Examining the generic biologics debate

Maureen Martino, FierceBiotech Managing EditorWith 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