Economic Impact
Biologic drug development is on the rise, and more pharmaceutical companies are investing in biopharmaceuticals. In 2013, eight of the top 15 best selling drugs were biologics according to a list compiled by Genetic Engineering News. Humira, a TNF blocker that treats rheumatoid arthritis with monoclonal antibodies, topped the list with an estimated $10.6 billion in sales. This is a 15% increase from the $9.2 billion sales in 2012. Biologics are expected to overtake conventional chemical drugs in the near future. However, biologic drugs are still currently more expensive than conventional drugs. A report by the Federal Trade Commission stated that “Americans spent $286.5 billion for prescription drugs in 2007; $40.3 billion of which was for biologics”. This has led to the development of biosimilars, or “generic” versions of biologics that are similar to the original drug in function but not exactly identical. The Biologics Price Competition and Innovation Act (BPCI Act) of 2009 describes the legal pathway for the approval of biosimilars in the US. The act includes a twelve year period of exclusivity during which generic firms are barred from producing biosimilars. In order to be approved, biosimilars also have to undergo testing to show that the product is “highly similar” and “interchangeable” with the original drug.
As the average biologic takes ten to fifteen years and $1.2 billion of research, the long period of exclusivity allows pharmaceutical companies to recover from the costs of development and provides incentive for further investment and research. However, consumer groups and patients’ rights advocates argue that such a long exclusivity period would essentially give drug companies a monopoly on biologics and deny patients access to potentially lifesaving drugs. Cheaper alternatives are necessary to ensure that sick patients receive proper treatment for their conditions. According to the Generic Pharmaceutical Association, generics account for 72% of prescribed drugs and only 17% of the total costs. Generic brand drugs also benefit average Americans, as “sav[ing] the health care system $1 billion every three days” (Citation 55).
Another issue is the naming of biologics. As biologic drugs are highly complex, it is impossible for generic companies to manufacture an exact copy of the original biologic. Organizations such as BIO and PhARMA have joined forces in advocating the use of unique names for biosimilars to distinguish them from their brand-name counterparts. Developing a separate naming system for biosimilars would also provide a method of tracking the biosimilars and evaluating their performance. Opponents argue that this would “to impose a de facto post patent monopoly” and hurt consumers (Citation 36). As the market for both biologic drugs and biosimilars expands, these economic issues must be addressed to establish an orderly system in which the industry can develop and flourish.
(Multimedia Citation 55)