Gottlieb Colleagues to Peter Bach & Crew: Biologics Are Not a Natural Monopoly

AEI experts say net prices show that competition from biosimilars is having the intended effect

Scott Gottlieb​'s colleagues at the American Enterprise Institute today rebutted Peter Bach and his colleagues' contention that biologics are a natural monopoly and argued that competition has, in fact, helped bring down the net price of some biologics.

The AEI colleagues, Alex Brill and Benedic Ippolito, used data from SSR Health to calculate that the current net price for Neupogen is 42% lower than its wholesale acquisition cost (WAC) and, what's more, that the net price is 8% lower than the net price in 2007. 

Brill and Ippolito say that Bach and his Memorial Sloan Kettering colleagues went wrong by using the WAC price for brand-name biologics and biosimilars instead of the net price.

Adam Fein has also emphasized that net prices paint a truer picture of drug prices.  

This lively exchange about biologics and prices is taking place on the Health Affairs blog, which depends on outside contributors.

Bach et al. (Preston Atteberry,  Jennifer Ohn, Mark Trusheim, who is at MIT) wrote a two-part Health Affairs blog post in April that argued that the biologics are a natural monopoly, so hope that competition from biosimilars would exert downward pressure on prices is misguided. Price regulation is needed instead, they wrote.

Today Bach retweeted the former FDA commissioner's tweet that pointed to Brill and Ippolito's blog post but left it at that.

But here's to another round of intelligent debate. It's a fair bet that both sides would agree that neither has a natural monopoly on the truth.