Biological? Trying To Clip Pharma’s Wings
The behind-the-scenes machinations that will determine the blueprint for allowing generic biologics - or biosimilars, as many call them - is threatening to emerge as a consumer healthcare issue. Or that’s what is hoped by a group of generic drugmakers, insurers, pharmacy chains and major employers.
With lobbying heating up in Washington, the Coalition for a Competitive Pharmaceutical Market has aligned itself with several consumers groups to begin a newspaper campaign that portrays brand-name drugmakers and biotechs as flying into Washington DC to unfairly line their pockets at the expense of patients. A letter was also sent today to the House Energy and Commerce Committee.
The biosimilar issue is, of course, complicated, but a key sticking point is the extent to which brand-name companies will be given exclusivity. A recently introduced bill offers a mininum of 12 years, plus another 2 years for a medically significant innovation. That much exclusivity, the coalition argues, will keep prices high. We don’t pretend to have a solution but, as an aside, we do note that many coalition members have their own company jets.
The coalition’s corporate members include: Aetna, Barr Laboratories, Caterpillar, Chrysler, CVS Caremark, Dow Chemical, Eastman Kodak, Express Scripts, Ford Motor, General Motors, Hospira, Humana, Medco Health Solutions, Mylan Labs, Ranbaxy Pharmaceuticals, Rite Aid, Teva Pharmaceuticals, Walgreen, Watson Pharmaceuticals, Wellpoint and Xerox.
Scott
I hope this coalition is successful; this bill is already several years behind the European regulatory authorities, and the biotech industry has reaped millions at the expense of patients and their healthcare providers. Its worth mentioning that the average biotech drug already sells for handsome premiums, so they are already rewarded for their investments.
Duke University’s Henry Grabowski ran an inflation-adjusted model on previous work for development costs of biologics relative to small-molecule drugs, and he found that the development cost of a biologic was around $1.2 billion, vs. the cost for a small molecule was actually slightly higher - $1.3 billion. Therefore, BIO’s request for 14 years guaranteed exclusivity is absolutely unfounded (should we be surprised that Silicon Valley’s Anna Eshoo, home to Genentech and other biotech startups sponsored such legislation?)
But Congress is starting to feel the pinch of its refusal to move on this issue in the costs allocated to the Medicare Part B drug coverage, so I don’t expect the impasse to last forever.
Jack2
All of those companies have a financial stake in keeping healthcare costs low or directly profiting from biosimilars. None of them have a financial stake in the development of innovative new treatments. It’s not all about the patients on their side of the fence either.
Dr. Sal Giorgianni
Interesting use of Dr. Grabowski’s model. If I am not mistaken with industry tries to use Dr. G’s model to demonstrate the inherent risk and small percentage of non-biologics that actually make profit it is discounted as a bad model full of flaws. When it supports their position it is Gospel. Ah, the wonderful world of Advocacy-Speak.
A more significant issue is this: If price pressure is put on this cutting edge and very difficult EMERGING technology too early it will be a short sighted disaster that will likely have a chilling effect on the investment capital needed to help this entire sector to mature. The long term potential for this technology to become more efficient and cost efficient and thus deliver more moderate prices in the future could be chilled by overly aggressive curtailment of patent protection.
I also find it amusing that the corporate members of this coalition, who are probably providing financial resources for patient advocacy members, have a significant financial stake in curtailing patent protection. Seems like the same sort of coalition approaches that these groups criticize PhARMA for.
Sorry for raining cynicism on this parade.
Former pharma Marketing Exec
Jack2 - good point, it probably isn’t about the patient, but more about keeping drug costs low for the purpose of not having to raise their premiums to their workers who are already feeling pinched, and just might need a pay raise to compensate for an increase in premiums.
Dr. Giorgianni, I am curious, if this coalition wins - so to speak, because in my mind the jury is out if it actually “wins” anything or not, where are you saying they will go? If it gets difficult to fund this emerging technology, then it won’t be emerging anymore - no? But, as I have said before, “something” is more than “less” to someone who doesn’t have “anything”, but to “someone” who has “much” “less” hurts…
I could be wrong, but that would make this new technology, possibly more efficient right from the start ;-)
However, your cynicism is not mis-placed. I just can’t figure something out. If patient groups can’t take money from pharma, and can’t take money from non pharma companies, then who funds patient groups?
