Biologics Exclusive a Boon to BigPharma but an Affront to Free Enterprise

Obama backs 7-year exclusivity for biologics By Tracy Staton

The Obama administration is throwing its weight behind a shorter exclusivity period for biologics. These products should be open to generic competition after seven years, the administration said, rather than the 12 to 14 years branded drugmakers have lobbied for, Bloomberg reports. That's a "generous compromise" upward from the five years proposed by at least one Congressional leader.

"Lengthy periods of exclusivity will harm patients by diminishing innovation and unnecessarily delaying access to affordable drugs," Nancy-Ann DeParle, director of the Office of Health Reform, and Peter Orszag, director of the Office of Management and Budget, wrote to Rep. Henry Waxman, who is working on legislation that would allow the copycat biologic meds.

As you know, current law doesn't allow copycat forms of biologic meds, even after their patents have expired. There's long been a movement to open up a so-called "regulatory pathway" for biosimilar meds, but those efforts have gained real traction recently as legislators hunt for any and every way to save money on healthcare. Branded drugmakers, generics firms, insurance plans, politicians and plenty of others have opinions about just how generic biologics should work. The debate has only just begun.

Related:

Biotech Drugs Need Only 7 Years Protection, U.S. Says (Update2)

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By Catherine Larkin

June 25 (Bloomberg) -- Biologic drugs should be subject to generic competition in the U.S. after seven years, the Obama administration said, calling it a “generous compromise.”

Access to cheaper copies of medicines made by Amgen Inc., Roche Holding AG and other biotechnology companies is “a key element” in reducing health-care costs, White House officials said in a letter to Representative Henry Waxman obtained today by Bloomberg News. Brand-name companies have lobbied for 12 to 14 years of exclusivity, while Waxman proposed only five.

Americans spend more than $60 billion a year on biologic drugs to treat cancer, rheumatoid arthritis and other serious illnesses at a cost of as much as $200,000 for each medicine, Ernst & Young estimates. Unlike conventional pills, biologics can’t be copied even after patents expire. Patient groups, payers and generic drugmakers have battled biotechnology companies for more than two years over how to allow competition.

“Lengthy periods of exclusivity will harm patients by diminishing innovation and unnecessarily delaying access to affordable drugs,” wrote Nancy-Ann DeParle, director of the Office of Health Reform, and Peter Orszag, director of the Office of Management and Budget, in the letter dated yesterday.

Obama has urged lawmakers to rein in record health-care spending, expand coverage to the 46 million uninsured and modernize record-keeping. His proposed budget in February called for legislation allowing generic biologics after a period “generally consistent” with the 1984 law that provides five years of protection to most conventional pills and seven years of protection to so-called orphan drugs for rare diseases.

Health-Care Overhaul

Waxman, a California Democrat and chairman of the House Energy and Commerce Committee, sent a letter to Obama earlier this month asking him to discuss the potential savings from generic biologics and what can be done to prepare the Food and Drug Administration to regulate this new category of products.

The White House is conducting “a serious review of FDA’s existing authorities” to ensure that the agency can quickly take on the role of approving generic biologics once legislation is passed, DeParle and Orszag wrote to Waxman.

Generic biologics may be included as part of the Senate health committee’s plan to overhaul the $2.5 trillion U.S. health-care system, but lawmakers haven’t agreed to specific details for their proposal. The panel passed a bipartisan bill in 2007 that called for 12 years of exclusivity.

Advertising Effort

Drug-plan managers today began an advertising campaign urging lawmakers to reject proposals that would delay generic competition when biotechnology companies make “minor changes” to their formulas. The ad is sponsored by the Pharmaceutical Care Management Association, a Washington-based trade group representing Medco Health Solutions Inc., CVS Caremark Corp. and other companies that coordinate drug benefits for employers.

The U.S. lags behind Europe, where Teva Pharmaceutical Industries Ltd., of Petah Tikva, Israel, Novartis AG’s Sandoz division, of Basel, Switzerland, and Hospira Inc., of Lake Forest, Illinois, have won approval for copies of three biologic drugs.

Amgen, of Thousand Oaks, California, and Genentech, a unit of Swiss drugmaker Roche, are the largest U.S. makers of biologics. They say their medicines can’t be replicated like conventional pills produced through chemical synthesis because of complex manufacturing and finished products that have slight variances.

Amgen Comment

“Without a fair and sustainable cycle of investment and returns in innovative R&D, biotech discovery will be stifled,” said David Polk, a spokesman for Amgen, in an e-mail today. “We look forward to working with Congress on legislation which strikes a necessary balance.”

The Biotechnology Industry Organization, a Washington-based trade group, has backed a measure from Representative Anna Eshoo, a California Democrat, that would set a high bar for approving generics and only after a brand-name product was on the market for 12 to 14 years.

Generic biologics may be sold at a 10 percent to 30 percent discount, allowing for “substantial consumer savings” without eroding market share for brand-name drug companies, the Federal Trade Commission said in a June 10 report.

Amgen’s Epogen for anemia and Neupogen to boost white blood cells after chemotherapy will probably be among the first biologics copied in the U.S., Ronny Gal, an analyst at Sanford C. Bernstein & Co. in New York., said in a Feb. 24 presentation. Both drugs already have competition in Europe.

To contact the reporter on this story: Catherine Larkin in Washington at clarkin4@bloomberg.net.

Last Updated: June 25, 2009 17:37 EDT


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