Competition is key to low drug prices---else, inflation.
Pharma News 23 (part of the Xtelligent Healthcare Media network, provides coverage of the pharmaceutical industry, How Inflation, Competition, Biosimilars Affect Prescription Drug Costs, Pharma News Intelligence, https://pharmanewsintel.com/features/how-inflation-competition-biosimilars-affect-prescription-drugcosts#:~:text=In%20addition%20to%20using%20policy,treat%20conditions%20without%20adequate%20therapies., 6/7/24---gm)
In addition to using policy to manage inflation and keep drug prices low, a competitive marketplace that promotes innovation can also reduce drug spending.
“It is important to reward the continued investment in new drug development to treat conditions without adequate therapies. The challenge is that most diseases where innovation is critically needed are severe and frequently extremely specialized,” Lucio stated.
“Given the severity of the disease, the vulnerability of the patient population treated, and the use of novel technologies, the initial launch prices are extremely high,” he continued.
Competition among certain drugs, especially at market entry, reduces the impact of inflation on drug prices. Conversely, a lack of competition allows drug manufacturers to approve regular price increases, with extremely high increases as the loss of exclusivity nears.
To incentivize drug development, the FDA grants market exclusivity and patent eligibility to drug developers after FDA approval, preventing other manufacturers from developing generic forms for the drug. In the biologic space, the equivalent to generic medicines is biosimilar competitors, which mimic the biologic.
BIOSIMILAR COMPETITION
The biosimilar marketplace has expanded dramatically in recent years, providing alternatives to many expensive brand-name biologic drugs.
“At this point, there is likely nothing more critical to lower drug prices than encouraging biosimilar consideration and adoption,” Lucio stressed. “Biosimilars offer a large opportunity in cost savings, and continuing to support the biosimilar pathway and limiting excessive patenting as a strategy to prevent competition are steps the government has and can continue to take in managing drug costs.”
Biosimilar competition is a significant factor in reducing drug prices. According to a Vizient analysis, biosimilar products and adoption have saved the US healthcare system $12.6 billion from 2014 to 2022. With a highly anticipated biosimilar boom as more companies launch biosimilar alternatives and providers adopt them, many experts project even more future savings.