It costs how much?

One of the major questions posed by the rise of biotechnology is: How much can we pay for a drug?

Last year, Cambridge’s Genzyme Corp. reached a milestone when its top-selling drug became a ‘‘blockbuster’’ by cracking $1 billion in annual sales. Cerezyme, which treats a rare genetic disease, is used by fewer than 5,000 patients worldwide and costs more than $200,000 a year per person. No drug has ever hit blockbuster status with so few patients, or with so high a price tag.

Down the street, Shire PLC makes an even more expensive drug, Elaprase, which treats another rare genetic disease. The company estimates Elaprase costs up to $300,000 a year per patient and is used by about 250 patients.

Cerezyme and Elaprase are extreme cases that highlight a growing concern about biotechnology: The industry’s products, though they undeniably benefit patients, are the most expensive in the history of medicine. To a large extent, these high prices are the pillars on which Cambridge’s flagship industry is built. Genzyme sells four drugs in that price range. Millennium’s Velcade, a cancer drug, costs $36,000 for a full course of treatment. And numerous biotechnology drugs for cancer, multiple sclerosis, and other diseases cost $20,000 or more per patient per year.

A growing concern

Each year, these highly specialized treatments make up a larger percentage of new drugs on the market and claim a bigger share of healthcare dollars in the United States. As they do, many in the healthcare industry have shifted their focus from the promise of biotechnology to its cost.

‘‘It’s been escalating as a concern,’’ said Steven Miller, chief medical officer for Express Scripts Inc., a company that manages drug benefits for health insurers. ‘‘They’re all very concerned about it,’’ he says of insurers and large employers, ‘‘and they’re looking for help.’’

Miller’s firm estimates that spending on so-called specialty drugs — high-end, injectable treatments for cancer, multiple sclerosis, and rare diseases — grew to $54 billion last year, or nearly a quarter of US drug spending. He counts it one of the fastest-rising parts of the national healthcare bill.

In Washington, a push is underway to reduce biotechnology drug costs by allowing generic versions of biologically derived products, which — unlike traditional drugs — have long been protected from such competition.

At least one Wall Street analyst has suggested companies need to rein in drug costs before they trigger bad publicity and, possibly, government price controls. Industry leaders are starting to notice.

‘‘Biotechnology has enjoyed a white hat for a long time,’’ said James Greenwood, president of the industry’s national trade group, the Biotechnology Industry Organization. ‘‘We don’t want to be perceived in the same way that people perceive pharma — as these big greedy pharmaceutical companies. But it’s a tough business, because as you know, it can cost a billion dollars on average to develop a drug, and you’ve got to get it back somehow.’’

Price of success

To a large extent, the new focus on price is a measure of biotechnology’s success. In the early days, there were so few biotech therapies that their prices were just a blip on the radar of Medicare and insurers.

Even today, Genzyme’s drugs treat such rare diseases that they have a far lower impact on an insurer’s bottom line than widely prescribed pills like cholesterol-lowering Lipitor or the heartburn stopper Nexium, which can cost $1,500 or less per year per patient.

But as they consume a growing chunk of healthcare dollars, their high prices have drawn more attention from insurers, Medicare, and patients — many of whom are asking: Do they have to cost so much?

Yes, say drug makers. In terms of raw materials, many biotechnology drugs cost more to produce than traditional chemical drugs. The so-called biologicals, like Genzyme’s drugs, don’t roll off a production line like pills. Rather, they are fermented in small batches, often taking two months or more per batch. Once purified and bottled, they need to be handled so carefully that a whole secondary business has arisen — ‘‘specialty pharmacies,’’ networks of stores and warehouses that focus on injectable drugs.

High profit margins

But still, profits on such drugs are high — as much as 85 or 90 percent, a margin similar to traditional pharmaceuticals. Executives say those high profits are necessary because of the overall economics of the drug industry, where hundreds of millions of research dollars can be plowed into a drug before it is even approved.

The Tufts Center for the Study of Drug Development estimates that a single successful biotech drug costs $1.2 billion to develop and requires eight years of testing and federal review. Each successful drug, biotech or not, needs to pay back that research investment and support a company’s ongoing costs, while at the same time allowing profit for investors.

