Cost of Biologics - Who holds the answer?

Biologics, the new ‘wonder-drug’ in the fight against arthritis, offers the hope of partial or complete remission to people with previously incurable systemic arthritis diseases like rheumatoid arthritis, ankylosing spondylitis, psoriatic arthritis and juvenile arthritis.

But there is no getting around the fact that biologics are very expensive, typically costing 20 times more per patient per day than traditional drugs.

A variety of factors go into the high cost of biologics. For starters, development of the complex proteins and antibodies is much more costly than development of the pharmaceutical industry's traditional synthetic organic chemicals.

Because biologics are mostly "large-molecule" drugs and can be produced only within living cells, the complexity and cost of production of biologics is far greater than manufacturing traditional small-molecule drugs in specialty chemical plants.

With little likelihood that most biologics will face early competition from bio-similars that might help push down prices, role players are concerned about the strain increased use of biologics will impose on the healthcare system.

One extra cost of biologics that could be immediately addressed stems from the fact that many are commonly administered via injection or infusion in a doctor's office (or in a clinic / hospital), unlike small-molecule drugs which are generally taken orally.

In the American healthcare market, higher costs for biologics are also attributed to many doctors who administer drugs in their office -- such as oncologists and rheumatologists -- buying biologics and other drugs directly from the manufacturer, then sell them to patients at a significant profit. This situation is not reflected in the South African market – despite this, the cost of the biologics medication remains of an exorbitantly high nature. Why? Surely development costs cannot be the only contributory factor?

What is the profit margin of pharmaceutical companies then in the South African market? The fact remains that the South African market is a fairly insignificant one (compared to the American market where 20% of medical aid costs are accounted for by biologics and where 40% of arthritis sufferers are on biologics). To make the drugs available to a wider spectrum of arthritis sufferers will place an additional burden on the medical aid industry. Where to we start looking for answers then?

Will the price of biologics come down? Although the manufacturing process is lengthy and expensive, no significant reduction in biologics pricing has been forthcoming in the last seven years, despite considerable strengthening of the Rand.

It’s time for all role players to adopt a policy of transparency – for pharmaceutical companies to re-address profit margins could result in a wider market being reached; possibly resulting in a more transparent approach to payment for and availability of these drugs from the Medical Schemes sector. For a better life...