Friday, August 28, 2009

Brief thoughts on biologic drugs

Biologics are molecules produced in living organisms, as opposed to chemically like regular drugs. They often target rare diseases, and they're often the only treatment available for that disease. From a cost perspective, it's obviously better to have multiple competing drugs, and preferably one or more of them are generics - it brings costs down.

Right now, there is no legal pathway to allow generic biologics in the US, whereas pharma drugs go off patent in a number of years. There are two bills in the House of Representatives that would reverse that. One would grant 7 years' exclusivity, the other would grant twelve. The latter bill seems to be in favor. However, Morningstar, a stock analyst firm, argues that even 8-10 years' exclusivity is far too long. One factor at play is that the companies can make minor adjustments to the formula, a process known as evergreening, and legally have a brand new drug every time they do this. This is not acceptable.

Generic Biologics Face Uphill Battle
Generic Biologics Face Uphill Battle -- Part 2

A Marketwatch article notes that Europe has biogenerics legislation. However, due to manufacturing difficulties, biogenerics are only about 20% cheaper on average than the originals, although they will get cheaper as manufacturing technology improves.

Pharma spending accounts for about 10% of US spending. However, biologics are a growing market. People who need them face high costs (insurers often make you pay a certain percentage of the price of a drug, as opposed to a dollar amount; this is coinsurance, as opposed to a copayment). Those who go broke end up on Medicaid, and then the government picks up the tab. Again, the current proposed solution was heavily influenced by the pharmaceutical lobby and is absolutely unacceptable.

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