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Biotech Giants Battle to Stop Generic Competition

Economist Dean Baker: 'This is a great example of how the rich rig rules to get all the money'

- Andrea Germanos, staff writer

Biotech giants are fighting tooth and nail to prevent pharmacists from giving generic substitutes for biological drugs, which could cost the companies billions of dollars in annual sales but save consumers thousands of dollars.

Biotechnology companies are lobbying to stop generic competition to their drugs. (Photo: Images Money) Andrew Pollack reports in the New York Times on Tuesday:

The complex drugs, made in living cells instead of chemical factories, account for roughly one-quarter of the nation’s $320 billion in spending on drugs, according to IMS Health. And that percentage is growing. They include some of the world’s best-selling drugs, like the rheumatoid arthritis and psoriasis drugs Humira and Enbrel and the cancer treatments Herceptin, Avastin and Rituxan. The drugs now cost patients — or their insurers — tens or even hundreds of thousands of dollars a year.

Two companies, Amgen and Genentech, are proposing bills that would restrict the ability of pharmacists to substitute generic versions of biological drugs for brand name products. [...]

The companies and other proponents say such measures are needed to protect patient safety because the generic versions of biological drugs are not identical to the originals. For that reason, they are usually called biosimilars rather than generics.

Generic drug companies and insurers are taking their own steps to oppose or amend the state bills, which they characterize as pre-emptive moves to deter the use of biosimilars, even before any get to market.

Pollack writes that the lobbying marks "the latest phase in a battle over the rules for adding competition to the biotechnology drug market as called for in the Patient Protection and Affordable Care Act of 2010," and this blowback, writes economist and Center for Economic and Policy Research co-director Dean Baker, "shows the complete indifference to free market principles held by big business."

Baker adds this is an example of "how the rich rig rules to get all the money":

First it is a great example of the sort of abuses that economic theory predicts would result from having the government grant patent monopolies. When companies call sell drugs for prices that are a hundred or even a thousand times their cost of production, we should expect that they will lie, cheat, and steal to expand their market. And the drug companies largely act exactly as economic theory, if not economists, predicts.

The other reason this is a great story is that it shows the complete indifference to free market principles held by big business. Are the folks who want to arrest pharmacists for substituting generics "market fundamentalists?"

Note that the sums of money involved in the industry swamp the chump change that many liberals fight over. The article cites data showing drug industry sales at $320 billion a year. They would be around one-tenth this amount without patent and other protections provided by the government, a difference of $290 billion. By comparison, the entire food stamp program cost $47 billion in 2012, around one-sixth this amount. Federal spending on TANF is around $17 billion, less than one-tenth of this amount.

This is a great example of how the rich rig rules to get all the money. Then they let the loser liberals run around saying that we need the government to help the poor.