Today’s Managing Health Care Cost Indicator is $5 billion
Everyone is in favor of controlling health care costs, and almost everyone wants to be sure that less expensive bioequivalent generic biologic medications are available. However, don’t tell that to a group of Senators (including Orrin Hatch R-UT and Kay Hagan, D NC) who sent a letter to the FDA asking that brand name biologics be given an extra twelve years of exclusivity for improving their potency or safety. The story is reported in today's Wall Street Journal. This might not sound like a good idea, but it’s a recipe for permanent exclusivity, because at the eleventh year the biotechnology firms would make small changes in the medicine to maintain their patent protection.
There is a lot at stake here.
Here are some of the costs of top biopharmaceuticals as of 2010 (Source: Medical Letter, subscription required):
Beta Interferon (Avonex, Rebif, Betaseron, Extavia)
$35-$36,000 per year
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$43,000 per year
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$40,000 per year
Humira, Enbrel, Remicaid, Cimzia, Simponi
$18,000-$24,000 per year
These drugs are woefully expensive, and one of the places where the Affordable Care Act lives up to its name is the provision to allow generic biopharmaceuticals. The Congressional Budget Office believes that allowing a pathway to generic biosimilar medications could lower the overall cost of all drugs by 2% by 2019. We spent $250 billion on drugs in 2009; 2% of this would be $5 billion. This alone won’t solve the health care cost crisis, but it isn’t chump change.
These Senators are asking the FDA to make a decision that would be very good indeed for the biopharmas – but would increase the future cost of health care. This kind of decision would likely also diminish innovation, as firms tasked their scientists to protect expiring patents, rather than to develop novel treatments.
If we’re serious about controlling health care costs, we shouldn’t undermine the elements of the Affordable Care Act that would save money down the road.