Chemotherapy for Breast Cancer – This is what happened when the free market reached excessive prices

Nine to twelve years. That’s about how long most drug companies have to make serious money on new products before their patent protection ends. Then generic companies enter the fray and prices typically drop.

But 20 years after it hit the market, Herceptin (a drug used to treat breast and stomach cancer) was still priced at more than $70,000 per patient. How could it stay so expensive for so long? And what happened recently that caused the price to drop almost 60%?

I have a one-word answer to both questions: biosimilars!

Many common medications are small molecules – products like aspirin and angina pills – that are the products of relatively simple chemical reactions. A formula, a laboratory full of beakers and pipettes, and a competent scientist are on their way to manufacturing a generic drug. Herceptin, on the other hand, is one monoclonal antibodya large ‘biological’ molecule that cannot be synthesized by a chemist. Biological drugs such as Herceptin are typically produced in vats, sometimes with genetically modified bacteria designed to replicate the molecule. Knowing the molecular form of Herceptin is not enough to allow a scientist to create the drug; she would still have to overcome a host of manufacturing challenges: How do you program the bacteria to make the drug? Under what conditions do you grow the bacteria? Etc.

To bring a generic drug to market, companies might take two years to perfect their manufacturing processes, and spend several million dollars to prove that the chemical is equivalent to the brand-name drug. In contrast, it takes six to nine years to bring biosimilars to the market, often at a cost of 500 euros over $100 million. As a result, it is difficult for companies to enter the market with biosimilars, even after the manufacturer’s original patent has expired.

Lacking competition, Herceptin brought its manufacturer (Genentech) more than $300 million in annual sales in the United States in 2007, almost two decades after it came to market. That return reflects two things: the drug was effective and the price was high.

Ultimately, a few courageous companies proved that they too could successfully produce the molecule, which goes by the generic name trastuzumab. Courageous because there was no guarantee that physicians would trust these other manufacturers enough to deliver their “biosimilar” products. Also courageous because they were competing with a large company and its powerful lawyers, who would challenge whether they could market the drug. As a Genentech spokesperson explained to me, the company has long “supported the FDA’s efforts to implement an evidence-based pathway for the approval of biosimilars.” Nevertheless, many companies aggressively resist biosimilar competition, especially if they can raise credible scientific doubts about whether the competitor has successfully created a molecule with the same or similar biological activity as the original.

When multiple companies did come to market with biosimilars, they did gaining the trust of a significant number of doctors. Here is a picture of the market share of these competitors, out a study performed by Alice Chen and colleagues from the University of Southern California:

And here’s a photo showing that after this contest, prices dropped by as much as 60%:

According to Genentech, the current price of Herceptin for a patient with “HER2-positive metastatic breast cancer” is approximately $50,000, a significant decrease from the first twenty years it was on the market. Biosimilars cost less than that.

It is still a very expensive treatment. But if you or a loved one needs Herceptin/trastuzumab, it’s good to know that your doctor should be able to find a relatively affordable version of the drug. The healthcare market is finally becoming competitive enough to drive down the price of this life-saving chemotherapy.