Will Congress Cut Biotech Drug Prices?

New Breed Of Drugs Helps Those With Devastating Illnesses, But Prices Are Astronomical

(CBS)  Caryn Allen is a living example of what's good - and what's troubling - about the biotech drug revolution. The drug she takes for multiple sclerosis, Avonex, has kept her pain-free and symptom-free for eight years, reports CBS News correspondent Wyatt Andrews.

But Avonex is expensive - an eye-popping $23,000 a year. Much of that Allen pays herself, even with insurance.

“I still have a very large co-pay and deductible I need to meet to receive this medication,” she said. “It doesn't make any sense to me why a drug would be so costly.”

Here's why: Where traditional drugs are made from chemicals, biotechs are made from living organisms. But unlike traditional drugs, there's no federal law allowing generic versions of biotech drugs - which means there's no competition.

Congressman Henry Waxman has proposed a bill allowing the FDA to approve biotech generics.

“We want competition, because competition holds down the price of these drugs,” Waxman said.

Government and insurance companies are straining under the high cost of these drugs.

But in Congress, lobbyists for the biotech industry are waging a pitched battle, arguing their drugs should be protected against generic competition for an extra 14 years.

They are lobbying Congress for what's called data exclusivity, which is basically a longer period of time when the inventor of a biotech drug can keep secret how the drug gets made.

At Biogen Idec, the company that makes Avonex, CEO Jim Mullen says it takes a billion dollars to invent a biotech drug.

“After we've spent 15 years developing these products, if we don't have some time to recoup those investments, there's just not the incentive to invest behind them,” he said.

Avonex has been a blockbuster investment, with $1.7 billion in yearly sales and 130,000 patients. Mullen argues the high cost of the biotechs is worth it.

“You know, what's the value of my life, you know, is it worth the value of a Honda Accord?” he asked. “I think maybe it is.”

But extra protection against competiton? Waxman calls that a money grab.

“Until they have competition, they have a monopoly and if you have a monopoly over a life saving drug, you can charge whatever price people can pay,” Waxman said.

Caryn Allen is both grateful for the benefits of Avonex and incensed about the price. And that's the dilemma facing Congress as it confronts generics: how long can the country pay full price for these breakthrough treatments without breaking the health care bank.

[xavia1-2009]

also, i think the value of ceo jim mullen''s life may only be worth a schwinn.

[xavia1-2009]

gosh, it''s unbelievable that they''re making such a big stink about not allowing generic drugs so they can keep on making TONS of money, when it''s people''s lives they''re dealing with. How can you be in the business of saving lives and yet be so greedy? it''s disgusting.

[klsmathers]

I, too, am outraged by the HONDA ACCORD comment made by CEO Jim Mullen. I didn''t think you COULD put a price on a human being. His company MAY HAVE spent a billion dollars to invent one biotec drug, but gained $1.7 billion in yearly sales from 130,000 patients?? Do you think he bought a Honda Accord from his 6 or more figure income? I think not. People who need the drugs to live pay for, I''m sure, a big fat luxury car for him. What happened to humanity? Congressman Waxman....please continue your fight. You have my support.

[eggy1620]

jacqui_r_74: You cannot afford health insurance. How much do you spend on your internet connection? That could certainly go towards a health plan couldn%u2019t it?

[quiltfanatic1]

I''m incensed by the dishonesty and arrogance of this CEO as well. How insensative can a human be towards another? A new Honda indeed. He misrepresented even that comparison. It would actually cost you the equivalent of a new Honda every single year of your life. How many Americans could afford THAT price? I know I couldn''t. I''m retired and living on a very limited income.

[quiltfanatic1]

Is my life worth the price of a Honda? You bet it is. But he neglected to mention that it would cost you the equivalent of a new Honda every single year of your life. Put THAT into perspective and I seriously doubt most americans could afford this life saving drug. I know I can''t. I''m on social security.

[atrue1]

What about those who can''t afford a Honda, don''t they deserve to live?

With their profits, they can afford to buy all their consumers a fully equipped top of the line Honda.

But I bet Jim Mullen drives a much nicer car.

[jlyn74]

I was outraged by the CEO''s comment about the Honda Accord. That was disgusting. My family doesn''t have health insurance (none is provided through our employers and it would cost around $800/month to get private insurance), and being in the lower-mid economic range, we would be unable to benefit from such meds if needed. You can take out a 6 year loan on a Honda Accord, I doubt very seriously the banks are going to start approving loans for prescription meds. This is disturbing. Maybe that CEO needs to walk in our shoes for a day, driving a Honda Civic, having health problems, and no options for healthcare.

[itgranny]

What I would like to see disclosed is which medical school helped out with the research of this drug and how much tax payer money went into the discovery of these products. These drug companies like to tell us these drugs etc. cost a a ton but fail to mention that they get help from the government and schools to do the research. I guess to me, I''d say that if these companies did the research completely on their own, then the big long copyright period is ok. If they used taxpayer dollars to discover and bring the product to market, then the copyright should be considerably shorter.

[researcher3]

I guess the real question is how much is enough to provide incentive to gamble a billion dollars? Often times drugs almost make it to the market, and fail. If you do not provide enough incentive the companies will not perform the research, and you would have no drug at any price. The drug companies can make a decent profit by just selling generics and not bothering to develop new drugs. Imagine all the research dollars going to marketing.

[sheilad9]

I also have MS and know just how Caryn Allen feels. I was disturbed by Jim Mullen''s comment about the Honda Accord. Luckily I have insurance, but the co-pay and deductible still causes my family to make sacrifices. $1.7 billion a year for an extra 14 years? Congressman Waxman is right.