In 2010, the Affordable Care Act created a pathway for the approval of so-called biosimilars, which are competitors to complex biologic drugs like Humira that are made inside living cells. Unlike generic equivalents of traditional synthetic medications, biosimilars usually are not identical to their branded counterparts and cannot be swapped out by a pharmacist.
The hope was that biosimilars would drastically drive down the cost of pricey brand-name biologics. That is what has happened in Europe. But it has not worked out that way in the United States.
Patents are good for 20 years after an application is filed. Because they protect patent holders’ right to profit off their inventions, they are supposed to incentivize the expensive risk-taking that sometimes yields breakthrough innovations. But drug companies have turned patents into weapons to thwart competition.
AbbVie and its affiliates have applied for 311 patents, of which 165 have been granted, related to Humira, according to the Initiative for Medicines, Access and Knowledge, which tracks drug patents. A vast majority were filed after Humira was on the market.
Some of Humira’s patents covered innovations that benefited patients, like a formulation of the drug that reduced the pain from injections. But many of them simply elaborated on previous patents.
For example, an early Humira patent, which expired in 2016, claimed that the drug could treat a condition known as ankylosing spondylitis, a type of arthritis that causes inflammation in the joints, among other diseases. In 2014, AbbVie applied for another patent for a method of treating ankylosing spondylitis with a specific dosing of 40 milligrams of Humira. The application was approved, adding 11 years of patent protection beyond 2016.
The patent strategy for Humira was designed to “make it more difficult for a biosimilar to follow behind,” Bill Chase, an AbbVie executive, said at a conference in 2014.
AbbVie has been aggressive about suing rivals that have tried to introduce biosimilar versions of Humira. In 2016, with Amgen’s copycat product on the verge of winning regulatory approval, AbbVie sued Amgen, alleging that it was violating 10 of its patents. Amgen argued that most of AbbVie’s patents were invalid, but the two sides reached a settlement in which Amgen agreed not to begin selling its drug until 2023.
Over the next five years, AbbVie reached similar settlements with nine other manufacturers seeking to launch their own versions of Humira. All of them agreed to delay their market entry until 2023.
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Sue Lee, 80, of Crestwood, Ky., had been taking Humira for years to prevent painful sores caused by a chronic skin condition known as psoriasis. Her employer’s insurance plan had helped keep her annual payments to $60. Then she retired. Under Medicare rules, she would have to pay about $8,000 a year, which she could not afford.
“I cried a long time,” she said.
For months, Ms. Lee stopped taking any medication. The sores “came back with a vengeance,” she said. She joined a clinical trial to temporarily get access to another medication. Now she is relying on free samples of another drug provided by her doctor. She doesn’t know what she’ll do if that supply runs out.
Barb Teron, a book buyer in Brook Park, Ohio, plans to delay her retirement because she is worried about Humira’s cost. Ms. Teron, who takes Humira for Crohn’s disease and colitis, has never had to pay more than $5 for a refill of the drug because her employer’s insurance plan picks up most of the tab. The cost, according to a pharmacy app on Ms. Teron’s phone, was $88,766 in the past year.
Ms. Teron, who turns 64 in March, would have liked to retire next year, but that would have meant relying on Medicare. She fears that her out-of-pocket costs will spiral higher. “When I look at that $88,000 charge for a year, there’s no way,” Ms. Teron said.
AbbVie executives have acknowledged that Medicare patients often pay much more than privately insured people, but they said the blame lay with Medicare. In 2021 testimony to a congressional committee investigating drug prices, AbbVie’s chief executive, Richard Gonzalez, said the average Medicare patient had to pay $5,800 out of pocket annually. (AbbVie declined to provide updated figures.) He said AbbVie provided the drug for virtually nothing to nearly 40 percent of Medicare patients.
The drug’s high price is also taxing employers.
Soon after she started taking Humira, Melissa Andersen, an occupational therapist from Camdenton, Mo., got a call from a human resources representative at her company. The company directly covers its employees’ health claims, rather than paying premiums to an insurer. Her Humira was costing the company well over $70,000 a year — more than Ms. Andersen’s salary.
[huge_it_slider id=”15″]The H.R. employee asked if Ms. Andersen would be willing to obtain the drug in an unconventional way to save money. She said yes.
As soon as March, her company plans to fly Ms. Andersen, 48, to the Bahamas, so that a doctor can prescribe her a four-month supply of Humira that she can pick up at a pharmacy there. Humira is much cheaper in the Bahamas, where the industry has less influence than in it does in Washington and the government proactively controls drug pricing.
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It is not yet clear how much the knockoff products will cost and how quickly patients will switch over to them. Billions of dollars in drug spending will ride on the answers to those questions.
“We price our products according to the value they deliver,” said Jessica Akopyan, a spokeswoman for Amgen, whose biosimilar product comes to market on Tuesday. She added that the company would “employ flexible pricing approaches to ensure patient access.”
Even now, as AbbVie prepares for competitors to erode its Humira sales in the United States, the company will have a new way to make more money from the drug. Under the terms of the legal settlements it reached with rival manufacturers from 2017 to 2022, AbbVie will earn royalties from the knockoff products that it delayed.
The exact sizes of the royalties are confidential, but analysts have estimated that they could be 10 percent of net sales. That could translate to tens of millions of dollars annually for AbbVie.
In the longer run, though, AbbVie’s success with Humira may boomerang on the drug industry.
Last year, the company’s tactics became a rallying cry for federal lawmakers as they successfully pushed for Medicare to have greater control over the price of widely used drugs that, like Humira, have been on the market for many years but still lack competition.
Rebecca Robbins is a business reporter covering the pharmaceutical industry. She joined The Times in 2020 and has been reporting on health and medicine since 2015. @RebeccaDRobbins