Generics can’t save advisors from big biologic claims

by Nicolas Heffernan22 Dec 2014
As the primary cause in the increase in massive drug claims, biologic drugs have been the scourge of health plans.

So news from Apotex, announcing they had an application accepted by the FDA to produce the biosimilar (generic) for Amgen's Neulasta, a drug that helps cancer patients taking chemotherapies fight infections and fever, should be reason for advisors to rejoice.

Apotex President and CEO, Dr. Jeremy B. Desai certainly thinks so: “The benefits for patients, payers and providers from biosimilars will be significant.  We are dedicated to playing a leading role in the effort to increase the American public's access to more affordable versions of these life-saving therapies and generate substantial savings for the US health care system."

But alas, all generics aren’t created equally.

“When a chemical drug goes generic there’s a huge cost savings. It’s much simpler process for the generic brand manufacturer to get approval from the authorities to sell that drug,” said Wayne Farrow, President and CEO of Benefits Alliance Group. “Biosimilars aren’t all that different from the original so it’s maybe a little quicker but there’s not as much cost savings in a biosmilar because the cost is not a whole lot different than the original biologic drug.”

While biosimilars will engender some cost savings, advisors shouldn’t be counting on the huge reductions associated with generics for small molecule drugs.

“They should be less expensive and obviously they are going to be less expensive than the original biologic drug but it’s not going to be 75 per cent reduction in cost,” said Farrow. “That’s a concern for sure because those drugs really unless someone decides they want to get market share and drop down the price it’s not going to be the same.”