Biologics Give Rise to Exclusivity Debate
A bitter Congressional battle over the cost of super costly biotechnology drugs has come down to a single, hotly debated number: How many years should makers of those drugs be absolved from generic competition? But what certain people in Washington seem to identify — or publicly acknowledge, anyway — is that this magic number may ultimately not count as much as the most vitriolic debaters insist.
At issue are such drugs as Biogen Idec’s Avonex, for multiple sclerosis, which can cost beyond $20,000 a year; Genentech’s Avastin for cancer, which can cost over $50,000; and several Genzyme drugs for rare diseases that can cost $200,000 a year or more. Usually, such drugs are given by injection or intravenous infusions.
These drugs, called biologics, are complicated proteins made in vats of living cells. Because they are difficult to copy exactly, they have not been subject to the generic competition that ultimately knocks down the cost of drugs like Lipitor and Prozac. Pills like Lipitor, known in the industry as small-molecule drugs, are made from simple chemicals whose formulas are easy to reproduce. But now Congress, as a cost-cutting piece of the overall health care attempt, is gearing legislation to permit the Food and Drug Administration to approve copycat versions of biologic drugs. That could save consumers, insurers and the government billions of dollars in the following years.
The tactic is to permit competition without undermining the financial incentives the pharmaceutical industry requires to undertake the risky task of developing the next drugs for cancer and various diseases. That is where the magic year number shines. Trade groups for the big pharmaceutical and biotechnology companies say that to recover their investments, they need an exclusivity span free of generic competition that would remain 12 to 14 years from the time the F.D.A. approves a drug for sale. But consumer groups, insurers, employers and generic drug companies say anything more than five years — the exclusivity period now provided to small-molecule drugs like Lipitor — would disembowel any capable savings from the new competition.
Till now, the biotechnology industry seems to be winning. The Senate’s health committee, for example, has agreed to 12 years of exclusivity. In the House, a bill that provides at least 12 years of exclusivity has many more co-sponsors than one that would provide five years. The Obama administration has said that seven years would be a “generous compromise.” But in actual, neither the threats to innovation nor the capable savings from generic competition are as significant as claimed.
For starters, whatever the exclusivity span, biologic drugs would also remain to be guarded from copycats by patents. And many a times, the patent protection would last more than the exclusivity span, making the Congressionally mandated exclusivity a moot point. Genentech’s Avastin, for instance, has patent protection until 2019 — 15 years after the drug’s 2004 approval by the F.D.A. The company’s breast cancer drug, Herceptin, has patents that extend 21 years from its 1998 approval.
Where the exclusivity period might value most would be in the cases of drugs whose patents were nearing expiration by the time the developer succeeded in winning F.D.A. approval. But that rarely occurs. Still, it is probably not true, as the other side claims, that the legislation would be virtually useless if it granted a long exclusivity span. There are ample of blockbuster biologics, such as Epogen and Neupogen from Amgen, that have been on the market more than 12 or 14 years and thus would get no extra protection from even an exclusivity period at the long end of the ranges now being talked over.
In regard to cost savings, the Congressional Budget Office has estimated that generic biologics might save the government only about $10 billion in the next 10 years. That is a relative drop in the bucket when it comes to paying for health care reform, which is expected to cost about $1 trillion in coming 10 years. But generic makers and their supporters, sensing that many of the biologic patents may not withstand court challenges, are lobbying for the shortest possible exclusivity period.
“If your patents are strong, let your patents stand for themselves,” said Katie Huffard, executive director of the Coalition for a Competitive Pharmaceutical Market, a group of employers, insurers, pharmacies and generic makers lobbying for easier access to biosimilars. “That’s what every other industry has to do.”
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