Herceptin’s biosimilar: off patent and still expensive. What now?

The access-to-medicines folks as well as Big Pharma backers will want to take note of the latest ‘issue’ arising in the pharmaeutical pricing arena. As we had reported earlier last year, Roche had decided to drop its pursuance of patents over breast cancer biologics drug Herceptin (Trastuzumab). However, if anyone thought this meant a cheaply available generic would soon be available, it turns out that they’d be mistaken.

US-based Mylan along with partner Bangalore-based Biocon received regulatory approval a few months ago for their biosimilar to be marketed under the name Canmab starting from February, 2014. (See Biocon Press Release here). They will be selling it at about 25% less than the price of Herceptin. However, many are already saying that this price is also too high for India. [Note that unlike generics of chemical entities which can be easily and cheaply reverse engineered, making bio-similars of biologics is not as simple nor as cheap to do. According to this article for instance, the range one should expect biosimilars to reduce prices by is only 10-20%]

According to ET, Roche already sells the Rs 75,000/440mg Herceptin at a discounted price through several dealers at Rs 55,000-57,000. I haven’t seen anything regarding discounts on Canmab’s announced retail price of Rs 56,000/440mg but presumably there will be some sort available after it goes on the market.

As Prashant pointed out in an earlier post of his, when the price of Herceptin dropped from ~ Rs 90,000 (2009) to ~ Rs 60,000 (2012), the number of patients taking the pill almost tripled from ~500 (2009) to ~1400 (2012). According to this article, in 2012 there were about 25,000 patients with breast cancer that could have been treated with this medicine. That leaves more than 23,500 patients who still required the treatment, presumably for reasons of unaffordability.

So what now?

So – yes. The price is too high for nearly all the patients who need it. Biosimilars are also known to be expensive to make. Is it really ‘this’ expensive? Possibly. We don’t have a way of checking (at least not that I know of) and 25% cheaper seems to be about right in accordance to estimates of how much cheaper biosimilars can be made. The question is – what now? When the generics are also no longer providing an affordable alternative, what options are left for patients? From a policy perspective, the options seem to be:

1. Do nothing. Accept that this is the cost to pay to get drugs into the market.
2. Find a method of successfully auditing or at least approximating costs involved in creating bio-similars – and then find a method of tying the price to the cost. Presumably this will run into the same problems that exist with trying to find costs with Big Pharma. 
3. Impose price-regulations and risk disincentivizing pharmaceutical companies from venturing into the field
4. Start accepting that price-based market mechanisms cannot give optimal solutions for healthcare concerns and thus start seriously examining delinkage mechanisms.

These aren’t mutually exclusive options of course. The first three points are self explanatory. The fourth point is ‘radical’ in the sense that it would require a big step out of the comfort zone of most of the involved stakeholders, thus it’s bound to throw up a lot of opposition. However, the following needs to be considered:

Health concerns are ‘inelastic’ in nature. The demand for healthcare is proportional to the incidence of disease and not to the ability of a person to mark their preference in a market. In other words, those who are best able to mark their preference in the market (i.e., buy drugs) are not necessarily the ones who have the most demand for healthcare. In fact, there is sufficient evidence to show that those who are unable to mark their preference in the marketplace have a higher correlation to incidence of disease than those who are better able to mark their preference. This contrast becomes much more stark when we understand that (a) drug development is a very risky and very expensive process, and (b) these market signals are the ones used to determine the pricing as well as the direction of R&D for future drugs.

When we know this – along with the knowledge that the current system is allowing a gross majority of the affected population to die even though the treatment is available (and this is just one disease, in one country) – would it not be grossly negligent to not start seriously considering alternative options for reducing and removing costs? We’re yet to carry a series of posts on the possible options, but ideas are floating around out there. From reducing costs through Open Source Drug Discovery to delinking R&D costs from drug prices through various types of Prize systems (e.g., the Health Impact Fund which I discussed here), to a Global R&D treaty. It’s time to start looking into them as actual alternatives, or at least supplements.

The next few years are going to be very interesting ones for those interested in pharmaceutical innovation in the biologics field atleast. Till now, the positions of patients have been pretty much aligned with generics as against Big Pharma – but now this alignment may slowly fade away and all three parties will be coming in from their own respective corners. Let’s hope good sense and good policy prevails as we move forward.