The passage of the Affordable Care Act (ACA) in 2010 opened up a pathway for the production and approval of biosimilar medications. Biosimilars are “copies” of complex biologic medical drugs, and are seen as cost-effective alternatives to expensive medications. So how did the regulations around biosimilars come to be?
Steven Brill in his book America’s Bitter Pill writes an exhilarating account of the passage and implementation of the Affordable Care Act. The pharmaceutical industry became an early supporter of the ACA and played a big role in the legislation passage and outcomes.
In 2009 while negotiations were happening, PhRMA, the lobbying arm of the industry, agreed to $80 billion in givebacks in exchange for eliminating the most threatening elements to containing the cost of drugs. The givebacks included funding advertisements to support the ACA, more discounts for Medicaid drug prescriptions, and a tax on drug companies.
The issue around biosimilars was a tough negotiating point. Unlike traditional simple drugs, which have clear patent protection rules for generics, biologics were in a grey area. Because biologics cannot be copied exactly like generics it was unclear what patent regulations applied to them.
Protecting biologics was a multibillion-dollar issue. Obama personally advocated for 7-years of protection, while the industry fought for 12-years of patent protection for biosimilars. Liberal CA Congressman Waxman argued that every year of protection added billions of dollars in high healthcare costs for lifesaving drugs. The industry side argued that the billions in revenue were necessary to finance the discovery of new drugs. Either way, without a clear regulation around whether biologics could be copied or not, companies avoided creating biosimilars for fear of legal consequences.
Giant biologic company Amgen’s lobbyists, and individuals associated with it, handed out more than $1.1 million to key congress members during the 2008 election cycle according to Brill’s book. Amgen also deployed dozens of lobbyists spending more than $38 million from 2007-2009, pushing for favorable legislation of the industry. The pharmaceutical industry was ultimately successful in winning 12-year protection for biologics, which is similar to regulations for creating generic drugs.
Companies are now creating biosimilars as the patents of a growing number of biologic medicines are expiring. By 2020 many biologic medicines worth an estimated $81 billion in global annual sales will lose their patents. The biosimilar market is expected to grow rapidly in the next few years. A 2014 RAND study estimates a $44.2 billion reduction in direct spending on biologic drugs from 2014-2024.
The pharmaceutical industry is quickly adapting and innovating to incorporate the move to biosimilars, much like it did when generic drugs were introduced. Many major companies including Pfizer and Amgen are jumping into the biosimilar game with many new products in the pipeline. While critics argue that the ACA did not do much to control high healthcare costs, the move to biosimilars will lead to a reduction in drug costs and open up more access to lifesaving treatments.