How Abbvie's Humira Undercuts The Drug Industry Price Defense

The pharmaceutical industry is known to defend its big prices for drugs by citing the risky nature of drug development and the regularly touted study showing it costs more than $2.5 billion to research and develop one prescription.

But when it comes to Abbvie ’s Humira, there’s a clear picture showing company sales have paid off the research and development costs multiple times over while still leaving behind billions in sales and profits.

Humira, which is the world’s top-selling drug, generated $14 billion in sales for Abbvie in 2015. The revenue last year alone is double what Abbvie’s former owner, Abbott Laboratories , paid to get Humira in the first place back in 2001. Today, Humira can cost consumers, insurers, employers or taxpayers $50,000 or more a year per patient.

And now Abbvie wants “to use new drug patents to delay generic versions” of Humira , a New York Times headline said last week. That would keep Humira’s sales and profits churning for years to come and well beyond the original “main patent” that was expected to expire this year, the Times said.

A key part of the Affordable Care Act allows for generic, or “biosimilar,” versions of expensive drugs derived from biotechnology like Humira and Enbrel, but the Food and Drug Administration has been slow to roll out the rules regulating cheaper alternatives.

The Times’ Andrew Pollack reported how Abbvie and Amgen , the maker of Enbrel, are using new drug patents to delay the introduction of so-called biosimilars, a much less expensive version their autoimmune biologics that can cost $50,000 or more a year for just one patient.

Drug companies don’t disclose margins on specific products. But in the case of Humira, there’s some idea of the drug’s financial return because of what Abbott paid for Knoll just to get at the promising biologic then known as “D2E7.”

Neither Abbvie nor its former parent company, Abbott Laboratories, discovered Humira. Abbott under CEO Miles White came across Humira by acquisition, a purchase of Knoll Pharmaceuticals for just shy of $7 billion in 2001. At that time, it was the biggest acquisition in Abbott’s 123-year history. Abbott spun off its branded drug business almost four years ago into what has become Abbvie.

Abbott took a risk since Humira was in development and wasn’t approved by the U.S. Food and Drug Administration until New Year’s Eve of 2002.

But Humira was in the final stages of development, having already proved to be effective in clinical trials. In addition, Knoll also brought Abbott several top-selling drugs, including the popular thyroid treatment Synthroid and other prescription medicines that have generated billions of dollars in sales over the years.

In 2011, Dr. Sidney Wolfe, the founder and former director of Public Citizen’s health research group, said back then in an interview that Abbott executives had “more than recouped their investment.” About $24 billion in sales came from Humira from its first sale in 2003 through 2010.

Since the beginning of 2011, Humira has produced another $54 billion in sales through last year . And it’s projected to do even better in years to come if Abbvie can successfully defend its new patents.