| 来源类型 | Article |
| 规范类型 | 评论 |
| The economics of biologic drugs | |
| Alex Brill; Benedic N. Ippolito | |
| 发表日期 | 2019-08-08 |
| 出版年 | 2019 |
| 语种 | 英语 |
| 摘要 | The market for biologic drugs in the United States is large and growing. Total US biologic sales in 2018 is estimated to have been $125 billion, an increase of 50 percent since 2014. Given widespread public interest in curbing drug costs and drug spending, policymakers and others are keenly interested in the viability of biologic market competition to reduce prices. Economists and health policy analysts, including the Congressional Budget Office (CBO), have estimated billions of dollars in future savings from biosimilars. Since enactment of federal legislation and the finalization of accompanying regulatory guidance to permit biosimilars to enter the US market, 23 biosimilars have been approved by the FDA and 9 have begun marketing in the United States. Against this backdrop, Dr. Peter Bach and colleagues have recently offered, in a series of Health Affairs blog posts, the provocative argument that biosimilars should be “abandoned.” They argue biologic drugs are inherently natural monopolies and, as such, their prices should be regulated. We disputed this view in a recent response, explaining to readers the misuse of the term “natural monopoly” and contending that biosimilars can offer meaningful competition to biologics. In addition, we argued that the use of wholesale acquisition cost (mislabeled by Bach et al. as net price) is not suitable evidence of their claim and that actual net price data point to declining prices paid to biologic drug manufacturers who face biosimilar competition. In turn, Bach et al. suggest that our analysis is not appropriate for the question at hand and present a new analysis of average sales price (ASP) that they contend supports their original argument. With the stage now set, we begin by commenting on expectations for biologic prices in a market with biosimilar competition before responding to some of Bach et al.’s new arguments and explaining why we remain steadfast that biologic drugs as a group are not natural monopolies, that the early evidence from biosimilar entry is encouraging, and that a host of policy options other than price controls can be considered lower costs within this market. Expected Prices For Biologics Facing Biosimilar Competition We, like virtually all observers of this market, agree with Bach et al. that biosimilar entry is unlikely to drive prices to near marginal costs, as is often the case with small-molecule drugs. For example, well before biosimilars ever entered the US market, CBO noted, “The process of designing and manufacturing biosimilars is complex and more costly than it is for traditional generic drugs, so the price discounts for biosimilars will not be as high in percentage terms as those for traditional generic drugs. Specifically, CBO estimated that prices for biosimilars would ultimately be about 40 percent lower than prices of the original drugs.” However, the lack of perfect competition does not mean that a market is a monopoly. These two terms define opposite ends of a very wide spectrum of market competitiveness. It is erroneous to claim that economics prescribes price regulation as optimal policy in any case where markets are not perfectly competitive. Average Sales Prices Of Biologics In their latest post, Bach et al. present new data showing that the Medicare defined average sales price (ASP) of Neupogen, a biologic oncology drug, has not fallen since biosimilar entry. We disagree that the use of ASP supports the conclusion that Neupogen is a natural monopoly. First, Bach et al. assert that the net price data that we rely on in our analysis are inferior to ASP data. While the fact that the ASP (and, in turn, Medicare Part B reimbursement) for Neupogen has not declined is interesting, it does not negate the validity of an alternative, market-wide calculation of the net price of this drug, a calculation that includes Medicaid rebates and 340B discounts. Given that statements about natural monopolies are inherently statements about market-entry decisions of firms, payments to manufacturers are highly relevant to this discussion. Second, the data used in Bach et al.’s latest analysis further supports our contention that biologics are not inherently monopolies. Neupogen faces multiple competitors which offer substantial discounts relative to the reference biologic. Using the most recent ASP pricing file from CMS, Exhibit 1 reports the ASPs for Neupogen and its competitors: Granix, Zarxio, and Nivestym. In the third quarter of 2019, ASPs for competing versions of Neupogen are 30-41 percent lower than the reference product’s ASP in the same quarter. Exhibit 1: Average Sales Prices of Neupogen and Competitors (HCPCS Code Dosage of 1 MCG) Source: Data from CMS, July 2019 ASP Pricing File Unsurprisingly, MedPAC notes Neupogen’s market share has plummeted—dropping by roughly two-thirds as of the first quarter of 2018. Put simply, Neupogen has multiple competitors which have undercut its price and stolen the majority of market share. The data indicate that this drug is simply not a natural monopoly. This is a reflection of reality, not of our “ideological preference for competition,” as Bach et al. suggest. Where Does This Leave Us? As we noted in our introduction, there is widespread interest in curbing drug costs and overall drug spending. Numerous regulatory proposals from the Trump Administration and a host of legislative proposals have intended to increase pharmaceutical competition, limit consumer out-of-pocket spending, and reduce federal drug spending. National polls and surveys indicate that voters share an interest in this policy agenda. As physicians know, a well-designed treatment regimen depends on a proper diagnosis. Likewise, an appropriate policy response requires a careful understanding of the market in which the government intends to intervene. Entry of numerous biosimilars into the US market and evidence of competitive pricing dynamics clearly indicate that this market is not destined for perpetual monopolization. The degree of competition among reference products and their biosimilars is evolving, and, as we noted in our previous post, policy reforms to better facilitate biosimilar entry would be welcome. Recently, the Senate Finance Committee adopted The Prescription Drug Pricing Reduction Act of 2019, major legislation with a number of provisions intended to further the degree of competition among biologic drugs, including changes to Medicare reimbursement for biologics in Part B. This legislation, jointly developed by Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR), implicitly recognizes the opportunity biosimilars represent and received broad support in Committee as well as an endorsement from the Trump Administration. At the same time, we also recognize that some barriers to biosimilar adoption are independent of federal payment policy or regulatory approval, but are nonetheless important for the evolution of this market. For example, perceptions of biosimilars by physicians can affect utilization of these products. In this regard, there is a similarity between the biosimilar market in the US today and the early years of generic small-molecule drugs, when some prescribers were hesitant to embrace generic drugs. Once physicians fully accept the safety and efficacy of these products and embrace their cost-saving potential, for instance, the competitive effects of biosimilars will only improve. Conversely, arguments suggesting that the biosimilar experiment in the U.S. has already failed risk undermining the opportunities these products can offer the healthcare system. More broadly, we stress that if policymakers are dissatisfied with the degree of competition among biologic drugs today, the set of credible policy options to consider is not limited only to price controls nor would such federal rate setting be a costless endeavor for society writ large. A wide set of options also exist to further promote competition by reducing entry costs of biosimilars, adjusting incentives embedded in payment policies, improving information about new biosimilars to providers, revisiting allowable contracting strategies of biologics, and much more. None are without potential tradeoffs and all should be carefully evaluated in terms of impact for consumers, payers, innovators and competitors. |
| 主题 | Health Care ; Economics ; Health Economics ; Health Policy |
| 标签 | Drug policy ; generic drugs ; Health care costs |
| URL | https://www.aei.org/articles/economics-biologic-drugs/ |
| 来源智库 | American Enterprise Institute (United States) |
| 资源类型 | 智库出版物 |
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/266244 |
| 推荐引用方式 GB/T 7714 | Alex Brill,Benedic N. Ippolito. The economics of biologic drugs. 2019. |
| 条目包含的文件 | 条目无相关文件。 | |||||
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