We are one step closer to a new generation of cheaper drugs


Where you keep money for health care, obviously. (401kcalculator.org)

Welcome to Health Reform Watch, Jason Millman's regular look at how the Affordable Care Act is changing the American health-care system — and being changed by it. You can reach Jason with questions, comments and suggestions here. Check back every Tuesday and Thursday afternoon for the latest edition, or sign up here to receive it straight from your inbox. Read previous columns here.

With the high cost of specialty drugs capturing so many headlines these days, here's a bit of a change of pace: A new wave of cheaper drugs marked a major milestone Thursday.

The Food and Drug and Administration for the first time has accepted an application for a copycat version of what's known as a biologic, which is a complex drug made from proteins of living organisms. These biologics are cutting-edge therapies that can be more effective than regular drugs made from chemicals — and, not surprisingly, they also can be expensive. For example, some biologics to combat rheumatoid arthritis, a disease affecting about 1 percent of the adult population, can cost more than $5,000 a week.

While cheaper generics now dominate the U.S. market for traditional drugs, accounting for about 85 percent of all prescriptions, you still can't get another version of biologic drugs in this country. That's about to change, though, because of a provision included in the Affordable Care Act that provides a pathway for copycat biologics, known as biosimilars, to enter the U.S. market.

Making a biosimilar isn't quite the same as creating a typical generic drug. As Reuters explains: "Because biotech drugs are made from living cells it is impossible to manufacture exact copies, as happens with simple chemical medicines, so regulators have had to devise approval processes for products that are similar enough to do the job." And even though the ACA became law more than four years ago, the FDA and the pharmaceutical industry are still wrangling over various regulatory issues concerning biosimilars.

There's already an overseas market for these biosimilars, although it's still small. It's expected to expand rapidly over the next few years, however — one recent projection estimates that sales of global biosimilar drugs will jump from $1.3 billion last year to $36 billion by 2020.

The biosimilars' potential for savings in the United States seems to be pretty huge. The pharmacy benefits manager Express Scripts, which has actively advocated for more rapid adoption of biosimilars, estimates that the United States would save $250 billion in health-care spending over the next decade if just 11 biologics had biosimilar alternatives.

Thursday's FDA application from Sandoz is just the first step. The company, which already markets its biosimilar in 40 countries, could gain final FDA approval as early as the first quarter of 2015, according to the Avalare Health consulting firm. With so much concern from health-care payers over a projected rise in U.S. drug spending in the next few years, the development of domestic biosimilar market is something worth watching.

Top health policy reads from around the Web:

HealthCare.gov has been busy since open enrollment ended. "It turned out that more than 5 million people signed up using HealthCare.gov by April 19. But perhaps more surprising is that, according to federal data released Wednesday to ProPublica, there have been nearly 1 million transactions on the exchange since then. People are allowed to sign up and switch plans after certain life events, such as job changes, moves, the birth of a baby, marriages and divorces." Charles Ornstein for ProPublica.

Medicaid children are relying on the ER. "Children covered by Medicaid, the publicly funded insurance program for the poor, visit the emergency room for medical care far more often than uninsured or privately insured youngsters, a U.S. survey finds. And kids with Medicaid were more likely than those with private insurance to visit for a reason other than a serious medical problem, according to the 2012 survey conducted by the U.S. Centers for Disease Control and Prevention. Reliance on ER care for non-urgent health problems is an issue because of soaring health costs. The U.S. National Institutes of Health says treatment in an ER can cost two to three times more than the same care in a doctor's office." Steven Reinberg for HealthDay.

Patients sue Tennessee over enrollment delays. "Three consumer advocacy groups filed a class-action lawsuit Wednesday accusing Tennessee officials of adopting policies that are depriving thousands of people of Medicaid coverage 'to score political points.' The suit was filed several weeks after the Obama administration ordered Tennessee and several other states to resolve problems that have led to a backlog nationwide of more than 1 million applications for Medicaid, the state-federal health insurance program for the poor.... Tennessee is the first state to be sued over Medicaid enrollment problems since passage of the federal health law." Phil Galewitz in Kaiser Health News.

 

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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