk the very real possibility the FDA won't reach a decision by that 2020 deadline, leaving you to resubmit after wasting time and money.

Submitting via Framework B isn't possible now because the reference product — insulin — is licensed under a different regulatory pathway.

"Right now, nobody can submit a biosimilar application for any of these products because there's no approved reference products, and there won't be until 2020," Lassman said.

This Catch-22 logic creates a regulatory dead zone that generic drugmakers have complained about since the FDA first said it would interpret the law this way in 2016.

Then, generic drugmakers and their trade lobby raised the issue to the agency via public comments.

Mylan, for example, stated the company strongly opposed the agency's plan, warning it "will have a devastating effect on current development programs for many important protein products, including insulin, thereby impairing competition from lower-cost biological medicines, increasing healthcare costs in the United States, and, most importantly, limiting patient access to affordable biological products."

And the generic industry's main trade group also argued in 2016 this policy would "severely impede patient access to affordable biologics, contrary to congressional intent."

Mylan and the Association for Accessible Medicines declined to comment to BioPharma Dive.

FDA has had the chance to alter its interpretation, but the finalized guidance this past December did not fix the regulatory dead zone, legal experts told BioPharma Dive.

The FDA did state, however, it would administratively convert and continue reviewing supplemental applications, but won't do that for original applications. Lassman, the Goodwin lawyer, called this aspect of the solution "a little strange."

"It seems to me that if they have authority to do the first, they also have authority to do the second," he said.

An FDA spokesperson noted this decision was based on the agency's interpretation of the law's intent, which specifically refers to approved applications. This supplemental transition "should provide business certainty to application holders who seek to make changes to their products close to the transition date," the agency spokesperson stated.

Chad Landmon, a partner at Axinn, Veltrop & Harkrider, said he saw no way the regulator could have completely avoided a transition gap, as drug applications have differing requirements under each framework, making it a problem that Congress would have to fix.

"It's a very weird situation where you have these products that should have been biologics but were treated as drugs because they are old," Landmon said in an interview with BioPharma Dive. "There was always going to be a kind of dead zone."

Dominant players under pressure

Three pharmas make up nearly the entire U.S. insulin market: Novo Nordisk, Eli Lilly and Sanofi.

Patient advocates, academics, politicians and legal authorities have increasingly focused on the practices by these insulin makers to protect and maximize their control over the market.

In November, the bipartisan co-chairs of the Congressional Diabetes Caucus attacked a system that features increasingly high list prices and correspondingly greater rebates to payers as "unfairly putting insulin out of reach, placing millions of lives at risk."

Just a few weeks before that congressional report, Minnesota's attorney general sued Sanofi, Lilly and Novo Nordisk, claiming the companies raised prices on their insulin therapies to keep rebate levels high for pharmaceutical benefit managers as well as to boost their own profits.

The situation for patients has fueled the political and legal uproar over insulin affordability.

One survey of about 200 patients at an urban diabetes center published in JAMA in December found one in four patients skimped on their prescribed insulin because of cost. A report from The Wall Street Journal from around the same time chronicled patients rationing their insulin, launching crowdfunding pages to afford treatment or even attempting to make their own therapies in acts of desperation.

While biosimilars have been touted as a vehicle for competition, pressuring branded drugmakers on price, the U.S. has seen slow uptake of the copycat biologics in general. Only a handful of biosimilars have reached American patients.

A large part of that slowness is tied to extensive patent protections around biologic drugs that limit the ability of biosimilar companies to enter markets.

Thin pipeline for rivals

Even as the FDA has talked up the opportunity for insulin biosimilars to ease concerns over access, the pipeline for potential competition in the future appears thin.

In October, Merck & Co. and Samsung Bioepis dropped development of a biosimilar of Sanofi's Lantus. Other major biosimilar players, including Pfizer, Amgen, Coherus BioSciences and Celltrion, do not list insulin candidates in their pipelines.

Two insulin copycats have been approved and launched in the U.S. under the Hatch-Waxman pathway. But both are made by big insulin players: Lilly sells a follow-on biologic of Sanofi's Lantus, and Sanofi does the same with Lilly's Humalog.

With generics, serious pricing pressure typically doesn't come until there are multiple copies on the market, FDA research has found.

Elsewhere, Mylan and Biocon have developed Semglee, a biosimilar of Sanofi's Lantus. But while Semglee has already gained European approval, the FDA previously rejected the copy and is now reviewing Mylan and Biocon's resubmission.

The companies have submitted via the Hatch-Waxman pathway, putting them at risk of getting caught in the regulatory dead zone.

For those companies that attempt to stick it out, Lassman said he wouldn't be surprised if a biosimilar maker sued the FDA if they face the potential need to pull their application and refile.

"I'd be interested to see, as this 2020 date nears, is anyone actually going to file a lawsuit against FDA," Lassman said. "I do think [the FDA is] on pretty shaky grounds from a legal point of view and from a policy point of view."