Photographer: J.B. Reed/Bloomberg
The Biologics Price Competition and Innovation Act was signed by President Barack Obama in 2010 as part of the Affordable Care Act. Its essential goal was to infuse competition and lower the prices of drugs that were made from living cells — so-called biologics — in much the same way the Hatch-Waxman Act of 1984 made it possible for less expensive generic drugs to compete with, and often replace, so-called small molecule drugs.
Biologics are not completely new — insulin is a biologic — but they are the vanguard of modern medicine, with the ability to better target particular diseases, especially those with small patient populations. They are more complex than traditional drugs, and usually more expensive. To take just one example: Soliris, which is made by Alexion Pharmaceuticals Inc. and treats two extremely rare diseases,
costs over $500,000 a year for a U.S. patient.
Until the 2010 law, biologics had no fear of competition — there was no legal way to introduce generic versions into the market — so they were able to maintain their monopoly price even after their patents expired. The BPCIA (as everyone in the industry calls the law) was intended to establish mechanisms within the Food and Drug Administration, the Patent and Trademark Office, and the courts that would allow the introduction of "biosimilars." These drugs weren't exact replicas of biologics, but were similar enough, and safe enough, to be used instead of the brand-name drugs.