In the latest bid to lower drug costs, a congressional lawmaker has introduced a bill to shorten the exclusive amount of time that companies would have to market expensive biologic medicines from 12 years to seven years.
By reducing the exclusivity period, other manufacturers would be allowed to more quickly market lower-cost versions, which are known as biosimilars, and presumably help reduce health care expenses. The bill, called the Price Relief, Innovation, and Competition for Essential Drugs Act, was introduced on Thursday by Janice Schakowsky, a Democrat from Illinois. A companion bill, by the way, is expected to be introduced by Senators John McCain of Arizona and Sherrod Brown of Ohio.
Biologics, which are typically injected or infused, are used to combat multiple sclerosis and different forms of cancer, among other illnesses. But they cost tens of thousands of dollars, if not more, per year. By contrast, lower-cost biosimilars are forecast to cost 10 percent to 30 percent less, although this is a moving target since drug makers have begun raising prices on biologics as competition nears.
“Across the country, the American people are struggling to deal with astronomical prescription drug costs for life-saving medicines,” Schakowsky said in a statement. “Nowhere are those costs more excessive than for biologic drugs. These drugs already come to market at very high prices, yet the manufacturers often increase the prices every year … By reducing the period of exclusivity from 12 years to seven, we can increase competition by allowing for the development of generic versions of these expensive drugs.”
She cited data from the US Department of Health and Human Services showing that reducing the period of exclusivity would save taxpayers nearly $7 billion over the next ten years (see page 137).
So far, just two biosimilars have been approved in the United States, but many more are expected. Meanwhile, spending on biologics nearly doubled to more than $128 million last year from 2010, and accounted for more than half of the rise in overall drug spending over the past five years, according to the IMS Institute for Informatics. For now, IMS estimates biosimilars may save health systems in the European Union and the US anywhere from $50 billion to $110 billion by 2020.
Even so, the 12-year marketing exclusivity has been a bone of contention ever since it was introduced as part of the Affordable Care Act. Curiously, the White House has regularly proposed shaving five years off the exclusivity period in its annual budget reports as a way to save federal health care dollars (see page 74), although the Obama administration has never taken concrete steps to implement the notion.
In fact, the Obama administration has also championed the Trans-Pacific Partnership, a pending trade deal between the US and 11 Pacific Rim nations, which calls for a 12-year exclusivity period in the US, although there would be shorter periods in some countries. But the pharmaceutical industry has staunchly defended 12 years of exclusivity as necessary for protecting its R&D activities.
“The proposal to reduce data protection for innovator biologics would reduce research and development investment in the US, resulting in lost jobs and slowed development of new treatments and cures for the most costly and challenging diseases,” a spokesman for the Pharmaceutical Research and Manufacturers of America, the industry trade group, wrote us.
Separately, Jeanne Haggery, a senior vice president for federal government relations at Biotechnology Innovation Organization, another trade group, said in a statement that “this legislation is a short-sighted attempt to undercut the critical work that innovator companies are doing and would, if enacted, deprive patients of many new treatments and cures in the future.”
For this reason, the bill is likely to encounter considerable opposition.
Meanwhile, one consumer advocacy group that supports reducing the 12-year exclusivity period argued that the bill doesn’t go far enough and should be strengthened to create exceptions.
“There are always going to be times when the government will want or need to break the exclusivity, whether for ethical reasons, anticompetitive behavior, the issuance of a compulsory license, or other reasons,” said Andrew Goldman, policy and legal affairs counsel at Knowledge Ecology International. In certain circumstances, a government can override a patent and issue a compulsory license when medicines are unaffordable.