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Private benefits plan managers can’t deny the impact of biologic drugs on their drug plans. According to Telus Health Solutions 2010 research, biologic drugs represent 14% to 16% of drug spend and 60% of catastrophic claims. However, they account for less than 1% of the total number of claims, according to ESI Canada’s 2009 Drug Trend Report. Biologic drug claims are growing by 14% per year (versus 4% for other drugs) and are expected to account for 33% of drug spend in 2014, according to ESI’s 2010 Drug Trend Report.

On the flip side, biologic drugs provide significant improvement in health outcomes. Treatment with Rituxan cuts deaths in non-Hodgkin’s lymphoma in half, according to a 2010 article in the Journal of Clinical Oncology. And recent studies in Rheumatology and the International Journal of Advances in Rheumatology have demonstrated that an early start with biologics for RA patients results in fewer lost workdays and increased productivity.

So how are biologics different from traditional medications? Biologic drugs are produced from living cells, whereas traditional drugs are produced from chemicals. A traditional drug can be created in any laboratory setting as long as you have the right ingredients and equipment. With biologic drugs, the product is the process. A small difference in the manufacturing process (such as duplicating a production facility in a different country) can significantly affect the nature of biologics and the way they function in the body.

Many plan managers hope that the cost of biologics will decrease when their patents expire and follow-on versions, called subsequent entry biologics (SEBs), enter the market. As a result of their manufacturing complexity, the regulatory approval process in Canada will be significantly different. In general, in order to substitute a generic drug for a brand name drug at the pharmacy counter, Health Canada must declare the drug bio-equivalent, and the provincial regulations must permit the pharmacist to interchange the drug without consulting the physician. With SEBs, the approval process will differ from that of traditional generic drugs. Whereas an application for a traditional generic drug can be abbreviated and requires demonstration of bio-equivalence, a SEB must be submitted as a new drug entity and requires clinical trials. Upon approval, Health Canada will not declare the drug bio-equivalent, and it is likely that pharmacists will not be able to interchange the SEB and the brand name drug.

Because of the complexity in the production process and the requirements for a full submission, clinical trials and review of the production process, it is likely that SEBs will not result in the significantly lower costs that we have seen with traditional generic drugs.

Suzanne Lepage is a private health plan strategist with Suzanne Lepage Consulting.

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© Copyright 2014 Rogers Publishing Ltd. This article first appeared in Benefits Canada.

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