Costly Drugs Known as Biologics Prompt Exclusivity Debate
"A bitter Congressional fight over the cost of superexpensive biotechnology drugs has come down to a single, hotly debated number: How many years should makers of those drugs be exempt from generic competition?" The New York Times reports. "At issue are such drugs as Biogen Idec's Avonex, for multiple sclerosis, which can cost more than $20,000 a year; Genentech's Avastin for cancer, which can cost more than $50,000; and several Genzyme drugs for rare diseases that can cost $200,000 a year or more. Because they are hard to copy exactly, they have not been subject to the generic competition that eventually knocks down the price of drugs like Lipitor and Prozac."
"But now Congress, as a cost-cutting piece of the overall health care effort, is preparing legislation to enable the Food and Drug Administration to approve copycat versions of biologic drugs. That could save consumers, insurers and the government billions of dollars in the coming years. The trick is to allow competition without undermining the financial incentives the pharmaceutical industry needs to undertake the risky job of developing the next drugs for cancer and other diseases." Pharmaceutical trade groups say they require a 12-14 year exclusivity period in order to recoup their investments, "but consumer groups, insurers, employers and generic drug companies say anything more than five years would eviscerate any potential savings from the new competition. So far, the biotechnology industry appears to be winning. The Senate's health committee, for example, has agreed to 12 years of exclusivity. In the House, a bill that provides at least 12 years of exclusivity has many more co-sponsors than one that would provide five years. The Obama administration has said that seven years would be a 'generous compromise.'"
But The Times reports that "in reality, neither the threats to innovation nor the potential savings from generic competition are as great as claimed" because of patent rules that often last longer than an exclusivity period. But an exclusivity period could affect biologics that have already been on the market for over a decade. "As for cost savings, the Congressional Budget Office has estimated that generic biologics might save the government only about $10 billion in the next 10 years," but "the real savings might come more than 10 years out, as new biologic drugs appeared and as biologics represented an increasingly greater part of overall spending on drugs" (Pollack, 7/21).This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.