Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa Bay news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Charlotte news in your inbox

Catch up on the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

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

GOP research firm aims to hobble Biden nominees

Alejandro Mayorkas. Photo: Joshua Roberts/AFP via Getty Images

The Republican-aligned opposition research group America Rising is doing all it can to prevent President Biden from seating his top Cabinet picks.

Why it matters: After former President Trump inhibited the transition, Biden is hoping the Republican minority in Congress will cooperate with getting his team in place. Biden hadn't even been sworn in when America Rising began blasting opposition research to reporters targeting Janet Yellen and Alejandro Mayorkas.

1 hour ago - Politics & Policy

Jen Psaki: "With that I’d love to take your questions”

In her inaugural briefing as White House press secretary, Jen Psaki said she has a “deep respect for the role of a free and independent press in our democracy,” and pledged to hold daily briefings.

Why it matters: Conferences with the press secretary in the James S. Brady Press Briefing Room became almost non-existent under the Trump administration. By sending Psaki to the podium hours after President Biden took the oath of office, the White House signaled a return to pre-Trump norms.

Avril Haines confirmed as director of national intelligence

Haines. Photo: Joe Raedle/Getty Image

Avril Haines was quickly confirmed by the Senate on Wednesday as the director of national intelligence (DNI) in a vote of 84-10.

Why it matters: Haines is the first of President Biden's nominees to receive a full Senate confirmation and she will be the first woman to serve as DNI. She's previously served as CIA deputy director from 2013 to 2015 and deputy national security adviser from 2015 to 2017.