A bitter congressional fight over the cost of super-expensive biotechnology drugs has come down to a single, hotly debated number: How many years should makers of those drugs be exempt from generic competition? But what few people in Washington seem to recognize is that this magic number may ultimately not matter as much as the most vitriolic debaters insist.
At issue are such drugs as Biogen Idec Inc.’s Avonex, for multiple sclerosis, which costs at least $20,000 a year; Genentech Inc.’s Avastin for cancer, which costs at least $50,000; and several Genzyme drugs for rare diseases that can cost $200,000 a year or more.
These drugs, known as biologics, are complex proteins made in vats of living cells. Because they are hard to copy exactly, they have not been subject to the generic competition that eventually knocks down the price of drugs such as Lipitor and Prozac. Pills such as Lipitor, known in the industry as small-molecule drugs, are made from simple chemicals whose recipes are easy to reproduce.
Complex affair: Vials of Avonex, an expensive multiple sclerosis drug, from Biogen Idec Inc. Bloomberg
But now Congress, as a cost-cutting piece of the overall health care effort, is preparing legislation to enable the Food and Drug Administration (FDA) 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. That is where the magic year number comes in. Trade groups for big pharma and biotech firms say that to recoup their investments, they need an exclusivity period that would last 12-4 years from the time FDA approves a drug for sale.
Consumer groups, insurers, employers and generic drug firms say anything more than five years would eviscerate any potential savings from the new competition. But in reality, neither the threat to innovation nor the potential savings from generic competition are as great as claimed.
For starters, whatever the exclusivity period, biologic drugs would also continue to be protected from copycats by patents. And in many cases, the patent protection would last longer than the exclusivity period, making the congressionally mandated exclusivity a moot point.
Because it is harder and costlier to make biologic drugs than it is to copy pills, fewer generic competitors are likely to enter the fray. Many experts, including the Federal Trade Commission, expect price declines of more like 10-40% in biologics.
©2009/The New York Times