If a drug treats a specific cancer or a rare disease, as many biotech therapies do, then it needs to earn all that money on a small number of patients — with, predictably, a much higher price tag than a mass-market drug.

‘‘It costs you the same to develop that drug whether there are a thousand patients or a million patients or 10 million patients. The same investment went into it,’’ said Alison Taunton-Rigby, a biotech entrepreneur and former Genzyme executive.

At Genzyme, whose drugs are costly even by biotech standards, executives say six-figure annual price tags per patient are unavoidable, given the rarity of the diseases they treat.

‘‘The drug would not exist at a lower price,’’ said David Meeker, the Genzyme executive in charge of Cerezyme. ‘‘If you were only able to charge $20,000, which would be considered a relatively high price for a single patient, you wouldn’t be able to recoup the cost for this. You would not take the risk of developing this drug.’’

‘We were just gambling’

In the early days of the industry, it was unclear whether that business model would succeed. Taunton-Rigby helped launch Genzyme’s first drug, an earlier version of Cerezyme. When it was approved by the Food and Drug Administration, company executives added its production cost to the profit margin they had hoped for and were taken aback. ‘‘We said, ‘This will cost, what, $600,000 per patient per year? We can’t do that,’’’ Taunton-Rigby said.

They launched the drug for half that price. Even so, it was by far the most expensive drug ever released.

‘‘We were just gambling, totally gambling, and it was a gamble that paid off,’’ she said.

The company switched to a new, less expensive production method and kept its price flat, never raising it, but offering no discounts. Sales of Cerezyme have risen steadily, and last year they passed $1 billion a year. Fabrazyme, a Genzyme drug for a similar rare disease, generated $359 million in revenue last year.

But those numbers are dwarfed by the total spending on other biotechnology drugs — injections that cost less per person but treat more patients.

The multiple sclerosis drug Avonex, made by Cambridge’s Biogen Idec Inc., treats 130,000 patients and has annual sales of $1.7 billion. The rheumatoid arthritis drug Enbrel, developed partly at Massachusetts General Hospital and sold by Amgen Inc., had sales of nearly $3 billion last year. The national biotechnology tab mounts steadily every year.

Battle to control costs

The next question is: What can be done about the cost?

At first glance, it appears not much. Many biotechnology drugs are protected from competition in ways traditional pills aren’t.

Even after a drug loses its patent protection, for instance, it can’t easily be copied. The typical biotech drug is made in vats of living cells, so manufacturing isn’t as simple as the chemistry process that creates traditional pills. And because many biotechnology drugs treat rare diseases, they benefit from another layer of protection: The 1983 Orphan Drug Act gives seven years of market exclusivity to any drug that treats a disease with fewer than 200,000 patients in the United States.

‘‘If you have a monopoly, as these companies do on their biotech drugs, you just charge whatever you want to charge,’’ said Marcia Angell, former editor of the New England Journal of Medicine and a critic of the drug industry.

Beginnings of change

But slowly, some moves are being made to change that system. Congressional Democrats have introduced a bill that would open the door to generic biological drugs. The road is not likely to be smooth, with the industry arguing that biological drugs are so complex that even copycat versions should require additional human safety tests — something not required for generic versions of simpler pills. Clinical trials would add to the cost of developing a generic biotech drug, diminishing the likely savings.

The industry itself has also shown some willingness to address the price question. California biotechnology pioneer Genentech Inc. recently set a $55,000 annual price cap on its cancer drug Avastin, no matter how much a patient receives in a year. And Amgen has said that for its new colon-cancer drug Vectibix, patients won’t be required to pay more than 5 percent of their annual income in out-of-pocket costs.

Even if such price caps don’t catch on, those dealing most directly with drug prices say that if new drugs work, and if they treat severe enough diseases, the healthcare system will likely keep finding ways to pay the bills.

‘‘People have been talking about the spiraling costs of healthcare for 60 years,’’ said Miller, of Express Scripts. ‘‘I just don’t know what the tipping point is.’’

Stephen Heuser can be reached at sheuser@globe.com.