For far too long, our country has paid far too much for biologic medications. These are the most costly medications available, ranging in price from $1,000 to more than $50,000 per treatment. In some cases, these drugs cost hundreds of thousands of dollars per year per patient.
And these drugs aren’t experimental; they are important and treat very real chronic conditions that touch all of us – cancer, rheumatoid arthritis, multiple sclerosis and others.
The Rising Spend on Specialty Medications
We forecast that the country will spend roughly $114.7 billion on specialty medications – mostly biologics – in 2014. At that point, $4 out of every $10 the country spends on prescription drugs will be spent on these complex medications that are only used by 2% of the population. Slightly more than half of this spend will occur in the pharmacy benefit; the rest in the medical benefit.
Despite International Success, Biosimilars Still Face U.S. Delays
Patients in Europe and Asia have taken advantage of biologics’ generic counterparts – biosimilars – which have lowered treatment costs there by as much as 40%. It proves a very easy equation: increased competition means lower prices.
Unfortunately for all of us, these more affordable biosimilars are not yet available in the U.S. The U.S. took the first step toward biosimilars in 2010, when the Biologics Price Competition and Innovation Act (BPCIA) was enacted. Since then, the Food and Drug Administration has been working to build this pathway so that it works for patients, physicians and payers across the country.
I believe there is opportunity to improve this biosimilar pathway, and that that the country will benefit greatly from doing so.
$250 Billion of Projected Savings – From Just 11 Biosimilars
At Express Scripts, we recently developed a financial model projecting that the U.S. would save $250 billion between 2014 and 2024 if just a handful of biosimilars were to enter the market.
Projected United States Spend Biologics
This estimate is based on the 11 existing biologic drugs that are the most likely candidates for biosimilars in the next 10 years. The assumptions were based on conservative estimates of utilization, cost and consumer inflation. By the end of 2024, none of the drugs in this group will be patent protected, unless extensions are granted.
The savings from a biosimilar pathway is likely to grow significantly greater when an additional set of major biologic drug patents expire between 2026 and 2028.
Challenges Ahead for Biosimilars
Roadblocks arise from both the nature of biologic drugs and the recent FDA regulatory pathway established for the approval of biosimilar drugs. Being a biologic means that the drug is manufactured using living organisms rather than by chemical reactions. Biologic drugs are very large, complex proteins. Due to natural variability in living cells, uncontrollable small differences are inevitable in both the biological manufacturing processes and the resulting molecules. Traditional drugs are chemically synthesized, they are much smaller molecules and they can be manufactured with virtually zero variability.
Right now, large biotech manufacturers – the makers of brand-name biologics – are lobbying to preserve their drugs’ market share at the expense of chronically ill patients. These groups have introduced bills in multiple states that would create obstacles for the substitution of their biologic drugs, thus creating impediments for biosimilar use. These companies claim that the purpose of their legislation is to protect patients from unsafe medications. The real motive, however, is to create barriers for competition. The result of these bills would be to preserve profits for the large biotech manufacturers and higher drug costs for the American public.
The FDA will not approve an unsafe biosimilar. In fact, when the FDA does approve biosimilars, these products by statute will have demonstrated the same safety profile as the original biologic drug.
As soon as possible, let’s ensure that Americans can start taking advantage of these more affordable, life-saving medications.
Steve Miller, MD, is presenting these biosimilar forecasts today at the Express Scripts Outcomes Symposium in Orlando, Fla.
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