Ah, the wicked web we weave when “ourselves” we choose to deceive….
The perfect storm alright…
Paul
Of course, this coalition is of the same ugly managed c are companies that were so well portrayed in Sicko. They are the bane of the healthcare system. Look who’s calling the kettle black?
Nathan
Dr Sal says: “If price pressure is put on this cutting edge and very difficult EMERGING technology too early it… will likely have a chilling effect on the investment capital needed to help this entire sector to mature. The long term potential for this technology to become more efficient and cost efficient and thus deliver more moderate prices in the future could be chilled”
We use a similar argument for small molecule drugs all the time. We need a significant period of exclusivity in order to make the profit motive high enough to take the extraordinary risk of bringing a product to market. However, I disagree with you in this instance. The current system gives biologics a significant advantage over (traditional) small molecule therapies. I would like to see biologics have a defined period of exclusivity similar to that seen for small molecules. (on the order of 10 years?) That would put small molecules and biologics on equal ECONOMIC footing. That way the two technologies can compete head-to-head solely on their scientific (not economic) merits.
Bingo
Jack2,
“None of them have a financial stake in the development of innovative new treatments.”
This is a very basic misconception. Generic drug manufacturers have a big stake in the development of innovative new treatments. Where do you think their pipeline comes from? At the same time, without the spur of generic competition, the incentive to develop new products is greatly reduced. Generic companies are both dependent upon new products and help to encourage their development.
Jack2
Let me clarify.
Under current law, generic manufacturers have no stake in the development of innovative new biologic treatments.
Bingo
Yes, under current law there is no such thing as a generic biological manufacturer, hence they have no stake in development of biological treatments. However, current law is going to change. The question here is how it will change. The industry argument that innovation will be stifled by a pathway for follow-on products is faulty. BIO’s suggested extended data exclusivity would protect the investment made by innovative companies, but certainly wouldn’t spur further innovation as much as the threat of competition to existing products from biosimilars would. It’s a feedback loop and all participants have a stake (albeit indirect) in the inputs from others.
Beverly
A few patients who use these biotech medications testified before Congress that they couldn’t afford them. One woman had to sell her house and live out of her car. For example, Gaucher disease treatment costs up to $430,000 per patient per year and many others can be hundreds of thousands per year as well. Of course, they need generic competition to bring their pricing down as the Federal Trade Commission has stated. I don’t understand how anyone can say that this isn’t about the patient. It’s all about the patient. AARP and Consumers Union are hardly in anyone’s pocket.
HorusCat
A couple of thoughts…
1. Dr. Sal, you are absolutely right. In its zeal to “protect” the patient and lower costs, Congress will probably go to the other extreme, making patent lives that are too short to encourage new venture capital.
2. Patient groups get money from pharma all the time. They can apply for unrestricted educational grants just like clinicians do. Not only that, but we fund patient programs where they bring in a speaker (we pay the speaker honorarium and provide the food), who, despite you skeptics out there, does not discuss any one branded medication. Usually, the speaker addresses something entirely different, such as dealing with common side effects, upcoming research, ADA, etc.
3. Since when are we in the business of deciding when a company has made enough profit? We live in a free market, not a fascist state. This reminds me of Congress grilling the oil companies about their “windfall profits.” Or Obama and Hillary telling me I’m rich and need to share more. A patient always has the option of not purchasing a medication. That sounds crass, but it’s the truth. No one has a RIGHT to any of these meds. Should a moral, compassionate society provide these meds if at all possible? That is a different question.
4. I don’t know about Gaucher disease, but I know that for common biologics like the interferons for MS and HGH, all the companies have patient assistance programs for the indigent. And an MS sufferer wouldn’t have to sell their house in order to be eligible; they simply have to show a certain level of income.