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Innovators Score

Makers of brand-name biologics get closer to winning 12 years of exclusivity before generic versions can come to market

by Glenn Hess
September 28, 2009 | A version of this story appeared in Volume 87, Issue 39

Credit: Scott J. Ferrell/Congressional Quarterly/Newscom
Eshoo (left) and Waxman have clashed over how many years biotech drugs should be protected from generic competition.
Credit: Scott J. Ferrell/Congressional Quarterly/Newscom
Eshoo (left) and Waxman have clashed over how many years biotech drugs should be protected from generic competition.

The biotechnology industry has gained the upper hand over generic manufacturers in a long-running congressional battle over the shape of future rules that will guide the market entry of less expensive versions of brand-name biologic drugs.As part of health care reform legislation, committees in the House and Senate have adopted measures based on earlier proposals that would give 12 years of exclusivity to biotech innovators before generics can come to market. The generics industry, the White House, and some powerful members of Congress have been advocating for that period to be shorter.

Unlike small-molecule drugs such as aspirin, biologics are complex proteins produced by living cells. They are generally administered by injection and are used to treat particularly debilitating diseases such as cancer, HIV/AIDS, and multiple sclerosis.

Biologics are also among the most expensive drugs on the market, costing anywhere from $10,000 to $200,000 a year for a single patient. In a June report, the Federal Trade Commission (FTC) estimated that Americans spend $40.3 billion per year on these cutting-edge medicines, which account for approximately 15% of total U.S. prescription drug sales (C&EN, June 22, page 11).

The Food & Drug Administration has no process to approve generic versions of biologics, so brand-name biologics do not face generic competition. But establishing a regulatory framework to allow generic competition has been debated in Congress for more than three years.

FDA has had the authority to approve cheaper generic versions of small-molecule pharmaceuticals for a quarter-century under the Hatch-Waxman Act, the 1984 law named after its lead sponsors, Sen. Orrin G. Hatch (R-Utah) and Rep. Henry A. Waxman (D-Calif.).

But that law did not envision modern-day protein-based medicines and generic biologics, which are often called follow-on biologics or biosimilars because they are similar but not identical to their brand-name counterparts. The manufacturing process is unique to each biologic and is not generally disclosed as part of the patent, making it impossible to “duplicate” the original biologic drug.

Lawmakers working on a sweeping overhaul of the nation’s $2.5 trillion health care system view lowering the cost of prescription drugs as a vital component of reform. They have turned their attention to biosimilars because they believe that bringing generic competition to the biologics market will achieve substantial cost savings. Biosimilars could save the federal government up to $12 billion in the first 10 years after legislation is enacted, according to the nonpartisan Congressional Budget Office.

A major flash point in the debate is how long brand-name biologics should be protected from generic competition. The biotechnology industry contends that innovators need 12 to 14 years of “data exclusivity” to give investors the incentive to finance the development of new biologic medicines. The period of exclusivity prevents generic competitors from using the clinical-trial data of biotech innovators to support approval of generic products.

“The incentives for innovation have to continue to be preserved if in fact we’re going to play the role that we’re capable of playing, not only in curing cancer but in treating every disease we can think of,” says James C. Greenwood, president of the Biotechnology Industry Organization (BIO), a Washington, D.C.-based trade group representing brand-name biotech drugmakers.

“A minimum of 12 years of data exclusivity establishes a fair and reasonable period to ensure continued biomedical innovation and provide the benefits of competition,” Greenwood says. The Tufts Center for the Study of Drug Development, in Boston, has estimated that the average cost of developing a new biotechnology product is $1.2 billion.

The generic drug industry and consumer advocates argue that exclusivity should be limited to as few as five years—the same period for small-molecule drugs under Hatch-Waxman—so less expensive biosimilars can reach the market sooner. “Excessive exclusivity will create virtual monopolies that will prevent generic competition and result in billions of dollars in lost savings to consumers,” says Paul M. Bisaro, president and chief executive officer of generic drugmaker Watson Pharmaceuticals.

Credit: BIO
BIO uses epoetin (above) and aspirin (below) to explain the difference in complexity between small-molecule drugs and biologics.
Credit: BIO
BIO uses epoetin (above) and aspirin (below) to explain the difference in complexity between small-molecule drugs and biologics.

White House officials have suggested that biologic drugs should be subject to competition from generics after seven years. “Lengthy periods of exclusivity will harm patients by unnecessarily delaying access to affordable drugs,” wrote Nancy-Ann DeParle, director of the Office of Health Reform, and Peter R. Orszag, director of the Office of Management & Budget, in a June 24 letter to Waxman, chairman of the House Energy & Commerce Committee.

