News February 2007

Study Eyes Generic Drug Savings

Patients and health insurance providers could save at least $71 billion over 10 years if there was a regulatory mechanism that allowed for the marketing of generic biotech medicines, according to a study being released today.

Currently there is no legal pathway that allows generic drug makers to produce biotech medicines, so the pricey treatments, which are derived from a living source such as proteins, have never had to compete with copycat products that drive pharmaceutical costs lower.

Most drug makers, such as Eli Lilly and Co., increasingly are focusing on such medicines.
Controlling the cost of biotech medicines has become a top priority for those providing health insurance because the cost of such treatments is dramatically increasing.

Biotech treatments now account for 25 percent to 30 percent of a company's overall drug costs, according to pharmacy benefit manager Express Scripts Inc., which conducted the study.

Express Scripts said that the average biotech drug costs $71,600 a year, compared with the annual average for a traditional drug of $1,200. It said that escalating biotech drug costs, which reached $40 billion in 2005, are expected to more than double in four years to a total of $90 billion in 2009, a rate three times faster than traditional drug costs. But on Wednesday, a bill was introduced by a group of bipartisan lawmakers in Washington, D.C., that would give the Drug Administration the authority to approve copies of biotech drugs. Similar legislation was introduced last year.

Express Scripts conducted the study by taking a 25 percent discount off brand-name medicines in four classes of drugs that would already have generic competition because of patent expirations if copycat biologics were allowed. Express Scripts decided on that discount because it said that the generic version of human growth hormone sells at a 25 percent discount to its brand name counterparts in Europe.

The four categories of drugs were: insulin for diabetes, erythropoietins for anemia, growth hormones and treatments for multiple sclerosis.

Jim Greenwood, president and CEO of the Biotechnology Industry Organization, cautioned against forecasting any savings from generic biotech drugs without knowing how much testing regulators would require. BIO maintains the drugs won't be true generics because a product made from a living source can never be exactly copied.

Source http://www.indystar.com/