There’s mounting pressure on President Obama and his congressional
allies to focus more of their healthcare reform efforts on cutting
down costs. The President recently acknowledged this trend, promising
that “the bill I sign must also slow the growth of health care costs
in the long run.”
That’s a good goal. Every day, I see how damaging it can be when
people who need medical help aren’t able to get it. Lowering
healthcare costs is one of the most effective ways to ensure that
Americans can get the care they need. Yet the best way for reformers
to do this has yet to receive serious consideration: Bolster the
development of new biopharmaceutical drugs.
The treatments and cures generated by this research are proven to save
money in the long term by drastically improving patient health, thus
reducing the need for expensive medical procedures.
Biologic drugs are the crowning achievement of biotechnology research.
Derived from living tissues, biologics are significantly more complex
than traditional chemical drugs, and have proven incredibly effective
at combating some of the country’s worst diseases.
Take the biologic Herceptin. This drug has quickly become a standard
treatment for breast cancer. The survival rate for patients on
Herceptin within a year of starting treatment is over 10 percent
higher than for those using only chemotherapy — 78 percent versus 67
Breast cancer patients do have to pay a premium to get Herceptin. But
the effect is has on their illness dramatically reduces the chance
that they’ll need expensive surgeries or other treatments. And so
they’re likely to experience long-term savings that more than make up
for their initial drug costs.
Future biologic treatments for prominent diseases could generate huge
savings for the health system. Indeed, the Lewin Group estimates that
annual Medicare spending would drop by $51 billion within five years
of the discovery of a breakthrough biopharmaceutical treatment for
Here in Hawaii, the biopharmaceutical sector is strong. It’s
responsible for over 10,200 jobs, and generates $1.2 billion in
economic activity annually.
It shouldn’t come as a surprise that creating biologics is risky and
incredibly expensive. It costs $1.2 billion and takes 10 years to
develop the average biologic drug. Add to those expenses the $250 to
$450 million it costs to build the average biotech manufacturing
facility. Then consider that less than a fifth of the drugs that make
it to clinical testing ever get approved by the FDA.
And even if a biologic does make it to market, there’s no guarantee it
will turn a profit. Of the 30 new biologics to go on sale between 1982
and 1993, 24 will likely never recoup their development costs.
Despite the risks, investors continue to pour money into
biopharmaceutical research. That’s largely because the profits from a
single successful drug can make it all worthwhile. That financial
incentive is what drives biologic innovation. Lawmakers have to
Fortunately, Congress is in the process of doing just that. It’s
considering two bills that give brand-name biologic manufacturers a 12-
year “data exclusivity” period. During that time, firms can keep the
research data for a new biologic private. After the protection
expires, competitors gain access to the information, and can use it to
create “biosimilars,” which are basically copies of biologic drugs.
Without a sufficiently long data exclusivity period, original biologic
manufacturers will have to watch biosimilars flood the market and
siphon away customers before they’ve had a chance to make back the
huge investment required to make a new drug. Biologic investment would
become a losing enterprise, research dollars would dry up, and there’d
be fewer new drugs.
What’s the right length of data exclusivity? Research from Duke
University economist Henry Grabowski shows it take 12.9 to 16.2 years
of sales for a biologic manufacturer to break even on a new drug.
Some lawmakers have accounted for this finding, and are pushing
legislation that sets biologic data exclusivity at 12 years.
Unfortunately, a contingent of congressmen, among them Sens. Chuck
Schumer and Sherrod Brown, want to reduce that period, likely to 7 or
Hawaii’s reps should fight against such efforts, and push for the 12
year data exclusivity provision to become law. By fostering
biopharmaceutical innovation, our state lawmakers can help bring down
healthcare costs and give Americans the power to get proper care when
they need it.
‘Mary Margaret Baker, MSN, APRN, is the founding president of the California Association of Nurse Practitioners. She was also the founder and director of Chicken Soup, Plus, a nursing practice and home health agency. She currently resides in Maui, where she offers
private case-management services.’