What is a Biologic?

January 21, 2014

Employee Benefit & HR News

In the course of a day most consumers encounter advertisements on television, magazines and other media for a host of pharmaceuticals. So it is likely you have heard the term “biologic” used in some of those ads.

Have you wondered what exactly a biologic medication is? Let’s learn more about these meds and how they differ from conventional drugs. Let’s also learn about the impact on the quality and cost of healthcare today.

Biologics, which are also known more formally as biological response modifiers, differ from conventional drugs in that they are manufactured using a living system such as microorganism, plant, or animal cells. The result of this process is a very large and complex molecule or mix of molecules. Some biologics are produced by recombinant DNA technology. This is in contrast to conventional drugs which are comprised of smaller molecules and are produced through chemical synthesis by combining chemical ingredients in a specific order. (How do Drugs and Biologics Differ?)

It is important to note the process used to create a biologic is the mechanism by which the medication is produced. “The product is the process” and it is proprietary to the manufacturer. The process must therefore be tightly controlled and monitored at every step of the way to insure the end product is produced as expected. Small process differences cannot be allowed to occur as this can result in an end product that varies significantly from the desired result. This facet is the biggest difference from producing a conventional medication. It also makes it difficult for another manufacturer to create an equivalent medication (known as a biosimilar) at the present time. (How do Drugs and Biologics Differ?)

Biologics are part of a growing drug class called specialty medications. Specialty meds are typically used to treat complex, chronic health conditions including but not limited to rheumatoid arthritis, Hepatitis C, multiple sclerosis as well as certain cancers.

Most biologic medications are delivered through injection or infusion and many require the intervention of a physician to administer them. The costs of these medications to a health plan are not only being incurred as part of the pharmacy benefit but in the medical benefit as well.

Advancements made in the development of specialty meds including biologics has been a godsend for individuals suffering from serious health conditions, however the medications are also typically quite expensive. Some treatments can cost hundreds of thousands of dollars per year for each patient. This creates challenges for insurance carriers and plan sponsors who are being called upon to cover the high cost of these therapies. It is a double-edged sword balancing the improvement of patient care while managing significant costs.

Express Scripts advises specialty drug spending is expected to increase 67% by the end of 2015. Three of the four most costly drug therapy classes will be for specialty conditions. (Specialty Drug Spending to Jump 67% by 2015)

Express Scripts also reports the U.S. was expected to spend approximately $114.7 billion on specialty medications in 2014 with $4 out of every $10 spent on prescriptions covering the cost of medications for complex conditions. The company estimates $250 billion could be saved between 2014 and 2024 if just eleven biosimilar medications were allowed to enter the market during that period. However, as mentioned above, the process of creating biosimilars is challenging. This is due to the nature of biologics and also the current FDA regulations in approving these medications.

Currently, it is difficult to monitor the process of producing these medications vs. the manufactured end-result of traditional drugs. Express Scripts reports the large biotech companies which manufacture brand-name biologics have taken steps to protect their market share through lobbying and state legislation. The manufacturers claim they have taken these steps to protect the public from unsafe medications. (The $250 Billion Potential of Biosimilars)

In summary, this will undoubtedly be the subject of continued scrutiny which is hopefully resolved to the benefit of patients in need of these life-changing medications.

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About Rick Ewers

Mr. Ewers is an analytical consultant providing financial analysis, vendor evaluations, market & compliance analysis, as well as national industry trending for group employers.

View all posts by Rick Ewers

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