President Donald Trump’s meeting with leaders from large pharmaceutical manufacturers last week, and the president’s commitment to finding market-based solutions to the problem of high drug prices deserves praise. Like Trump, I believe prescription drug prices are out of control. In fact, in 2015, prescription drug spending increased at the highest annual rate since 2003.
The public is rightly fed up with the failure of government and industry to do anything about this burgeoning problem. According to a Harvard study, more than three-quarters of the public believe that name-brand prescription drug prices are too high, with such prices driven primarily by price increases in the absence of additional innovation. For example, in 2016, the public watched with growing anger as the cost of EpiPens skyrocketed to more than $600 — a 600 percent increase since 2011. The manufacturer was forced to introduce a generic product in response to the public and Congress’ outrage.
A primary reason for high drug prices is the emergence of high-priced specialty drugs where the federal government’s checkbook takes a huge hit from these higher prices through Medicare expenditures. In Medicare, spending on specialty high-cost drugs has more than tripled since 2010. High drug prices and rapid price increases of many once affordable drugs are harmful to patients, their families, the healthcare financing system, and our nation’s economy as a whole.
Many of these high priced drugs, those known as biologics, comprised seven of the 10 highest grossing pharmaceutical products in 2015. These products are particularly prone to year-to-year unwarranted price increases. The price of several biologic drugs have increased by more than 100 percent in the past 10 years, some have increased their prices by more than 300 percent to 400 percent. One example is the anti-inflammatory class of biologics which treat conditions such as rheumatoid arthritis and psoriasis, which about doubled in price over the first ten years on the market, then doubled yet again over the next five years. This means that the same drug introduced for say $15,000 a year per patient in 2000 is now about $60,000 a year per patient. While these drugs deliver important relief to patients who suffer from debilitating, and sometimes life-threatening conditions, such increases are unjustified. But until now, the biologic marketplace has been dominated by name-brand manufacturers who have gone to great lengths to limit competition, thereby allowing price increases.
There is a ready, real world solution that exists today that can help alleviate the stress and financial strain of high drug prices on consumers and the federal budget. Biosimilars are high-quality versions of brand-name biologics, and biosimilars have a real chance to be a free market solution to high drug prices as they provide competition.
Promoting biosimilars should be a key part of any comprehensive plan to address high drug prices. According to a landmark 2014 Rand study, biosimilars could save at least $40 billion through 2024 in the United States alone. However, to realize this potential, concrete steps need to be taken by the federal government to ensure the development of a robust and thriving biosimilars industry that increases access for patients and brings down costs. There is a ready set of tools at our disposal to help achieve these goals.
The Trump administration has called for free-market solutions to escalating health care costs, and biosimilars can be a core part of the solution set to that endeavor. To do that, the Trump administration and the federal government should promote broader acceptance and use of biosimilars. This will increase access, drive down costs and in the end benefit patients, and the economy. To achieve these goals, the Food and Drug Administration needs to be given the tools and importantly, the resources necessary to move the biosimilar program forward. This will help speed therapies to market, in line with the stated goals of reducing bureaucracy and the time it takes to get drugs approved.
In order to address the other issue Trump cited in last week’s meeting — speeding up approval processes — the federal government should come out in support of the Biosimilars User Fees agreement. To date, the FDA has never received one appropriated dollar for reviewing biosimilar applications, even though the potential cost savings are huge. The agency must rely on user fees to support its work on biosimilars. This agreement, negotiated between industry and FDA over the course of many months, gives FDA funding to implement a fair and responsible regulatory framework, while at the same time increasing its capacity to review and approve applications. This will also create predictability for industry stakeholders that are currently investing significant time and resources in the absence of a fully complete regulatory program for biosimilars.
The promise and potential of biosimilars to positively contribute to the health care system cost solutions is tremendous. Biosimilars will create competition in previously monopolistic markets, promote access and help control prices. A robust biosimilars market will spur innovation while also leading to better patient outcomes. The Trump administration and Congress should support biosimilars as part of the solution to high drug prices and do everything they can to promote the emergence of this new industry.
Dennis M. Lanfear is CEO of Coherus BioSciences.
Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Submission guidelines can be found here.