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Examining the generic biologics debate
With the healthcare reform debate heating up in Washington, lawmakers are focusing on the cost of biotech drugs now more than ever before. Drug prices make up only 10 percent of healthcare costs in the U.S., and biologics account for just 14 percent of total drug spending. But when a treatment costs tens of thousands of dollars a year, those pursuing healthcare reform are naturally looking at generic biologics as an easy way to cut some substantial costs. The general consensus is that there is a real need for a generic biologic approval pathway, but stakeholders are stuck haggling over just how long biologics should be protected from competition.
Here's a run-down of the various proposals on the table:
- Congressman Henry Waxman has proposed a bill that provides a five-year window of market exclusivity for biologics. Not surprisingly, Waxman's bill has been met with scorn from the industry, which says such a short period of IP protection would crush innovation and bottom lines. Oftentimes biologics can treat a broad range of conditions, many of which aren't explored until after the drug receives initial FDA approval. Would companies continue to fund studies examining additional applications if their drug had only five years of exclusivity? It seems unlikely if they're working with such a short exclusivity period.
- In late June the Obama Administration weighed in on the biogenerics debate, offering a "generous compromise" of seven years of market exclusivity--a time frame that the powerful AARP also supports. It's certainly an improvement over five years and indicates that the final agreement will offer drugmakers a better deal than the Waxman bill. But it's still half as long as what some developers would like to see.
- Today the Senate Health, Education, Labor and Pensions Committee voted 16-7 in favor of an amendment that would protect biotech developers from generic competition for 12 years. BIO, of course, would love for this to be the plan that ultimately passes. But the bill faces a long road: it must be debated by the Senate, and then the Senate will have to negotiate with the House's five-year plan.
- Senator Ted Kennedy (D-MA) broke with the Obama Administration last week when he called for up to 13.5 years of protection for biologics. His plan would give drug 9 years of exclusivity, and up to four and a half more for development of pediatric and other additional indications.
- BIO strongly supports the development of a biogeneric approval pathway, but advocates 12 to 14 years of exclusivity for branded drugs. "Any pathway to biosimilars should provide a fair period of time for innovators to protect their proprietary data from competitors in order to promote the continued development of breakthrough medicines, therapies and cures" the group maintains. BIO, of course, is motivated to protect its member's interests, and as such wants branded biologics to be protected for as long as possible. The group also has concerns about generic drugmakers' abilities to produce safe and equally effective copies of branded biologics.
- A recent FTC report quashed the industry's call for 12 to 14 years of IP protection for biotech drugs. The agency's reasoning? Barriers to entry--including the difficulty and substantial expense of manufacturing biologics--will prevent the market from being flooded with competitors. According to the FTC's logic, branded drugmakers will retain "70 to 90 percent of their market share." Therefore, biotech companies should suffer minimal negative effects from generic competition. BIO issued a scathing response to the report, saying its conclusions were "based upon fundamentally flawed or highly selective assumptions."
If the industry had its way, Washington would go along with BIO's proposed 12 to 14 years of exclusivity. But the industry may have trouble selling that idea, even with the support of Kennedy and Senate committee. The healthcare reform pressures are substantial and every player in the industry is going to be expected to make sacrifices. While Waxman's five years of protection would benefit those developers that are aggressively pursuing a generic biotech strategy, it does run the risk of stifling innovation among branded drugmakers. I personally believe that when the dust settles, the industry will emerge with eight to ten years of exclusivity. How many years do you think biologics should be protected from generic competition? Vote here to share your opinion. - Maureen
Comments
Nice summary, if the 5-7 year options are passed, then it will reduce the expansion of new indications. With no tort reform why should companies invest in smaller disease areas related to the initial indication. If you have sickle cell anemia, Pemphigus, Graves disease there will be no economic incentive you will be out of luck. Only the big 3 will be the focus. Heart Disease, Cancer and Diabetes. There are enough pipeline products to take us passed OBAMA but then the pipelines will be even tighter. The argument that generic erosion won't be as great with greater barriers to entry is bogus. If there is money then the generic companies will ramp up. WIth the FDA running gunshy who will make sure there process remains smooth.
As the debate rages on about the length of exclusivity to be enjoyed by the innovators of biologics, the discussion has centered more on cost and less on safety. This unfortunate situation has no doubt been promoted by the language of the discussion itself. To speak of biogenerics is to speak about something that technically cannot exist. It implies that a therapeutic agent derived from live organisms can be reproduced with the same specificity as a therapeutic agent derived from chemical entities. While chemicals can be identical, live organisms aren't - they can only be similar. The discussion, therefore, should be about biosimilars, not biogenerics! Now that we are clear on exactly what it is we are discussing, the safety issue of these biosimilars begets a whole new set of questions - how will the biosimilar pathway be established? What clinical trials will be required for approval? What will be the effect on substitutability? Will the FDA be able to issue guidance to manufacturers? A process for allowing the availability of biosimilars cannot move forward without addressing such questions, lest public safety be risked. I expect the FDA will have a lot more to say about this process.
I think it is one way good for the biosimilar manufacturer in South East Asia . More the period of exclusivity , the unit cost of the inovator will be the same. Whereas we the would be biosimilar manufacturer will be the gainer to capture the South East Asian and Non-regulated market for a cheaper price.
Setting up of Biotechnology facility is expensive, and the scaling up is tough, but once that is done, it is very cheap to keep producing huge quantities of biotech drugs. They are very expensive and so the profit margin is huge compared to small molecule drugs. Big Pharma wants to monopolise the biotech market due to the huge profit margin - not because of their safety concern. Insulin and growth hormone are biotech drugs for which lots of generic versions are available and we have not heard of any safety concerns for these.
Fifteen years ago, the technology to compare the biologics was not good enough, but today, it is a different story. We have technology good enough to establish "same-ness" of biologic drugs and their generic versions. Rep. Waxman is right in insisting that the exclusivity should not exceed five years. Let us tell Big Pharma that their geed is showing.
Big Pharma and the politicians aside, not all stakeholders would agree that today's technology is good enough to establish "same-ness" of ALL biologic drugs and their generics - some, yes, but not ALL. Also, as inovation in biotech drugs rapidly evolves, it is essential that we look beyond what we have available today, and consider what is in the pipeline. The issues surrounding biosimilars that I cited in my previous post need to be addressed, whether Big Pharma benefits, or not.
Biosimilars production and use is already a a broken myth. Bacterial and yeast production systems are easy. Proteins that requires no glycosylation have been produced for years (G-CSF, interpherons) and more complex molecules like EPO (one of the more complex with 40% in glycosylation) has also been produced in mammalian cells with success and comercialized in Europe and in the ROW. So trying same-ness is no longer a question. The rest is only a debate on how much the industry should retain their high margins.
With the biotech companies assuming all the $ risk in developing new drugs (or expanding indications), they should stand to have greatest $ rewards for successful development. Once the developmet costs are recovered, then the large profit margins are used to fuel development of other biologics / drugs. Therefore we need these exclusivity periods to be as long as possible. People need to remember that generic drug makers are not in the business of developing new treatments, and they assume no $ risk of drug development, and are purely profit-only entities. So, why is it that we cannot stand to see pharma or biotech make the $? You call them greedy, I call it business, which when prosperous results in more drugs and biogics brought to market.
Have there been any decisions regarding this issue since this article? What do we see regarding patent protection for biologics going forward?
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