Imagine the following scenario for a minute: A middle-aged man books a round trip ticket from San Francisco to Shanghai. His reservation indicates this will be a short trip; he is going to be in China less than one full day. Upon arrival at the airport in Shanghai, the immigration control officer asks him “What has brought you to China?” The man looks sickly, is sweating profusely, and appears much older than the 54 years indicated on his passport. Knowing this question was going to be asked, he has been carefully thinking over his answer during the 14-hour flight. “I’m here to buy drugs,” he confesses.
At this point, you’re probably thinking he’ll be marched off to some dank prison cell, never to be heard from again. You would be wrong. Instead, he’s told, “Welcome to China!” and after clearing customs, he heads to a large medical institute located on the Bund by the Huangpu River. Here, he will get his first injection of the generic biologic drug that has led him to this ancient land, along with a yearlong supply to take (actually, smuggle) back home.
Why would someone travel 6,200 miles to buy drugs when they are available here in the U.S.? For the same reason people now are traveling to India, Thailand, or South Africa for heart surgery, hip replacement, or some cosmetic procedure – affordability. They have no (or limited) insurance coverage, and the costs of their treatment are significantly less in other countries. An estimated 750,000 Americans went overseas to have medical procedures done in 2007, according to Wikipedia, saving the recipients a great deal of money and costing the U.S. health industry billions in lost revenue. The cost of the surgery overseas can be one-tenth the cost of having the surgery done in the U.S., even factoring in the travel expense. Similarly, biologics can be every bit as expensive as heart surgery or hip replacement. Treatments for rheumatoid arthritis, cancer, hemophilia, or rare enzyme deficiencies can cost tens of thousands, even hundreds of thousands of dollars a year.
As I’ve discussed in a previous Xconomy piece, generic versions of biologic drugs are not currently for sale in the U.S. Even worse for patients who would benefit from these, regulatory authorities are still in the process of formulating a pathway that would allow the approval of generic biologics. So what’s the likelihood of my scenario above coming to pass? Will shopping overseas for biologics come to resemble the trend of traveling for cut-priced surgery? Here are the key factors involved:
Insurance—For the sake of our discussion, this is a non-issue. If your insurance covered your biologics, then you wouldn’t be leaving the country in the first place to purchase these drugs overseas.
Availability—Just because a biologic is available in the U.S. doesn’t mean that you are going to be able to buy a version of it overseas. Foreign manufacturers, like American ones, will likely choose to make drugs based on their potential profitability as well as whether or not they have patent … Next Page »
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