Biologic drugs—pharmaceuticals produced from living organisms—are at the forefront of medical innovation and hold tremendous potential to improve and save lives. Unfortunately, their pricing has been a driver of rapidly escalating, unsustainable drug costs.

Congress recognized the need for competition to slow price growth, and in 2010 passed the Biologics Price Competition and Innovation Act. That opened the door to the development of biosimilars—lower-cost versions of brand-name biologics that are interchangeable in clinical...