Realist, not conformist analysis of the latest financial, business and political news

The NHS Miracle, Savings On Adalimumab – This Just Happens Naturally

Glory be to That Wonder of the World that is our NHS, it is to save £300 million on adalimumab. The only slight wrinkle with this story, the story which is being held up as a proof of the wondrous and unique manner in which our health care is delivered, is that exactly the same process is going on in every health care system in the world. This is not, despite the manner in which the tale is being told, a result of having all the clever people in the bureaucracy organising our lives for us. It’s a result of the patent on the drug, adalimumab, running out. Therefore everyone gets the cheaper generic versions. Because that’s just how drug development works.

Hey, maybe it shouldn’t work this way, maybe a better system can or could be devised, but this is the way that it does.

The NHS is set to save a record £300 million after negotiating deals with five manufacturers on low-cost versions of the health service’s most costly drug.

The saving – the biggest in NHS history from a single drug negotiation – could pay for 11,700 more community nurses or 19,800 more breast cancer treatments for patients.

Isn’t that excellent? The bureaucrats have achieved something.

The saving is the result of the introduction of drugs almost identical to adalimumab, which is prescribed to more than 46,000 patients to treat conditions such as rheumatoid arthritis, inflammatory bowel disease and psoriasis.

Joy unconfined at the perfection of our entirely state run system.

NHS England chief executive Simon Stevens said: “As part of the NHS’s long-term plan we are ensuring every penny of extra investment is wisely spent.

“Harnessing the power of competition between drug companies, NHS England has now freed up hundreds of millions of pounds of savings to reinvest in patient care.

See? All those offices full of papershufflers have a value!

Except we knew this was going to happen. Only drivelling idiots would not be able to do this:

The United Kingdom’s National Health Service (NHS) has begun to prepare provider trusts and commissioners for the advent of biosimilar adalimumab. In a briefing to regional committees on the use of best-value biologics, the NHS urged commissioners to begin planning to use the best-value adalimumab option beginning in October 2018, when Amgen’s EU-authorized biosimilar, Amgevita, becomes available.

According to the briefing, the reference adalimumab, Humira, cost the NHS over £333 million (approximately $469 million) to treat approximately 57,000 patients with home-administered subcutaneous injections from 2016 to 2017. The NHS hopes that using the adalimumab product that provides the best value to the system will help it to achieve its 2021 goal of producing an annual savings of £200 million to £300 million (approximately $282 million-$422 million) through increased biosimilars use. The brief says that, in the current financial year, using other approved biosimilars has saved the NHS £170 million (approximately $239 million).

That’s the prediction from 7 months ago that this would happen.

So, how did we know this would happen? Because the patent on the drug ran out (October 16th actually). And this is what happens.

Our basic problem here is that it costs $2 billion or so to get a new drug to market. Maybe it shouldn’t, maybe we should cut the testing phase, or the regulatory bureaucracy, but that’s about what it does cost. But once that permission to use and sell has been granted then it only costs pennies to actually make the drug. Huge sunk and fixed costs, entirely minor marginal costs. This produces a problem. Who will spend the $2 billion if anyone can just then copy and sell for pennies?

For someone who has already spent $2 billion we don’t give a damn. We’ve got the new drug, we’re gaining the benefit, they can go whistle for their money. Except, except, if we do that, then who will invest $2 billion to cure the next ails to which we are prey? So, we set up a system whereby those who have spent $2 billion have a chance at least of making it back. We grant them a patent, an exclusive right to sell their new drug. This lasts 20 years, the clock starts to tick quite early on in the development process. In effect, the producer has 10 years or so between approval to sell and the patent running out. In that period they’ll do their best to make back their $2 billion. Then everyone else can make these biosimilars, generics as we also call them, and prices slump.

This is not an error in the system, it is not a mistake, this is how it is designed. We get all that capital invested in trying to find ways to cure us, the capitalists get their pound of flesh and we, after a time, get nice cheap and safe drugs to kill off the things which would kill us. Not a perfect system by any means but certainly the best we’ve come up with so far.

So, is this anything to do with the NHS, this arrival of biosimilars for Adalimumab? Nope, it’s all to do with the basic structure of the global pharmaceutical market and system. The patent’s run out, other people get to manufacture and sell at something close to marginal cost and we all get the cheaper drugs. We all meaning the entire global population not just those of us oppressed by the National Health Service.

This doesn’t stop half the newspapers in the country running laudatory pieces about how well the NHS works of course, for it’s the Wonder of the World, isn’t it? So glorious that absolutely no one has copied it, they all gaining health care too without having to boast about it at the Olympics.

The reality here is that given Adalimumab’s patent running out if the NHS hadn’t secured access to generics we should have burnt the thing to the ground. But then maybe we should be doing that anyway. Certainly we could do with a little less propaganda about it.

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5 years ago

“the NHS urged commissioners to begin planning to use the best-value”
Which implies that they regions don’t bother to source biosimilar drugs unless they are told to!

The NHS briefing should read “X drug is coming out of Patent so in line with policy NHS regions will begin using biosimilars which are cheaper and just as effective.”
Anything else implies either they don’t use biosimilars automatically & need to be told to stop wasting vast amounts of money, or they do use them automatically and don’t need to be told – therefore telling them is a waste of money.

5 years ago
Reply to  swannypol

The NHS has form here by not uniformly, automatically switching to cheap genetics, and continuing to pay for full price branded products, because there is no central buying authority nor single supplier of drugs. Plus clinical choice means some clinicians will resist change to cheaper or other brands.

It will be interesting to see a report on whether all buyers in the NHS respond.

Jonathan Harston
Jonathan Harston
5 years ago

Didn’t omepazole go out of patent recently? I remember going from having to get it prescribed to being able to buy it over the counter whenever I wanted it for cento-pennies.

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