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Health Affairs, 25, no. 5 (2006):
1202-1203
doi: 10.1377/hlthaff.25.5.1202 © 2006 by Project HOPE |
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From the Editor |
Biotech Drugs Come Of Age; Policymakers Take Notice
IN THE VAST U.S. MEDICAL ECONOMY, with annual expenditures of $2 trillion, spending on biotechnology products represents a minuscule fraction, but it is growing rapidly. In 2005, revenues totaled $50.7 billion, an increase of 15.8 percent over the previous year, according to Ernst and Young, which tracks the industry. The largest biotechnology companies—Amgen, Genentech, Genzyme, and Gilead—enjoyed particularly robust growth. However, the industry as a whole recorded a net loss of $4.1 billion, which underscores the reality that drug development is a risky business. On the public policy front, the biotech industry—indeed, all of the pharmaceutical enterprise—faces greater scrutiny because government interest in it has expanded as a consequence of Medicare’s new prescription drug benefit. The Congressional Budget Office estimates that as a consequence, Medicare will spend a total of $558 billion on drugs between 2004 and 2013. Added political pressure on drug prices could heighten as a consequence of the very design of the benefit and whether Democrats are able to take control of one chamber of Congress. Sometime before the November 2006 election, many hundreds of thousands, if not millions, of seniors could hit the so-called doughnut hole of the benefit: When their annual drug spending reaches $2,250, they become responsible for their drug bill until it reaches $5,100, when Medicare coverage resumes.
A growing segment of pharmaceutical products are specialty drugs, which include so-called biologics: medical preparations that are based on living organisms, not chemical compounds. These products largely form the world of biotechnology and are often used to treat complex chronic conditions, including asthma, cancer, multiple sclerosis, and growth hormone deficiency. Many biotech products provide treatments for diseases that have not yielded to other therapeutics, and they are generally priced at multiples above traditional medications. The policy issues surrounding biotechnology have not been prominent in our pages past, but they are taking on increasing importance as company pipelines surge and products are approved by the Food and Drug Administration (FDA). As a consequence, we are devoting this issue to papers that cover a range of topics central to the future of biotech, particularly those that apply to economics and insurance coverage. We gratefully acknowledge support from three California-based organizations that helped fund this issue: Blue Shield of California was the major benefactor, while Amgen and Genentech also lent support. All papers published by Health Affairs are subjected to rigorous external peer review, including those that we invite.
In our lead paper, contributing editor James Robinson examines the evolving strategies of private health insurers as more biotech products come to market and as physicians and their patients demand access to them. The cost-sharing requirements that insurers place on patients will be an important barometer of how financial risk is shared and how tolerant consumers are to cover this expense. In the next set of papers, authors take a close look at Medicare policy in relation to biologic products. Of particular interest is the paper by Sean Tunis and Steven Pearson because it sets a context for why Medicare is moving in new directions as its stewards strive to maintain beneficiaries’ access while constraining expenditure growth. During the years (2000–2005) that he oversaw coverage policy at the Centers for Medicare and Medicaid Services (CMS), Tunis was the architect of the agency’s "coverage with evidence development" (CED), a concept signaling that evidence will become an increasingly important factor in the decisions of public and private insurers alike.
Finally, on 1 August 2006, Health Affairs launched its new Web-based manuscript submission and review system. This is the culmination of a four-year project managed by our executive editor, Donald Metz, who has worked tirelessly on strengthening the journal in many ways during his years of leadership at Health Affairs. Ask any author who has ever worked with Don, and he or she will tell you how helpful, how insightful, how patient he is in assisting authors and strengthening their papers. The new manuscript system integrates a number of functions, automates routine processes, and facilitates anonymous peer review, thereby promising more efficient and error-free management of the growing volume of submissions that we handle (we will receive more than 1,000 submissions this year, a fourfold increase over the past decade). We deeply appreciate the contributions and participation of authors and reviewers, and we trust that all will find the new system user-friendly and of added value. As always, we welcome feedback on how to improve various aspects of our review process to serve authors, reviewers, and readers to the best of our ability.
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