For­get biosim­i­lars. Pe­ter Bach and Mark Trusheim be­lieve price con­trols are the bet­ter way to rein in bi­o­log­ics prices

The prover­bial so­cial con­tract that drug­mak­ers of­ten cite to de­fend pre­scrip­tion drug prices hinges on the im­age of a patent cliff: Af­ter a pe­ri­od of ex­clu­siv­i­ty that al­lows de­vel­op­ers to re­coup R&D costs, any treat­ment — even those with ex­or­bi­tant price tags — even­tu­al­ly suc­cumb to gener­ic com­pe­ti­tion that in­evitably brings down its cost, if not ren­der it ob­so­lete.

That mod­el has large­ly held true for small mol­e­cule drugs. But out­spo­ken pol­i­cy re­searchers Pe­ter Bach and Mark Trusheim, along with two of Bach’s as­so­ciates at the Memo­r­i­al Sloan Ket­ter­ing Can­cer Cen­ter, are ar­gu­ing that the new gen­er­a­tion of bi­o­log­ics may need an ex­tra push down that cliff, and the force of biosim­i­lars won’t be enough.

Bi­o­log­ics, they write in a two-part blog­post in Health Af­fairs, are fun­da­men­tal­ly dif­fer­ent from small mol­e­cules, cre­at­ing nat­ur­al mo­nop­o­lies that are dif­fi­cult to over­come with com­pe­ti­tion-based price re­duc­tions:

While the mo­nop­oly held by in­no­va­tor small mol­e­cules is a prod­uct of gov­ern­ment poli­cies, in­no­v­a­tive bi­o­log­ic ther­a­pies pos­sess in­trin­sic sci­en­tif­ic un­cer­tain­ties that make cre­at­ing repli­cas dif­fi­cult, cost­ly, slow, and risky. Com­peti­tors to brand­ed bi­o­log­ics are called biosim­i­lars rather than “bio-iden­ti­cals” or gener­ics to re­flect this dif­fer­ence.

Mark Trusheim

Giv­ing up en­tire­ly on biosim­i­lars, Bach, Trusheim (of MIT Sloan), Pre­ston At­te­ber­ry and Jen­nifer Ohn pro­pose a reg­u­la­to­ry ap­proach to rein­ing in bi­o­log­ics costs that they say can gen­er­ate $250-$300 bil­lion of net sav­ings, while in­cur­ring one-time costs of $10-$20 bil­lion over five years. Their es­ti­mates for sav­ings are based on “the cur­rent 12-year ex­clu­siv­i­ty pe­ri­od and an as­sump­tion that dis­counts ap­proach the tra­di­tion­al gener­ic dis­counts of 70-90 per­cent,” while the one-time costs go to­ward com­pen­sat­ing biosim­i­lar firms.

The pol­i­cy would re­quire in­no­va­tor bi­o­log­ic man­u­fac­tur­ers to low­er their prices af­ter the pe­ri­od of mar­ket ex­clu­siv­i­ty — a price set by an in­de­pen­dent body that takes in­to ac­count the re­port­ed cost, a markup, a de­fined prof­it mar­gin, re­turn on cap­i­tal and so on.

The au­thors an­tic­i­pat­ed some push­back. You can be sure that fresh­ly re­tired FDA com­mis­sion­er Scott Got­tlieb was among the first to de­fend con­tin­ued pol­i­cy­mak­ing around biosim­i­lars.

A vo­cal cham­pi­on of biosim­i­lars as a means of low­er­ing drug prices, Got­tlieb has pre­vi­ous­ly lam­bast­ed a “rigged pay­ment scheme” on the in­sur­ance and phar­ma­cy ben­e­fit man­agers side that hin­der mar­ket pen­e­tra­tion for biosim­i­lars.

The Biosim­i­lar Coun­cil, a di­vi­sion of the gener­ic drug­mak­er coali­tion known as the As­so­ci­a­tion for Ac­ces­si­ble Med­i­cines, told Bio­Cen­tu­ry that “mar­ket­ed biosim­i­lars cur­rent­ly av­er­age 47% off the brand bi­o­log­ics’ price” and aban­don­ing it al­to­geth­er would be “toss­ing out the ba­by with the bath wa­ter.”

Some al­so took is­sue with the premis­es of the ar­gu­ment.

As a no­table talk­ing point of Pres­i­dent Don­ald Trump’s plan for low­er­ing drug prices — with big bio­phar­ma play­ers like Pfiz­er and Bio­gen dou­bling down on their in­vest­ments — biosim­i­lars are un­like­ly to go away any time soon. But Bach’s will be one of many ideas to come as politi­cians and com­pa­nies alike fran­ti­cal­ly search for ways to tam­per the roar­ing de­bate around high pre­scrip­tion drug prices, in which ex­pen­sive bi­o­log­ics play an ever en­larg­ing role.


Im­age: Pe­ter Bach at an End­points pan­el, Jan­u­ary 2019.

John Hood [file photo]

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