Biologics Are Not Monopolies to Be Regulated, AEI Economists Assert

Two economists from the American Enterprise Institute (AEI) Tuesday shot back at the idea that biosimilars are natural monopolies and should have their prices regulated by the government, as was proposed a little more than 2 months ago by critics who say that trying to wring lower drug prices through competition with biosimilars is an experiment doomed to fail.

Writing on the same forum—the Health Affairs blog—Alex Brill, MA, and Benedic Ippolito, PhD, write that it is not true that biosimilars are natural monopolies, as asserted by Peter B. Bach, MD, a drug pricing critic who runs a policy institute at Memorial Sloan Kettering Cancer Center, and coauthors Preston Atteberry, Jennifer A. Ohn, and Mark Trusheim this past spring.

Reference biologics may not face immediate competition, they say, and they pointed out that the FDA only released its final guidance on interchangeability in May. That does not mean that the future of biosimilars is bleak; moreover, they write that natural monopolies exist when fixed costs are high relative to potential returns—not just if development costs are high.

Physicians, patients, and payers need more time to get acclimated to biosimilars, and they pointed to the release of the FDA’s Biosimilar Action Plan—released under former commissioner Scott Gottlieb, MD (who now works at AEI)—as being one pathway that should be used to foster competiion.

Brill and Ippelito also take issue with part of the analysis used by Bach et al, saying that an exhibit used in the piece focused on the wholesale acquisition price and not the net price paid after all discounts and rebates.

The net price of reference filgrastim, Neupogen, has fallen about 30% since the introduction of biosimilar Zarxio, they say; likewise, the net price of reference infiximab (Remicade) has fallen about 30% as well.

“We’re on the cusp of meaningful competition in this important space. Let’s not throw in the towel now,” they write.