THE BLOG
12/12/2014 03:59 pm ET Updated Feb 09, 2015

The Pharmaceutical Industry Still Doesn't Want You to Pay Less for Their Products

Thirty years ago, when the Hatch-Waxman Act made it easier for generic drugs to win Food and Drug Administration (FDA) approval, the president of what we now know as PhRMA (Pharmaceutical Research and Manufacturers of America) told the New York Times:

"Our members are concerned that the F.D.A. standards do not insure that two versions of a drug deemed equivalent will be equally safe and effective when used interchangeably."

The industry's "concern trolling" didn't stop there.

Pharmaceutical companies hired doctors to talk to the press about the dangers of switching to generics. They argued for restrictions on automatic substitutions, publicized anecdotal observations as evidence of adverse effects and helpfully sent pharmacists forms to record the many patient complaints substituting generics would surely earn them. One brand manufacturer even issued a "Dear Pharmacist" letter cautioning that pharmacists who substituted generics for their product could be exposed to patient lawsuits.

If you know anything about the Hatch-Waxman Act, you know the only safeguards it eliminated were the ones that had been protecting name-brand profits. Since generic drugs are clinically identical versions of drugs already approved by the FDA, the FDA's clinical trial requirements before Hatch-Waxman did little more than deter generic manufacturers from selling their products in the United States, thus allowing name brands to maintain market monopolies years after their patent protections expired.

Dropping those requirements promised to flood the market with generics and cost the pharmaceutical industry billions...unless, of course, they could keep folks from switching to generics.

To its great credit, the FDA, when writing the Hatch-Waxman regulations, not only didn't fall for the industry's spin, it refused to bow to its pressure. The agency moved ahead with regulations that ensured generics would be widely available.

As a result - 30 years later - even PhRMA acknowledges generics have been a benefit to the system, citing the fact that four out of every five pharmaceuticals dispensed in the United States is a generic. According to the Generic Pharmaceutical Association, generics have saved the American health care system trillions ($239 billion in 2013 alone), while giving millions of Americans access to lifesaving medication they might not otherwise be able to afford.

Buoyed by this success, Congress passed legislation in 2010 to ease the FDA's approval process for medically equivalent versions of biologic medications - known as biosimilars - and the FDA is currently writing the necessary regulations.

Biologics are the fastest growing class of prescription therapeutics on the market, in large part because advancements in biotechnology are leading to groundbreaking treatments for some of the hardest to treat conditions, such as: cancer, rheumatoid arthritis, diabetes, and multiple sclerosis.

Biologics are, however, the most expensive therapeutics on the market, in large part because they weren't prevalent enough in the mid-80's to be covered by Hatch-Waxman. (The first biologic didn't come to market until 1982.) Without an abbreviated pathway for FDA approval, biosimilars now face the same obstacles that once deterred generics from being brought to market. As a result, biologics currently cost as much as 20 times more per patient than traditional pharmaceuticals, while accounting for more than 28% of the industry's profits.

Lack of competition is, of course, not the only reason biologics cost more, but as a recent RAND Corporation study found, it is a factor. The study's authors predict that added competition from biosimilars could lead to a "$44.2 billion reduction in direct spending on biologic drugs" over the next ten years, while cautioning that "actual savings will hinge on the specifics of the final FDA regulations."

As you may have guessed, the pharmaceutical industry has concerns about the specifics of those regulations. Namely, as a PhRMA representative told the FDA, that allowing biologics to be used interchangeably will be "unsafe for patients."

Again, the industry's concern trolling, doesn't stop there.

For example, the industry is arguing that - to protect patient safety - biosimilars should be assigned unique International Non-proprietary Names (INNs), the official generic name given to a pharmaceutical's active ingredient. They, of course, fail to mention that since INNs enable generic substitution, assigning unique names to biosimilars would also make it a lot harder for pharmacists to substitute them, which, in turn, would protect the industry's profits.

In other words, it's pretty much the mid-80's all over again.

With billions on the line, it's not surprising that the pharmaceutical industry would, once again, warn people away from their competitors, but -- given the industry's history -- it's also not surprising that Americans routinely rank the pharmaceutical industry as "untrustworthy" and in need of new regulations.

If PhRMA was smart, it would realize this lack of trust could ultimately cost the industry more than just competition from biosimilars. For example, being perceived as untrustworthy was one of the main reasons people believed Jenny McCarthy when she warned them not to vaccinate their children. (Coincidentally, vaccines are a type of biologic.)

Earlier this year, PhRMA began a blog lamenting the anti-vaxx movement, with the following quote:

"Despite rigorous and extensive testing for safety and efficacy, a single piece of widely circulated false information can have lasting impact on the public's perception of...safety."

I doubt the pharmaceutical industry will ever recognize the irony in its use of those words, but for the sake of patients everywhere, I hope the FDA will - once again - see through its spin.