Biogenerics: A way to provide safe, effective biologic drugs at lower costs

Biological drugs, often simply called "biologics," are protein-based medicines derived from living cells, such as yeasts, bacteria or other living material. They are different from traditional medications, which are chemical-based. Biologics may be administered by a trained patient, in a doctor's office, by a home infusion service or in a hospital setting. Biologics are used to treat a diverse range of conditions including rheumatoid arthritis, multiple sclerosis, cancer, psoriasis, hemophilia, immune deficiency, and many other chronic conditions. Basically, they are what are often referred to as "specialty pharmacy medications."

For a traditional drug, once a manufacturer's patent has expired, other manufacturers may produce a generic version. Generic drugs are generally much less expensive for both the patient and the health plan. While the Food and Drug Administration (FDA) has the authority to permit and regulate generics, Congress has not yet defined a process by which generic versions of biologics can come to market. Under current law, the FDA has no authority to approve a generic biologic or so-called biogeneric.¹ The FDA's Center for Drug Evaluation and Research performs an essential public health task by making sure that safe and effective drugs are available. Generic forms of biologics may be referred to as biogenerics, biosimilars or follow-on biologics. Several biogeneric drugs are available in other countries but not in the United States.

Why this issue is important to GEHA members
Biologics represent some of the most costly therapies available. On average, they cost 22 times more than chemical-based drugs per daily dose, with the most expensive biologics costing up to $100,000 or more per year. Cost savings with biogenerics are difficult to estimate. We don't know how they will be priced, as there is no path yet for approval of biogenerics, In Europe, where approval mechanisms are in place, biogenerics are providing savings between 25 percent to 30 percent. Because biologic drug companies face little or no competition in the United States, they are able to price their products free from competitive pressure.² If the FDA had the authority to approve biogeneric drugs, it could create competition between the brand drug and the biogeneric.

Biologics are a valuable part of patient care but are very expensive. Biologics are among the fastest growing components of the U.S. health care system; their prices have increased significantly.

To help reduce the cost of biologics and support the health plan's ability to provide access for patients, the FDA needs Congress to give it clear authority to approve biogeneric competitor drugs.

House of Representatives bill 1427 (H.R. 1427) and Senate bill 726 (S. 726) could:

• Strike the appropriate balance between fostering pharmaceutical innovation and making affordable biogenerics available to patients;
• Allow for a reasonable period of exclusivity (the time during which one pharmaceutical company alone can create and market a brand-name drug) for new biologics;
• Give the FDA the authority to make certain that any approved generic form of a biologic is just as safe and effective as the original product.³

These bills are supported by many large employers, such as General Motors; business organizations; consumer groups, such as the AARP; patient groups, such as the National Organization of Rare Disorders, and labor organizations, such as the AFL-CIO and the SEIU; along with national and independent pharmacies, pharmacy benefit managers, health plans, and manufacturers of generics.

We encourage you to review other legislation. However, be aware that some of these bills may include much longer exclusivity periods for the biological medication. If you would like to voice your support for this legislation, or if you have any questions about it, contact your U.S. representative or senator.

¹ FDA news. Drug Daily Bulletin. Feb 7, 2008;5:26.
² PCMA on biogenerics legislation: a bellwether for broader health reform prospects. July 6, 2009.
³ H.R. 1427 and S. 726-Promoting Innovation and Access to Life-Saving Medicine Act. Introduced in
  the U.S. House of Representatives March 11, 2009, and in the U.S. Senate March 26, 2009.