Peter B. Bach and Mark R. Trusheim offer a proposal to lower the cost of biologics in an op-ed for The New York Times. The authors recognize that “competition” will never lower the price of biologics, or most other drugs for that matter. Their solution is to set the price of biologics at the cost of manufacturing them plus 10 percent once their patents expire.
Biologic drugs are made using living cells and can be self-administered by injection or administered by a doctor. They cost the US billions of dollars a year; but, they can extend people’s lives significantly. Herceptin, which helps people with breast cancer, and Humira, which helps people with rheumatoid arthritis, are two examples.
Because pharmaceutical companies are granted patents on new biologics, they can set prices for these drugs sky high. The patent life is supposed to allow the manufacturers to profit from their innovations. And, it is supposed to end and lead to competition that drives down prices over time.
Bach and Trusheim explain that the problem with biologics is that they are not simple to manufacture. Competition, therefore, is not as likely in the biosimilars (generic alternatives to biologics) marketplace as in the regular prescription drug marketplace. Moreover, to the extent there have been competitive biosimilars, they have not successfully lowered the drug’s price. So, the price of biologics remain sky high.
Just to say it, competition is woefully lacking in the prescription drug marketplace writ large. In today’s world, there are many generic drugs that are still priced well-above what they should be priced. Competition in the prescription drug market often does not work to bring down prices.
Through legislation, Congress has tried to create a competitive market for biologics and has failed. More than eight in ten biologics that could have biosimilar competitors do not. Biologics need to be affordable.
Bach and Trusheim propose that Congress require pharmaceutical companies to lower the prices of their biologics once their patents expire to 10 percent above their production cost. That reform would reduce the price of biologics significantly. Good luck getting this law enacted and, if enacted, figuring out manufacturing costs for each biologic.
That said, the Washington Post reports that HR3, the prescription drug pricing bill that passed the House in 2019, has a chance of getting passed in this Congress. It would lower the price of 350 of the most commonly used prescription drugs (50-250 a year) in Medicare and private insurance. The price of a drug would be no more than 120 percent of what six other wealthy nations pay (Australia, Canada, France, Germany, Japan and the United Kingdom) over the next ten years. For some inexplicable reason, it would not lower drug prices for the uninsured.
Here’s more from Just Care:
- States charge 26 drugmakers with illegally driving up the price of generic drugs
- One in three FDA-approved drugs have safety risks
- Let’s legalize drug importation and import drug prices
- The deadly consequences of out-of-pocket drug costs
- Six tips for keeping your drug costs down if you have Medicare
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