Ever since AbbVie (ABBV) was spun off from Abbot Labs (ABT) the major concern was the upcoming loss of patent protection for Humira. Humira is one of the most successful drugs ever and it provides over 60% of AbbVie’s revenue. Losing Humira would be a huge blow to AbbVie’s business.
The common misconception with Humira is that it is a small molecule drug like Lipitor. With small molecule drugs, as soon as patent protection is gone sales plummet as cheaper generic drugs hit the market.
Humira is not a small molecule drug, it is a large molecule biologic. Biologics use microorganisms to produce a protein, the drug, that is then isolated and processed for human use. The entire process is the drug. One change in the production can have large consequences. It is because of this that biosimilars have to undergo safety and efficacy tests just like the name-brand biologic.
A small molecule generic just has to prove that it is the exact same chemical composition and structure as its name-brand counterpart.
This makes biosimilars very costly to make. The companies that make the biosimilar can’t offer too big of a discount to the name-brand biologic as The Wall Street Journal reports.
Biotech drugs are more difficult and expensive to make than traditional chemical-based pills. That is true of their knockoff versions, as well, making biosimilar makers unwilling to sharply undercut prices of the original versions.
“I really don’t expect big relief from biosimilars,” says Steven Marciniak, vice president of pharmacy programs at Priority Health, an insurer based in Grand Rapids, Mich.
The first biosimilar on the U.S. market, a knockoff of Amgen Inc.’s cancer-care drug Neupogen, was priced just 15% below the branded drug late last year. During the three years before, Amgen had raised the list price of a vial of Neupogen by 15.7%, according to data firm Truven Health Analytics.
If I’m a Doctor or a patient knowing that a biosimilar may work as well or it may not as the name-brand biologic will I choose the biosimilar for a 15% discount? Some will, but will it be at the same rate as people switching to generic small molecules? No.
The loss of Humira’s patent is not as ominous as it looks.