Biologics, namely biologically derived therapeutic agents such as viruses, vaccines, blood products and nonsynthetic proteins, account for a large and growing portion of total spending on prescription medicines in the U.S. Biologics include unique treatments for patients with previously untreatable cancers or devastating genetic disorders, such as Ketruda, for treatment of advanced melanoma, and Cerezyme, for the treatment of Gaucher disease.

While biologics account for only a small percentage of the total prescriptions written, they are very expensive. Biologics accounted for at least 18 percent of total prescription medicine costs in 2012, and costs for treatment with a single biologic medicine can exceed $100,000 per year. The amount spent on biologic medicines is expected to increase substantially. The reason for the high cost of biologics is in part because of the lack of generic equivalents. While regulations for the approval of conventional small-molecule drugs were covered by the 1984 Hatch-Waxman Act, these regulations did not apply to biologics. Until the passage of the Biologics Price Competition and Innovation Act in 2010 (the BPCIA), the legal framework for approval of generic biological drugs did not exist, and until quite recently the legal structures needed for approval of generic biologic drugs had not been implemented. The Food and Drug Administration’s (FDA) recent creation of “The Purple Book” is an important step toward the approval of less expensive biosimilar or biointerchangeable biologics.

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