May 14, 2019

How to jump-start a fledgling class of new, cheaper drugs

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

In photos: Authorities issue warning as Americans venture out for Memorial Day weekend

Ocean City in New Jersey on May 25. Photo: Donald Kravitz/Getty Images

Authorities urged Americans to maintain social distancing and wear masks to protect against the spread of the novel coronavirus amid reports of packed beaches and bars during the Memorial Day weekend.

Details: Law enforcement stepped up beach patrols, and there were crowded scenes in several places, notably at Lake of the Ozarks bars in Missouri and at Daytona Beach and on the Gulf Coast in Florida, per AP. Many people did take precautions against COVID-19, as Americans ventured outside for the long weekend some three months after the pandemic began to spread across the U.S

Coronavirus stay-at-home orders crater voter registration efforts

A volunteer looks for persons wanting to register to vote on July 4, 2019 in Santa Fe, N.M. Photo: Robert Alexander/Getty Images

The coronavirus pandemic is scuppering usual "get out the vote" efforts, leading to fears that large swaths of Americans could miss out on this year's elections.

What’s happening: Advocacy groups typically target college campuses, churches, festivals, fairs and other gatherings to seek out people who have yet to register, but many of those places are now closed. Voter registration efforts have largely moved to the internet, but advocates question whether that will be as effective as the person-to-person pitch.

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 7 p.m. ET: 5,471,768 — Total deaths: 344,911 — Total recoveries — 2,223,523Map.
  2. U.S.: Total confirmed cases as of 7 p.m. ET: 1,660,072 — Total deaths: 98,184 — Total recoveries: 379,157 — Total tested: 14,604,942Map.
  3. World: Italy reports lowest number of new cases since February — Ireland reports no new coronavirus deaths on Monday for the first time since March 21 — WHO suspends trial of hydroxychloroquine over safety concerns.
  4. 2020: Trump threatens to move Republican convention from North Carolina — Joe Biden makes first public appearance in two months.
  5. Public health: Officials are urging Americans to wear masks over Memorial Day.
  6. Economy: New York stock exchange to reopen its floor on Tuesday — White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Charities refocus their efforts to fill gaps left by government.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

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Updated 1 hour ago - Politics & Policy