Congress Moving on Generic Biotech Drugs

Plan promises to lower costs for employers, insurers and consumers.

By Martha Lynn Craver, Associate Editor, The Kiplinger Letter

July 10, 2007

A plan to get generic versions of biotech drugs to market is close to winning approval from Congress. A bill likely to pass by Oct. 1 will give the Food and Drug Administration (FDA) authority to approve generic versions of so-called biologic drugs, which are made from living organisms rather than through chemical processes.

Employers trying to hold down drug costs are keen on generic biologics as less expensive substitutions for the often very pricey brand-name pharmaceuticals. Some analysts estimate that competition from generic biologics could cut prices by a third. "Just as generic drugs have helped bring down the cost of medicines for millions of Americans, new follow-on versions of breakthrough biologics will make these innovative treatments more affordable for the patients who need them," says Sen. Edward Kennedy (D-MA), chairman of the Senate Health, Education, Labor and Pensions Committee and a key sponsor of the bill.

Under a compromise moving through Congress, the makers of the original brand-name drug would be guaranteed 12 years of market exclusivity, dating to when the drug was first approved, before a generic biologic can be sold. The first such drug OK'd would then get one year's worth of exclusivity before others reach the market.

Testing requirements will vary, depending on the drug involved. Animal studies and at least one human trial would be required for these generics, although the FDA could waive some or all of the tests. More-complex drugs will require a longer process, while simpler ones, such as insulin, will have a shorter path.

The FDA also will be able to decide whether a generic biotech product can be substituted by a pharmacist, rather than a doctor, for a prescribed brand-name drug. This is known as interchangeability and would be important in increasing the likelihood of generic substitutions.

The Generic Pharmaceutical Association opposes the 12-year period of market exclusivity, calling it "excessive and arbitrary." The Biotechnology Industry Organization prefers a 14-year period. In addition, it opposes interchangeability, except when approved by the patient's physician.

First on the market is likely to be human insulin from Novo Nordisk and human growth hormone drugs from Genentech, Novo Nordisk and Roche. Next in line are likely to be Epogen, a drug for anemia from Amgen; Enbrel from Amgen for rheumatoid arthritis; Avonex from Biogen Idec for multiple sclerosis and pulmozyme from Genentech for cystic fibrosis.

Key players in the biogenerics industry are Teva Pharmaceutical Industries Ltd., Barr Pharmaceuticals Inc. and Sandoz, the generics division of Novartis Pharmaceuticals Corp.

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