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Biologic Drugs: Why No Generics?

Amid the furor surrounding health care reform, a quiet but intense struggle is being waged over a cutting-edge form of medicine that is revolutionizing treatments for cancer, arthritis, multiple sclerosis and other conditions.

At issue are biotechnology drugs—commonly called biologics—that are complex products made from living organisms.

Although these drugs can sustain and improve the quality of life for many patients, they are expensive—sometimes costing $100,000 or more annually. Insurance coverage varies widely, and as a result, many patients can’t afford them.

No generic alternatives to biologics

Currently, there are no generic alternatives—often called biosimilars—to biologics in the United States. The Food and Drug Administration lacks authority to approve them because Congress has not addressed the issue.

As part of the health reform debate, Congress is considering how long biologics should be protected from generic competition. Traditional drugs are now given up to eight years of exclusivity before generics are allowed on the market.

Committees in the House and Senate have adopted a 12-year exemption period, but the legislation is tied up with the larger health care package.

Advocacy groups such as AARP, employers and insurers want a shorter exclusivity period, arguing that the sooner biosimilar drugs are allowed, the greater the savings for consumers and the government, which spent $13 billion on biologics through Medicare in 2007. They point to the widespread use of generic drugs, which are chemically similar to brand-name drugs, as evidence of potential savings.

Generic medication savings

Generic medications saved an estimated $121 billion in 2008, according to the Generic Pharmaceutical Association.

In Georgia, 51 percent of residents’ prescriptions were filled with generics in 2005, the latest year for which statistics were available, according to a recent AARP report. Industry officials say that figure is undoubtedly higher now. The national generics average in 2008 was about 70 percent of prescriptions.

Prescriptions for biologics are certain to grow in the coming years.

Biologics now represent 17 percent of prescription drug spending, but just 2 percent of the prescriptions filled, said Steve Miller, M.D., chief medical officer for Express Scripts, a pharmacy benefit management company.

A matter of exclusivity

Biosimilars would produce estimated savings to the federal government of up to $12 billion over the first 10 years after legislation took effect, the nonpartisan Congressional Budget Office reported. But greater savings would result if the 12-year exclusivity window were reduced, the CBO said.

President Obama has called for a seven-year protection window, and many lawmakers have pushed for five. AARP also has called for a five-year limit but endorsed a proposal for seven years.

The biotech and pharmaceutical industries argue for a 12-year protection period. They cite the $1.2 billion cost of developing a typical biologic and say a shorter exclusivity period would curtail investment in biotech firms that produce innovative medications.

“A lot of our members say they can’t afford them,” said Nora Super, AARP director of federal government relations for health and long-term care. Making less expensive versions of biologics “could mean the difference between life and death.”

The Federal Trade Commission issued a report recently that said no exclusivity period is needed to bolster the patent protection for biologic drugs partly because the cost of making them is so steep that only the largest companies will participate. An AARP Rx Watchdog report examined the FTC report and listed what it calls seven myths surrounding the debate.

The patient part of the equation

Bill Simcox would welcome more price competition.

Simcox was diagnosed with breast cancer last year. His treatment included Herceptin, a biotechnology drug commonly prescribed for that condition. It cost $5,000 a month.

“I’m barely making enough money to keep my house and buy groceries,” said Simcox, 58, of Port Charlotte, Fla. He stopped taking Herceptin in June because of the cost.

John Daggett, 53, takes Avonex, a biologic, for multiple sclerosis. Daggett, of New York City, is disabled and will start on Medicare this fall. But he’ll quickly fall into the program’s Part D “doughnut hole” for drug coverage. He estimates that his annual spending on Avonex alone, not counting his other prescriptions, will reach $8,000.

For Daggett, Avonex prolongs his ability to live independently by reducing the severity and frequency of the flare-ups of his disease. “It keeps me walking,” he said.

A generic alternative “would be cheaper for me and the U.S. government,” he said.

Andy Miller is an Atlanta-based freelance writer who specializes in health care issues.