Making specialty drugs cheaper

Marketplace Staff Mar 30, 2007

Making specialty drugs cheaper

Marketplace Staff Mar 30, 2007

TESS VIGELAND: Ever heard of biologics? They’re the most expensive pharmaceuticals on the market
And yet you’ve probably never seen a commercial for them.
Which should tell you something.
Every pill seems to have its own public pitch
Complete with some long disclaimer about how it might give you massive headaches and turn your teeth green.
But these specialty drugs don’t have ad campaigns.
This week, the FDA announced more research is needed for possible cheaper generic versions.
Andrea Smardon reports

ANDREA SMARDON: Darren Baker is a chemist. He works for a company called Biogen Idec in Cambridge, Mass. The company produces biologic drugs to treat people with diseases like cancer and multiple sclerosis.

Baker works on isolating proteins that will be the basis for the next drugs.

The potential life-saving proteins have to be stored at very cold temperatures.

DARREN BAKER: So as you can see my freezer is completely chock a block. So we have proteins for example here, these are purified.

Unlike traditional pharmaceuticals, biologics are made from living cells. The hope is that essential proteins from the cels will eventually be delivered to patients through injections or infusions.

Baker has always believed that his work is important. But when a doctor found a grapefruit-sized tumor in his chest, the work became personal

BAKER: These are my kids. My son Cameron, who’s 9, and my daughter Jackie.

Baker points to photos on the walls of his small corner office. Pictures of him with his two children on fishing trips, relatives who have died — some from cancer.

BAKER: This is my step-dad. This is my great aunty Mary, who passed away last year from Pancreatic cancer.

Baker was diagnosed with B-cell Non-Hodgkins Lymphoma in 2003. His oncologist suggested traditional chemotherapy as well as a specialty drug called Rituxan. Baker was all for it. Rituxan is produced by his colleagues at Biogen Idec.

BAKER:”My own experience with cancer and being treated with my own company’s drug really brought it home. You know what we do, what I do, what my colleagues do in making drugs to significantly improve people’s lives.

At the time, Rituxan was not yet approved for the type of Lymphoma Baker had, but as a scientist, he did his research, talked to his colleagues. He was optimistic.

BAKER: Hopefully my colleagues have got it right, because now their drug was going in my veins.

Three years later, Baker is cancer-free. But specialty drugs like Rituxan don’t come cheap, and the cost gets passed on to all of us in the form of higher premiums.

Mathew Connell is director of pharmacy services at Blue Cross Blue Shield, the largest insurer in Massachusetts. He says many new specialty drugs are coming on the market, and they’re a rapidly growing medical cost.

MATHEW CONNELL: Well if we look at 2005, there was roughly $40 billion worth of specialty drug spent in the U.S. We project that it could be 90 billion by 2009, so essentially more than doubling in four years.

At Blue Cross Blue Sheild, 20 percent of its pharmaceutical costs come from specialty drugs. But less than 1 percent of its members are taking them. This is becuase the drugs can cost as much as $200,000 a year for one patient.

Biogen Idec spokseman Tim Hunt says it typically takes about a billion dollars to develop each one.

HUNT: And then you realize that probably 7 out of 10 products that do get approved by the FDA end up being kind of a net loser financially to a corporation, that’s a pretty big expense.

Insurance companies have been able to reduce pharmaceutical costs by offering generics, but that’s not an option with biologics. According to Hunt, the process of extracting proteins from living cells is far more complicated than making a standard pharmaceutical pill.

HUNT: That makes it much, much, much more difficult to replicate them in a generic form, which is why there really will probably never be true generic biologics.

Insurance companies claim specialty drugs are likely to continue driving up medical costs. So, is it worth it? Ask Darren Baker.

BAKER: Well, I’m here. I’m not in remission. The fact that I’m here, working in the drug industry, making other drugs, you know, providing for my family, my kids have their father, my wife has a husband. I mean, absolutely. Worth every penny.

Those pennies could add up to healthy revenue growth for specialty drug developers in the years to come.

In Boston, I’m Andrea Smardon for Marketplace.

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