Don’t hand Big Pharma a windfall

Sarah Rimmington and Robert Weissman
The Roanoke Times

As Congress considers health care reform, many members are suggesting that reform must be tempered in light of the potential expense of expanding coverage.

Why in the world, then, is that same Congress on the verge of adopting an amendment to the health care legislation that will cost consumers and the government tens of billions of dollars? And will Rep. Rick Boucher, who holds a key position on the relevant House committee, vote to support a giveaway worth tens of billions of dollars to Big Pharma and the biotech industry, or will he support common-sense measures to control drug costs and foster marketplace competition?

Big Pharma is today salivating at the prospect of hijacking the health care reform process to enhance its ability to price-gouge the American public.

As the House Energy and Commerce Committee meets to vote on health care legislation, it is expected to consider an amendment from Reps. Anna Eshoo of California, Joe Barton of Texas and Jay Inslee of Washington state — supported by Big Pharma and the biotech industry — to authorize generic competition for biotech drugs. Currently, there is no regulatory process for approval of generic versions of this class of pharmaceuticals, known as “biologics.”

Biologics make up roughly half of the most important new medicines. Important biologics include many or most new cancer drugs, drugs for the treatment of severe arthritis and psoriasis, multiple sclerosis and numerous vaccines.

Biologic drugs are the fastest-growing segment of the pharmaceutical market, and they are priced significantly higher on average than brand-name conventional drugs. For example, the top-selling biologic, Enbrel, Pfizer/Amgen’s arthritis treatment, costs $15,000 to $20,000 per patient per year. Roche/Genentech’s cancer drug Avastin costs approximately $185,000 per year.

These extraordinary prices do not reflect high manufacturing or research and development costs. Shielded from competition, brand-name companies charge so much simply because they can.
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Big Pharma and biotech’s argument that it must charge 22 times more, on average, for biologics than for conventional drugs because biologics cost more to develop is untrue. Studies frequently cited by the brand-name industry report the cost of producing brand-name conventional drugs and biologics is almost identical ($1.2 billion versus $1.3 billion).

Unfortunately, rather than creating robust price-lowering competition, the Eshoo-Barton-Inslee approach would establish extended monopoly protections — exceeding the monopolies already conferred by patents — and impose a series of needless bureaucratic hurdles for approval of generics.

The Eshoo-Barton-Inslee proposal is competing with a pro-consumer bipartisan alternative offered by Energy and Commerce Committee Chairman Henry Waxman of California and Rep. Nathan Deal of Georgia. All major consumer groups involved in the issue support the Waxman-Deal approach, which would facilitate expedited price-lowering generic competition.

There are many differences between the Eshoo-Barton-Inslee and Waxman-Deal proposals, but the most important issue relates to “data exclusivity,” a key determinant in the length of monopoly protection for brand-name companies.

Data exclusivity addresses this issue: When a generic company seeks approval for a generic drug, it shows that its product is the same as, or essentially similar to, a brand-name product. It then relies on, but does not repeat, the full battery of clinical tests performed by the brand-name maker.

Data exclusivity prohibits the generic firm from relying on the brand-name test data, effectively barring the generic from the market for a set period of time. It gives the brand-name firm a monopoly on selling that product. This monopoly is separate and distinct from the patent monopolies already attached to these products.

The Obama administration recently indicated that seven years data exclusivity is a “generous compromise” between the zero years recommended in a recent Federal Trade Commission report and the 14 years being sought by Big Pharma and the biotech industry. The 12½-year data exclusivity period in the Eshoo-Barton-Inslee proposal is almost twice the length of time proposed by the White House and more than double the five years included in the Waxman-Deal biogenerics legislation. Traditional drugs receive five or three years data exclusivity under existing law.

Delaying generic competition for more than a decade will cost consumers and the government tens of billions of dollars. Moreover, the other obstacles to generic competition in the Pharma-favored Eshoo-Barton-Inslee proposal might keep generic firms out of the market for biologics altogether, costing additional tens of billions of dollars.

Why, indeed, would Congress consider gifting such a windfall to Big Pharma? Might it have something to do with Pharma’s legion of lobbyists — paid more than $1 million a day?

Whatever the reason, it is not too late for Congress to pull back from the precipice, deny Big Pharma and the biotech industry an unjustified windfall and save consumers and taxpayers tens of billions of dollars. Which side will Boucher be on?

Rimmington is an attorney with Essential Action’s Access to Medicines Project. Weissman is director of Essential Action, a nonpartisan, non-industry-funded public health and corporate accountability group.