The Affordable Care Act ushered in one of the greatest increases in healthcare coverage in U.S. history. Eleven years later, thanks to President Joe Biden and the sweeping pandemic relief bill, we finally have the first real expansion of the law's insurance coverage and Medicaid expansion. Despite this, we haven't realized the ACA's full potential when it comes to lowering drug costs.
When I worked at HHS during the Obama administration, helping to implement the ACA, I met workers and families across the country deeply proud and relieved to finally have health coverage for the first time. Now, despite more than 70 congressional attempts to repeal the ACA and three visits to the Supreme Court, it is clear that the law provides necessary protections for Americans and is woven into the fabric of our society. While the ACA is most heralded for its expansion of access to affordable, quality healthcare, it also contained important provisions to lower drug costs.
And despite the law's progress, some of the same families who finally have access to health insurance do not have access to the affordable drugs they need. One of the lesser-realized components of the ACA, the Biologics Price Competition and Innovation Act, paved the way for the Food and Drug Administration to approve biosimilars, generic-like alternatives to expensive biologics.
It's no secret that many Americans are frustrated by rising healthcare costs, with 8 in 10 saying it's very important that Congress work on lowering prescription drug costs.
Biologics are made from complex molecules, differing from small molecule chemically compounded drugs (like ibuprofen) in that they are manufactured in living cells. Biologics are powerful and lifesaving medications that have revolutionized the industry and changed the treatment of diseases, including certain cancers, multiple sclerosis, rheumatoid arthritis and psoriasis, to name a few.
These treatments have transformed the lives of patients globally and are predicted to become more important than ever in the coming years, but they are accompanied by a steep price tag. In fact, biologics are the single largest driver of prescription drug spending—making up 40% of all drug spending but accounting for just 2% of prescriptions filled.
By definition, biosimilars are biological products that are highly similar to and have no clinically meaningful difference from an existing FDA-approved reference product (brand-name biologic). This means they provide the same safe and effective treatment, but at an average of one-third less the price.
In the years since the ACA was passed, the FDA has approved 29 biosimilar products and 20 have launched in the U.S. While this is significant, the full potential of these savings for patients and for taxpayers is far from being realized and more must be done.
The first biosimilar became available to patients in the U.S. in 2015, and so far they have saved Americans $4.5 billion. But savings many times greater can be achieved with a stronger market. Let's compare this to the generics market as an example. Generics have saved patients trillions since they were developed and marketed. Initially sowed by doubt, it took the passage of legislation (the Hatch-Waxman Act in 1984) to boost the market.
And while direct cost savings are a primary advantage, increased therapy adherence and compliance are associated benefits of generic use. Biosimilars are poised to save patients $100 billion by 2024, but that is only if their use increases. This is a dynamic and emerging market in the U.S. To make sure patients, employers and taxpayers receive the billions in lower drug costs that were a promise of the ACA, we need real policies to support patients' full access to these lower-cost alternatives.
Through the American Rescue Plan, millions of Americans will be eligible to receive affordable healthcare and others' premiums will drop by thousands of dollars. This is encouraging, but President Biden and policymakers can do more to fulfill the ACA's full promise to lower drug costs. As the next generation of generics, biosimilars are the solution to how we can tackle the biggest driver of drug spending and lower healthcare costs for Americans. We just need to support them.