Abbott Laboratories technician Samuel Kamau tests a filter used in making… (For The Times, Josh Reynolds )
In 2001, Abbott Laboratories spent nearly $7 billion on the biggest acquisition in the company's 123-year history, primarily to get access to one drug: Humira.
Since then, the North Chicago drug giant has raked in more than $24 billion in sales from Humira, a pricey medicine derived from human cells and used to treat a variety of autoimmune diseases. This year, Humira is forecast to have its biggest year ever, with some analysts projecting more than $7 billion in sales.
But the national healthcare law is intended to put the brakes on the profit bonanza from Humira, as well as many other biotechnology drugs, by opening up the sector to generic competition. That will make biotech drugs — also known as biologics, which are innovative treatments derived from living cells — affordable to more consumers.
Many patents on some top-selling biotech drugs will start to expire in the next few years. But when "biosimilars" or "biogenerics" will be available to U.S. consumers is unclear. The Food and Drug Administration is working on guidance on how the approval for this class of generic drugs will work.
"Biotech drugs are among the world's most expensive," said Sidney Wolfe, director of the health research group at Public Citizen, a consumer watchdog of the healthcare industry. "They have been good, but they have been expensive, so it is extraordinarily important to get biogenerics as quickly as possible."
The Affordable Care Act, signed into law by President Obama in March 2010, clears a path for the FDA to approve generic forms of biotech drugs. Biogenerics have been unavailable in the U.S. because they were not part of the 1984 landmark Hatch-Waxman Act, which allowed for cheaper generic versions of chemically derived drugs.
Thanks to the 1984 law, consumers have access to generic versions of many blockbuster treatments, including the cholesterol drug Zocor and the antidepressant Prozac, which can cost $3 to $5 a day. The generic forms of those drugs typically cost pennies a day.
But biotech drugs weren't developed until the 1980s, when technology cleared the way for genetic engineering on DNA, allowing drug companies to rake in huge profits from this relatively new class of treatments.
Humira is a monoclonal antibody, hailed for its ability to work like a smart bomb because of its ability to precisely attack disease cells. Abbott says more than 500,000 people worldwide are taking Humira to battle a variety of autoimmune diseases, including rheumatoid arthritis, Crohn's disease and psoriasis, often halting progression of the condition.
But the innovation has come with a price. Humira costs patients, their employers and health insurance companies about $20,000 for one year of treatment. Doctors say costs can run higher depending on the patient and dosage needed.
The anti-anemia drug Epogen can cost more than $10,000 a year per patient, and biologic medicines for cancer and other life-threatening diseases can cost tens of thousands, sometimes more than $100,000 a year.
Although biotech drugs are very expensive for consumers, they can pay off for drug companies.
When Abbott engineered its $6.9-billion acquisition of Knoll Pharmaceuticals, which developed Humira, Wall Street analysts and investors thought the company spent too much. The drug industry at the time often touted the cost of researching and developing one drug at $800 million or more.
Knoll provided Abbott with a host of products, including the popular thyroid treatment Synthroid and the diet drug Meridia, which had a few years of good sales before the FDA requested that the company take it off the market because of heart risks. When Abbott bought Knoll in 2001, which was before Humira won FDA approval, Knoll was generating about $2 billion in sales.
"They have more than recouped their investment," Wolfe said of Abbott.
Miles White, Abbott's chairman and chief executive, recently indicated that Humira would continue to be a blockbuster, given that its first patents don't expire for another five years.
"Humira has been a phenomenally successful product with application in a lot of different disease categories," White said at the company's annual shareholder meeting. "Humira's got long legs, out until about at least 2016, when its first patents begin to expire."
White is banking on all of the FDA-approved indications for Humira, which has held up against competition from rival rheumatoid arthritis and Crohn's treatments derived from biotechnology, such as Johnson & Johnson's Remicade and Amgen Inc.'s Enbrel. The patent for Remicade also is expected to expire in the next few years.
"It is yet unclear what kind of competition we'll experience from biosimilars or the equivalent of generics at some point later in time," White said. "So I think some of the concern about Humira is exaggerated and overblown."