Biologics Industry Uses Political Power to Retain Monopoly, Price-Gouge and Limit Patient Access to Needed Medications

Biologics could be the future of medicine, but that future is on a path to be extraordinarily expensive, as the brand-name biologics industry uses its political power to price-gouge and maintain indefinite monopolies, a new Public Citizen report finds. The result: Many who could benefit from biologic medications - medications derived from biologicalsources, and often produced using biotechnology methods - will not receive them.

For traditional, small-molecule medications, generic competition often leads to price reductions of 80 percent or more. But the brand-name biologics industry has maneuvered to block competition for biologics.

Even conservative estimates suggest that generic competition for biologics could save enormous sums. Express Scripts has estimated that increased substitution of generic versions of biologics ("biosimilars") can save around $250 billion in health care costs from 2014 to 2024. In Europe, biosimilar competition has led to average price reductions of 35 percent, and in some cases closer to 80 percent.

"The super-high cost of biologics is not the result of research-and-development or manufacturing costs, but government-granted monopolies," said Robert Weissman, president of Public Citizen. "Without competition, biologic costs will break the bank for governments, employers and private insurers, and deprive patients of needed medicines."

After long resistance from brand-name biologics makers, the 2010 Biologic Price Competition and Innovation Act (BPCIA), enacted into law as part of the Affordable Care Act, instructed the U.S. Food and Drug Administration (FDA) to create a system for approving biosimilars. But the Public Citizen report, "Competition Inhibitors: How Biologics Makers are Leveraging Political Power to Maintain Monopolies and Keep Prices Sky-High," shows how, as a result of industry lobbying, the BPCIA established highly restrictive terms for the authorization of biosimilars and created new monopoly protections ("data and marketing exclusivity") that effectively bar biosimilar competition for at least 12 years.

More than four years after passage of the BPCIA, the FDA has yet to finalize regulations establishing what sort of safety testing is required for biosimilars.

"None of the actions that lawmakers took at the behest of the biologics makers had anything to do with science, patient safety or assuring fair returns on investment," said Weissman. "These barriers to competition are entirely because the brand-name biologics industry leveraged its political clout."

Meanwhile, the report shows, brand-name biologics companies continue to advocate for still more barriers to competition, focusing major efforts at the state, federal and international levels:

• The industry is lobbying at the federal and international levels to demand that biosimilars not share nonproprietary names with brand-name products. If there are distinct names, doctors and patients will likely doubt whether the products are legitimately substitutable.

• The industry has waged a vast campaign at the state level to impose burdensome requirements on pharmacists seeking to substitute FDA-approved interchangeable biosimilars for biological products. The biologics industry (BIO) has persuaded lawmakers to pass measures restricting substitution in eight states: Delaware, Florida, Indiana, Massachusetts, North Dakota, Oregon, Utah and Virginia.

• The brand-name biologics and pharmaceutical industry has urged the Office of the U.S. Trade Representative (USTR) to include in trade agreements provisions that would guarantee lengthy monopolies for brand-name biologics makers, and it appears that the extensive lobby efforts have paid off. On Oct. 16, a version of the intellectual property chapter of the Trans-Pacific Partnership (TPP), the trade deal between the U.S. and 11 Pacific Rim counties, was released by WikiLeaks. It included a U.S. proposal that would grant brand-name biologics 12 years of exclusivity - mirroring the win scored by BIO in the Affordable Care Act.

The inclusion of 12 years for exclusivity in the TPP contradicts an effort by the White House to reduce the exclusivity period in the United States to seven years. President Barack Obama's 2015 budget calls for a seven-year period and an increase in generic competition, which would save the government $15 billion over 10 years.

"In other words, BIO lobbyists have convinced the USTR, a White House agency, to propose a position that directly contravenes the position officially favored by the White House - a position that would preclude the White House from winning a favored policy change that it believes would save taxpayers billions," Weissman said.

To speed competition, the report recommends that:

• The FDA expeditiously adopt a system for approving biosimilars;

• The FDA ensures that biosimilars designated as interchangeable share the same non-proprietary name as brand-name products;

• States do not adopt rules inhibiting substitution of interchangeable biosimilars, in the absence of a finding that the FDA has failed to establish an appropriate standard of interchangeability; and

• The United States cease efforts to include pro-monopoly data and marketing exclusivity terms in international trade agreements.

"BIO is leveraging its political power at the state, federal and international levels to obtain and maintain government-granted monopolies, which give biologics makers the ability to charge whatever they believe the market will bear," said Weissman. "Biosimilars offer the prospect of bringing price-lowering competition to the market, but first, elected officials and high government appointees must decide to stop listening to the siren call of BIO and Big Pharma, and start serving the interests of the public."

Read the report.