Waxman has proposed the Promoting Innovation & Access to Life-Saving Medicine Act (H.R. 1427), which would give novel biologics just five years of market protection after their approval (C&EN, April 6, page 23). “We don’t need to give drug companies open-ended monopolies and unlimited profits at the expense of patients,” Waxman remarked at a hearing on his legislation in June.

But on July 13, the biotechnology industry scored a significant victory: The Senate Health, Education, Labor & Pensions Committee voted 16-7 to let brand-name companies market their biologics for 12 years before generic competition can begin. The vote took place in connection with an amendment, cosponsored by Hatch and Sens. Michael B. Enzi (R-Wyo.) and Kay R. Hagan (D-N.C.), to the panel’s massive health care reform bill.

“I believe the passage of this amendment strikes the right balance by providing a structure that fosters a strong and vibrant environment for innovators while creating an abbreviated pathway for biosimilars to come to market,” Hatch commented after the vote. “We must be mindful of the fact that before there can be affordable follow-on biologics, there must be lifesaving brand biological products that are being continually researched and developed.”

The committee rejected an alternative proposal by Sen. Sherrod C. Brown (D-Ohio) that would have limited the exclusivity period to seven years. “The amendment adopted by the committee is not in the best interests of patients or taxpayers—the big winner here is the drug industry,” Brown commented after the committee’s action.

The fight over generic biologics has broken along geographic rather than partisan lines. Biotechnology is viewed as an economic engine for growth in California, Maryland, Massachusetts, New Jersey, and other blue states. Among those voting in favor of Hatch’s amendment was the late Sen. Edward Kennedy (D-Mass.), whose state is a major biotech research center.

The Senate panel’s vote “marks a significant defeat for those who would shortchange future breakthroughs and the hope for cures for some of the most devastating diseases by providing an abbreviated period of data exclusivity,” remarked Greenwood, a former Republican congressman from Pennsylvania.

On July 31, the House Energy & Commerce Committee followed in the steps of the Senate panel: It voted 47-11 to give biologic drugs 12 years of protection from competing generic medicines. Similarly, the vote took place in connection with an amendment, sponsored by Rep. Anna G. Eshoo (D-Calif.), to the committee’s health care reform legislation.

The amendment “sets forth a straightforward, scientific process for expedited approval of new biologics based on innovative products already on the market,” said Eshoo, whose Silicon Valley district includes numerous biotech firms.

The “strong bipartisan vote” by the committee is “a decisive win for the patients of today and tomorrow,” Greenwood says. The Eshoo amendment, he asserts, “strikes the appropriate balance among ensuring patient safety, expanding competition, reducing costs, and providing necessary and fair incentives” for continued biomedical innovation.

The Generic Pharmaceutical Association (GPhA), which represents generic drugmakers, says it was “sincerely disappointed that some members of the House Energy & Commerce Committee have decided to put brand pharmaceutical profits before patient needs.”

“The amendment passed tosses patient needs out the window,” says GPhA President and Chief Executive Officer Kathleen Jaeger. “It is ironic that, as Congress works to reduce health care costs and increase access to high-quality care, some members are choosing to go down a path that only benefits the brand pharmaceutical industry.”

At a briefing at BIO’s Washington, D.C., headquarters earlier this month, Greenwood attributed biotech’s success in the biosimilars debate this year to being “religiously nonpartisan” in its lobbying efforts, which involved a lot of old-fashioned “shoe leather” politics.

To help lawmakers understand the differences in complexity between small-molecule pharmaceuticals and biologics, Greenwood said he uses two visual aids: a plastic model of aspirin and a DVD showing the structure of epoetin, the synthetic form of erythropoietin that is the crown jewel of the biologics portfolio of Amgen, the largest independent biotech firm.

“I’ve spoken to scores of members of Congress, carefully explaining to one member at a time what the science is,” Greenwood noted. “We want to have competition from the generic companies, but above all else, you have to make sure that the incentives for innovation remain.”

The biotech industry has carried that message to Capitol Hill in a well-funded lobbying campaign. BIO has brought the chief executives of some of its member companies to Washington, and it has run print and radio ads in the states of key lawmakers.According to lobbying disclosure forms,

BIO spent $3.7 million in the first half of 2009, while GPhA spent $1.1 million during the same period.

The generic drug industry has also been outgunned by a wide margin in doling out campaign contributions. For example, Amgen, has contributed $275,250 to federal candidates so far this year. Teva Pharmaceuticals, the world’s largest generic drugmaker, has given $47,100.

With a pathway to biosimilars now tied to the controversial and still-evolving health care debate, the outcome of the legislation is highly uncertain. “We are still a long way from finished,” Greenwood says. “We might face battles on the Senate floor as well as in the House. But so far, so good.”


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