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Illustration: Aïda Amer/Axios

The Affordable Care Act was supposed to open the door to a new class of drugs that would spark competition and lower prices for some of the most expensive therapies in the world. But that effort has barely gotten off the ground — less than a dozen of these new products are actually available to patients, and few deliver significant savings.

Why it matters: The future of drug development is hurtling toward complex, expensive biological products. If the market for cheaper versions of those treatments doesn’t get a jump-start, the health care system will see its drug spending climb to new heights.

How it works: Generics are one of the most effective tools we have to eventually bring down the cost of traditional small-molecule drugs.

  • Newer, more complex biologic drugs don’t have traditional generic versions, but “biosimilars” were designed to fill the same purpose — introducing a nearly identical product, a few years later, with a lower price.

The big picture: Two experts — former FDA Commissioner Scott Gottlieb and Gillian Woollett, who leads the FDA practice at the consulting firm Avalere — put a lot of the blame for biosimilars' slow start on insurers and pharmacy benefit managers.

  • “If I was trying to drive more rapid adoption, I’d be focused on market structures,” Gottlieb said.
  • Pharmacy benefit managers negotiate discounts in the form of rebates, and keep part of the discount as profit. Critics say they therefore make more money negotiating a big discount off of an expensive drug, rather than giving preference to a cheaper alternative.
  • “Basically, it comes down to: People do what they’re paid to do,” Woollett said.

Those incentives are especially strong with biologics.

  • Many insurance plans require patients to try the brand-name biologic first, and only move to a biosimilar if the first drug fails, Woollett said. That's backwards: With traditional drugs, you usually have to try the generic first.
  • And in Medicare, these types of drugs aren't subject to price negotiations. Doctors get paid a percentage of the drug's cost — another incentive to pick the more expensive drug.
  • “Payers are the linchpin. They have to deal with these rebate issues,” Woollett said.

Doctors are also hesitant about biosimilars, generally.

  • “I think it's misguided reluctance, but it’s not uncommon for physicians to be tied to a product they’ve been very accustomed to and used for a long period of time," Gottlieb said.
  • But biologics manufacturers have also spread “misleading information" about biosimilars, Woollett said.

The FDA could be doing more to correct misinformation about biosimilars and to allay doctors’ fears about whether the products are sufficiently similar to switch current patients, Woollett argues.

  • The FDA took a step forward on that front Friday, finalizing rules for what a biosimilar has to do in order to be considered "interchangeable" with the product it copies, similar to the way traditional generics are interchangeable with brand-name drugs.

Overall, commercial factors put a damper on the whole process, experts said.

  • Developing a biosimilar is difficult, time-consuming and expensive. Theoretically, because the products are still pretty expensive, a manufacturer should be able to match their competitors’ marketing budgets and overcome at least a lot of physicians’ trepidation. Some of these problems are, at least theoretically, solvable.
  • But if a would-be biosimilar is staring down a long and expensive development process, followed by a long and arduous approval process, and years of expensive patent litigation — only to see themselves undercut by insurers and brand-name competitors — that proposition simply isn’t worth it.

The bottom line: “Unless something changes, biosimilars will continue to struggle and may indeed fail in the United States,” Woollett said. “The rest of the world then may fail too.”

Go deeper

Ben Geman, author of Generate
3 mins ago - Energy & Environment

Japan vows deeper emissions cuts ahead of White House summit

Japanese Prime Minister Yoshihide Suga. Photo: Carl Court/Getty Images

Japan on Thursday said it will seek to cut greenhouse gas emissions by 46% below 2013 levels by 2030, per the AP and other outlets.

Why it matters: The country is the world's fifth-largest largest carbon dioxide emitter and a major consumer of coal, oil and natural gas.

Biden pledges to cut greenhouse gas emissions by up to 52% by 2030

U.S. President Joe Biden seen in the Oval Office on April 15. (Photo by Doug Mills-Pool/Getty Images)

The Biden administration is moving to address global warming by setting a new, economy-wide greenhouse gas emissions reduction target of 50% to 52% below 2005 levels by 2030.

Why it matters: The new, non-binding target is about twice as ambitious as the previous U.S. target of a 26% to 28% cut by 2025, which was set during the Obama administration. White House officials described the goal as ambitious but achievable during a call with reporters Tuesday night.

Exclusive: Chauvin trial prosecution worked with strategic communications firm

People gather at the intersection of 38th Street and Chicago Avenue to celebrate the guilty verdict in the Derek Chauvin trial on April 20, 2021 in Minneapolis, Minnesota. Photo: Brandon Bell/Getty Images

For most of the past year, a strategic communications firm with deep Washington ties has played an integral role for the prosecution in the State of Minnesota v. Derek Chauvin — operating without pay and so under-the-radar that most of its own staff had no idea.

The big picture: Finsbury Glover Hering — formerly known as the Glover Park Group — has been conducting media monitoring and analysis as part of legal team special prosecutor Neal Katyal's vision for a three-pronged "modern appeal/trial strategy."