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Boosting Generics

Congress targets high drug prices

by Glenn Hess
March 5, 2007 | A version of this story appeared in Volume 85, Issue 10

New Pathway
Credit: Novo Nordisk
Generic drug companies are seeking approval of non-brand-name versions of biopharmaceuticals.
Credit: Novo Nordisk
Generic drug companies are seeking approval of non-brand-name versions of biopharmaceuticals.

IN A BID TO LOWER health care costs for consumers and insurers, Congress is pushing legislation to expand and speed up the availability of generic drugs, including less expensive versions of boutique biotechnology-based medicines used to treat heart disease and other serious conditions.

Bills introduced in the House and Senate on Feb. 14 would empower the Food & Drug Administration to approve generic counterparts to biotech drugs without requiring the generics manufacturers to repeat all of the costly and time-consuming clinical trials conducted by brand-name manufacturers.

A separate measure approved by the Senate Judiciary Committee on Feb. 15, the Preserve Access to Affordable Generics Act (S. 316), would bar brand-name pharmaceutical companies from the profit-preserving practice of paying generics manufacturers to delay the introduction of cheaper, equivalent products.

The biotech drugs at the heart of this legislation are proteins, not small molecules characteristic of conventional drugs. These medicinal proteins are among the fastest growing and most expensive components of the nation's drug bill. But unlike for traditional pharmaceuticals, there currently is no statutory pathway for generic versions of biotech medicines to enter the market, even after all relevant patents expire. The federal law that now allows FDA to approve generic drugs does not address biotechnology medicines.

"This bill [H.R. 1038] will give FDA the clear legal authority to approve safe and effective copies of biotech drugs," says Rep. Henry A. Waxman (D-Calif.), who introduced the bill in the House. "Introducing fair competition for biotech drugs is essential to keep these life-saving treatments affordable." Sen. Charles E. Schumer (D-N.Y.) is sponsoring the Senate version of the Access to Life-Saving Medicine Act.

Biologics, as protein-based biotech medicines often are called, are growing three times faster than traditional prescription drugs, and annual sales are expected to reach $90 billion by 2009.

The Generic Pharmaceutical Association (GPhA) estimates that copies of biotech drugs would cost 10-25% less than their brand-name counterparts, potentially saving the U.S. health care system billions of dollars annually. "It's time for Congress to make certain that FDA creates a clear and efficient abbreviated approval pathway for biogenerics," says GPhA President Kathleen Jaeger. "Only then will biogenerics be able to begin to start improving the lives of millions of Americans who currently cannot afford the high costs of brand biopharmaceuticals."

According to a summary of the Waxman-Schumer generic biotech bill, FDA would be authorized to approve "comparable" and "interchangeable" versions of brand-name biotech drugs under a fast-track process.

Companies that seek to market comparable products would have to show that their active ingredients are chemically "highly similar" to those in the original products and also work by the same mechanism of action. A company whose generic biologic meets those criteria can ask that the product be deemed "interchangeable," meaning it would be expected to produce the same effects as the original in all patients. The bill states that FDA would have the discretion "on a case-by-case basis to determine what studies are necessary" and could "require a clinical study or studies but only if necessary to assure safety or effectiveness."

OPPONENTS of the legislation say the lack of a clinical study requirement is a major weakness. Brand-name biotech drugmakers warn that their products are difficult to copy because they come from complicated living organisms and even slight variations in the manufacturing process can produce significant changes in final products.

James C. Greenwood, president of the Biotechnology Industry Association (BIO), says the approval of generic biotech drugs should be based on the same rigorous standards that FDA uses to approve pioneer biotech products. "The legislation does not ensure patient safety," he charges, because "it does not recognize that biotech products are fundamentally different from drugs, in terms of complexity and dependence on unique manufacturing processes." Greenwood also asserts that the bill "does not preserve and value intellectual property and would jeopardize innovation."

Jaeger maintains the legislation would create a science-based approval process that would give FDA the authority and flexibility it needs to request from generic companies the necessary data and tests on a product-by-product basis to ensure safety and efficacy. "Safety is and always will be our number one priority," she says. "FDA would let sound science drive the approval process for biogenerics, just as it does today for biopharmaceuticals."

Lawmakers introduced a nearly identical measure last year, but the bill failed to advance out of committee. Schumer says supporters may try to attach the revived generics proposal to other legislation that would renew the fees the drug industry pays FDA to review new products, which Congress is expected to pass this year.

The Senate bill on generic drug delays takes aim at patent dispute settlements between brand and generic drug companies that keep lower cost medicines out of the market. The agreements settle legal challenges mounted by generic manufacturers seeking to enter the market for a drug before its patent expires. The legislation would make it a violation of antitrust law for brand-name manufacturers to compensate would-be generics competitors for agreeing to drop patent challenges and delay the introduction of their products.

"I believe this vote shows that many of my colleagues agree that these settlements are anticompetitive and that brand and generic drug companies are abusing this practice," Sen. Herb Kohl (D-Wis.), the bill's chief sponsor, said after the Judiciary Committee passed the measure unanimously. "Our solution is very simple: Make these anticonsumer patent settlements illegal."

Several Republican members of the committee argued that a ban on all settlements was too broad and could thwart some procompetitive deals. But they voted to advance the bill out of committee after Democrats agreed to address their concerns before bringing the measure to the floor for a full Senate vote.

IN 2005, two appellate court decisions overturned the Federal Trade Commission's long-standing position against the pay-to-delay practice and upheld settlements that include such payments. Last year, the Supreme Court refused to hear an appeal by FTC, prompting the new legislation.

At a Jan. 17 hearing, FTC Commissioner Jon Leibowitz told the Senate committee that in the six months following the 2005 court decisions, there were three settlement agreements in which generics companies received compensation from brand-name drugmakers. He said at least seven more agreements made in 2006 included a payment from the brand-name manufacturer in exchange for a promise by the generics company to delay market entry of its product.

"Exclusion payment settlements are highly profitable for brand-name and generic firms," Leibowitz testified. "Sadly, the incentives to enter into such pernicious pay-for-delay settlements are substantial. If such payments are lawful, companies have compelling incentives to use them."

Both brand-name and generic drugmakers oppose the bill. Industry officials argue that FTC has the authority to review patent settlements and can propose amendments or challenge the agreements. Instead of a "blanket ban on certain types of patent settlements, enforcement agencies and courts should continue to evaluate patent settlements on a case-by-case basis, looking at all relevant facts, including the scope of the patent," says Billy Tauzin, president and chief executive officer of the Pharmaceutical Research & Manufacturers of America, the brand-name industry's main trade group.

GPhA's Jaeger says that without the prospect of a settlement, patent litigation is an all or nothing proposition. "Taking a complex patent challenge all the way to a court decision necessarily means that the generic company risks being kept off the market entirely until patent expiration, which would ultimately harm the consumer," she says.


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