Biologic drugs—pharmaceuticals produced from living organisms—are at the forefront of medical innovation and hold tremendous potential to improve and save lives. Unfortunately, their pricing has been a driver of rapidly escalating, unsustainable drug costs.
Congress recognized the need for competition to slow price growth, and in 2010 passed the Biologics Price Competition and Innovation Act. That opened the door to the development of biosimilars—lower-cost versions of brand-name biologics that are interchangeable in clinical efficacy and safety. Yet nearly 10 years later, brand-name manufacturers are using a combination of coercive, anticompetitive tactics to box out biosimilars and maintain their monopolies. If policy makers want to reduce drug prices and maintain patient access, it’s time to end the manipulative practices that take choice away from physicians and patients.In 2017 biologic medicines made up 2% of U.S. prescriptions but 37% of Americans’ drug spending. In the absence of direct competition, prices on products such as Enbrel, launched in the 1990s at about $10,000 a year, were raised aggressively—and with impunity—to more than $60,000 a year. Patients are now paying up to 20% of these drugs’ list prices as copayments.It doesn’t have to be this way. In Europe biosimilars have been rapidly adopted, offering the benefits of biologics at a much lower cost to patients and the health-care system. Given the choice, physicians and patients choose value.Earlier this year, my company, Coherus BioSciences , brought to market Udenyca, a biosimilar of Amgen ’s Neulasta, which stimulates white-blood-cell production for cancer patients receiving strong chemotherapy. Our product is equally effective and priced 33% below the list price of Neulasta. Launched in January, Udenyca is off to a good start, with strong acceptance by oncologists and their patients, and it is substantially reducing costs.
Not everyone is happy about that. A cheaper option for patients cuts into Amgen’s profits. In response to our success, Amgen made a deal with UnitedHealth Group , the nation’s largest health insurer, and its pharmacy benefit manager, OptumRx, that would force physicians to prescribe the most expensive product, Neulasta, blocking the two less-expensive biosimilars. That’s great for Amgen, OptumRx and UnitedHealth Group, but terrible for patients, health care providers and the taxpayers who fund Medicare. All will pay higher prices than they should.
Amgen’s tactics aren’t original—they’re adapted from the playbook Johnson & Johnson used to block biosimilar competition to its Remicade therapy. Johnson & Johnson provides insurers with back-end rebates on a range of their products in return for the insurer’s blocking physician and patient access to less-expensive options. Johnson & Johnson is happy to collect its artificially inflated prices, and the insurer and pharmacy benefit manager are happy to pocket “savings” they’ve negotiated. Meanwhile, competition and choice wither, and the rest of us get stuck with the bill. Monopolies benefit only the monopolists.Congress and the Food and Drug Administration have done their part by enabling the creation of biosimilars, improving the regulatory-approval pathway at the FDA, and providing a framework for addressing patent issues. The problem is backroom, bundled-rebate contracts between Big Pharma, major insurers and pharmacy benefit managers.Policy makers are taking notice. Former FDA Commissioner Scott Gottlieb said Amgen is “using their market power to thwart an avenue to competition.” Secretary of Health and Human Services Alex Azar says that favoring high-rebate drugs over biosimilars creates “perverse incentives” and “costs seniors and taxpayers more.”Washington has the opportunity—and obligation—to ensure that biosimilars are allowed to do the job they were intended to do: provide a check on Big Pharma’s big prices.Earlier this month, the nonprofit advocacy group Patients for Affordable Drugs Now called on the Federal Trade Commission to investigate coercive bundled-rebate contracts that keep patients in the dark and force them to purchase more-expensive products when cheaper options exist. The FTC has every reason to investigate. Patients need access to products they can afford, and these secret contracts keep prices high and prevent doctors from maximizing patient benefit.Washington wants to lower drug prices, and that’s the right aim. There’s an easy first step: Allow biosimilars to compete. – WSJ