Making dollars and sense

Unless you’ve been living under a rock, you know that there’s some serious bickering going on in Washington about the federal budget. Looking past the partisan debates about taxing and spending, an important component of President Barack Obama’s 2012 budget hasn’t gotten nearly enough attention: a reduction of the exclusivity period for biologic pharmaceuticals from 12 years to seven.

While this issue may not have the emotional pull of funding cuts to Planned Parenthood or National Public Radio, it poses the opportunity to help consumers (and third-party payers, such as insurance companies) save major dollars.

So what is a biologic drug? Simply put, it’s a pharmaceutical product that is produced biologically, as opposed to the chemical processes used for traditional pharmaceuticals. This means a more delicate and complicated production process is necessary.

Biologics have largely been extremely effective for patients who do not respond well to traditional therapies, but the catch is that they are extraordinarily expensive.

A year’s supply of entanercept (trade name: Enbrel), for patients with rheumatoid arthritis and other autoimmune diseases, can easily cost of more than $10,000. Many other biologics are even more costly.

While these drugs are often life-changing for patients, they pose the potential to create significant financial hardship, especially if patients are paying out of pocket. For those on health insurance plans with lifetime payment caps, the cost of continuing biologic therapy alone can max out their benefits.

Everyone knows that health insurance premiums are rising quickly, a worrisome trend that packs an especially hard punch to small businesses. Most experts agree that the cause is clear: Health care itself is getting more expensive. The increased use of name-brand biologics certainly isn’t helping to reverse the trend.

It would be naive to ignore the reality that bringing a new drug to the marketplace is extraordinarily expensive. (Estimates vary widely, but Health Affairs magazine pegged it between $500 million and $2 billion for new chemical makeups.) In our current system of health care delivery, a new drug means significant cost and risk for a corporation.

I’m all for protecting intellectual property and encouraging development. I also hate to see potential savings ignored (I’m big on coupons). A path for fast-tracked generic biologics will not go through without a fight from Obama, but it could also save payers billions of dollars per year.

While I think the push for reduced exclusivity periods should come from a source besides the president’s budget, I also believe that this is an issue that must be acted on quickly. The government needs to take this step in the best interest of everyone who uses and indirectly pays for health care — that is, virtually all Americans.


E-mail: biglehar@indiana.edu