Billions at stake in ‘biologic’ medicines

Expensive medicines can make lifesaving treatments unaffordable. We allow drug companies to sell at monopoly-level prices to help them recoup investment, but these high prices come at the expense of our welfare. Fortunately for traditional drugs, generic competition can quickly and dramatically reduce prices after the monopoly protection provided by patents expires.

In contrast to traditional drugs — which are small molecules produced chemically — biologics are a different class of medicines made from living cells. They include vaccines, antibodies, enzymes, stem cells and blood components, and are currently used in therapies for arthritis and cancer. They often cost 10- to 20-fold more per year than traditional drugs, making up about one in eight prescriptions.

There is not yet a mechanism for generic competition in biologics, but it could reduce prices by 20 percent to 40 percent and save $71 billion in one decade.

Damaging legislation embedded in the U.S. Senate’s Committee on Health, Education, Labor and Pensions and the U.S. House Energy and Commerce Committee health care bills inordinately delays generic biologics by creating 12 years of monopoly price protection after FDA approval, independent of patent protection!

The legislation also leaves open the possibility to “evergreen” monopoly price protections and further postpone a generic market.

In contrast, monopoly prices for traditional drugs are only protected for 5 years after FDA approval.

Pharmaceutical companies and other supporters of the flawed legislation contend that biologics are more complicated than traditional drugs and need more financial incentives to promote innovation.

However, biologics only require on average seven months more time to develop, and the Pharmaceutical Research and Manufacturers of America’s own cited studies show that the cost of developing biologics is similar to that of traditional drugs .

In June 2009, the Federal Trade Commission recommended zero years extra monopoly protection for biologics because it concluded consumers will be reluctant to trust generic biologics, allowing the brand name company to charge higher prices even after patents expire. Current evidence supports this.

Fortunately, U.S. Rep. Henry Waxman, D-CA, and U.S. Sen. Sherrod Brown, D-OH, introduced legislation offering new biologics 5 years of monopoly protection, similar to what is offered for small molecules.

But Sen. Kay Hagan, D-N.C., is a sponsor of the poor legislation, very popular with the pharmaceutical industry, that sets 12 or more years of monopoly protection. This would mean billions of extra dollars from consumers flowing to large companies, whose advertising budgets are on average about twice their research and development expenses. And since early-stage biologics research is government funded, we are already paying in tax dollars even before the drugs enter the market.

This legislation is not only a domestic problem — long periods of high prices are of serious concern to global health, particularly to developing countries.

Commonly used biologics currently cost between $20,000 and $200,000 per patient, per year. Extending monopoly prices for seven years beyond the protection given to traditional drugs, despite evidence that this extension is not justified, is an irresponsible gift to pharmaceutical companies and is an unjustified burden for all of us.

 

Derek Lundberg is a Ph.D student in Genetics and Molecular Biology.  Contact him at derek.lundberg@gmail.com.