A Monopoly on Biologics will Drain Health Care Resources
Credit: BBC.com
Govind Rangrass, medical student at the University of Michigan Medical School and a member of the AffordableMedsNow.org campaign co-organized by Universities Allied for Essential Medicines, writes about concerns over possible new patenting laws of Biologics in the United States
Due to intense pharmaceutical lobbying pressure, a new U.S. bill will give biotech companies a twelve-year long monopoly on a class of medicines commonly known as biologics.
Reforming health care is high priority for the United States, but a little-noticed provision in the current legislation will funnel billions of tax-payer dollars into the hands of pharmaceutical companies. Due to intense pharmaceutical lobbying pressure, a new U.S. bill will give biotech companies a twelve-year long monopoly on a class of medicines commonly known as biologics. Biologics are a rapidly-growing, new class of drugs and are commonly used to treat medical conditions such as rheumatoid arthritis, diabetes, osteoporosis, Hepatitis C, multiple sclerosis, and cancer. Collectively, these diseases affect over 40 million Americans.[1] Unlike chemical drugs like acetaminophen (marketed as Tylenol), no current approval pathway exists for the production of generic biologics, or “biosimilars.” Generic competition drives down the monopoly prices that companies charge before competition comes to the market. Our health care system depends heavily on generic drugs, whose affordability has saved $734 billion in expenses over the past ten years.[2]
Designed correctly, new approval processes for biosimilars should set up a regulatory process for these drugs, protect patient safety, promote competition to reduce costs to consumers, and incentivize innovation. The current legislation was originally introduced to bring cost-decreasing biosimilars to the market. Unfortunately, it will also grant extensive protected market monopolies to innovator companies developing new biologics. These protections will bar generic companies from manufacturing biosimilars for twelve years after the original drug’s entrance into the market!
Domestic spending on biologics has increased between 15% and 20% annually in recent years, to about $40 billion in 2006.[3] The top five biologics already account for 30% of Medicare Part B spending,[4] and expenditure on the biologic Epoetin alone tops $2 billion.[5] Expensive drugs will burden our health care system and strain state Medicaid budgets, too. Quite simply, we cannot afford to forgo the 25-40% reduction in prices that will be seen with the introduction of generic competition.[6]
As we’ve already seen, innovator companies take advantage of their monopoly on biologics to reap unjustifiably high profits. The status quo sees biologics like Avastin, an anti-cancer drug, and Cerezyme for Gaucher’s disease, costing over $100,000/year and $200,000/year, respectively.[7] From 2003-2008, Epoetin, a biologic commonly used to treat anemia in patients afflicted with cancer or chronic kidney disease, generated $14.9 billion in sales, almost ten times its cost of production.[8] Rheumatoid arthritis and cancer-fighting drugs Enbrel and Rituxan boast even greater profit margins.
When pharmaceutical companies are already given a five year monopoly on conventional drugs, why should our government hand them seven more for biologics? I urge the members of the Senate and House of Representatives who have supported twelve years of data protections, to recognize the negative impacts that this bill will have on access to life-saving medicines and our resource-limited health care system. Amendments allowing five years of data protections for biosimilars will maintain the financial incentives that drive innovations, while saving an estimated $71 billion over a ten year period.[9] To do otherwise is an unwarranted give-away to pharmaceutical companies and exacerbate already excessive healthcare spending.
References:
[1] AARP. Rx Watchdog Report: Shinging a light on the cost and quality of prescription drugs. [Online]. 2009 May. [Cited 2009 Nov 21]. Available from: URL: http://assets.aarp.org/www.aarp.org_/cs/health/205256rxwatchdogmay09.pdf.
[2] Generic Pharmaceutical Association. Savings generated by use of generic drugs during first decade of Hatch-Waxman Act, 1999-2008. [Online]. 2009 May. [Cited 2009 Nov 21]. Available from: URL: http://www.healthpopuli.com/uploaded_images/Savings-Generated-By-Use-of-Generic-Drugs-During-742239.jpg.
[3] Congressional Budget Office Cost Estimate. S. 1695: Biologics Price Competition and Innovation Act of 2007. [Online]. 2008 June 25. [Cited 2009 Nov 21]. Available from: URL: http://www.cbo.gov/ftpdocs/94xx/doc9496/s1695.pdf.
[4] Engel and Novitt, LLP. Potential savings that might be realized by the Medicare program from enactment of legislation such as the Access to Life-Saving Medicine Act that establishes a new cBLA pathway for follow-on biologics. [Online]. 2007 Jan 2. [Cited 2009 Nov 21]. Available from: URL: http://www.therightprescription.org/uploads/en_biologics.pdf.
[5] Steinbrook, R. Medicare and erythropoetin. [Online] 2007 Jan 4. New England Journal of Medicine, 356, p. 4-6. [Cited 2009 Nov 21]. Available from: URL: http://content.nejm.org/cgi/content/full/356/1/4.
[6] Congressional Budget Office Cost Estimate. S. 1695: Biologics Price Competition and Innovation Act of 2007. [Online]. 2008 Jun 25. [Cited 2009 Nov 21]. Available from: URL: http://www.cbo.gov/ftpdocs/94xx/doc9496/s1695.pdf.
[7] Engleberg, A. B., Kesselheim, A. S., and Avorn, J. Balancing innovation, access, and profits – market exclusivity for biologics. [Online]. 2009 Nov 12. New England Journal of Medicine, 361, p. 1917-1919. [Cited 2009 Nov 21]. Available from: URL: http://content.nejm.org/cgi/content/full/NEJMp0908496?query=TOC#T1.
[8] AARP. Rx Watchdog Report: Shinging a light on the cost and quality of prescription drugs. [Online]. 2009 May. [Cited 2009 Nov 21]. Available from: URL: http://assets.aarp.org/www.aarp.org_/cs/health/205256rxwatchdogmay09.pdf.
[9] Miller, S. and Houts, J. Potential savings of biogenerics in the United States. [Online]. 2007 Feb. [Cited 2009 Nov 21]. Available from: URL: http://www.express-scripts.com/industryresearch/outcomes/onlinepublications/study/potentialSavingsBiogenericsUS.pdf.