The Burrill Report


After a protracted battle over healthcare reform legislation that passed in 2010, most of the major players walked away a little bloodied and scarred, but the biotechnology industry emerged with some notable victories, not the least of which was 12 years of exclusivity for its products as the legislation opened the door to copycat versions of its expensive therapies. But it’s a victory that may be short-lived.

As part of the fiscal 2012 budget plan released by the White House, President Obama wants to cut the period of exclusivity on biologics to seven years before biosimilars would be allowed to be marketed.

Biosimilars are not generics per se. Unlike generic drugs, which are copies of small molecule drugs that are chemically-synthesized, the molecular complexity of biologics and the fact that they are produced by living cells, means biosimilars are not truly identical to their branded counterparts. The healthcare reform legislation gave the U.S. Food and Drug Administration the authority to create a pathway for approving these alternative versions of biotech products.

The industry successfully argued that it needed longer exclusivity because of the high risk and long time to develop biologics. Without such protections, it says companies will not be able to recoup their investments in developing new drugs. Rep. Henry Waxman, D-Calif., had pushed for just five years of exclusivity during the healthcare reform debate. Critics of longer exclusivity argue it hurts innovation and delays patient access to affordable drugs.

Now, the fight will need to be had again. Biotechnology Industry Organization president and CEO Jim Greenwood says the proposal “flies in the face of President Obama’s own call for the U.S. to ‘win the future’ and maintain our nation’s leadership in research and technology.” He says the provision granting 12 years of exclusivity had broad bipartisan support, one of the few provisions of the healthcare reform legislation that did.

“Now the Administration is proposing to change this bipartisan, strongly supported provision and provide our innovators with dramatically less protection, in the name of questionable short-term budgetary savings that will come at the price of long-term costs to our healthcare system and our economy,” he says.

The Generic Pharmaceutical Association, however, praised the proposal, saying “There is no question that a 12-year exclusivity period would provide unwarranted monopolies for brand biopharmaceuticals, which would delay the savings that could result from the earlier introduction of biogenerics,” the organization said. However, it had problems with another proposal in the Obama budget.

The White House also wants to do away with so-called pay-for-delay settlements between generic drug makers and branded pharmaceuticals producers. The budget calls for the Federal Trade Commission to stop settlements from pharmaceutical companies to generic drugmakers that challenge patents in an effort to enter the market with competing generic versions of branded drugs.

“While we understand the need to reduce the deficit, policies such as these represent the wrong approach,” says John Castellani, CEO of the Pharmaceutical Research and Manufactures of America. “Instead, our country needs to retain and extend policies that promote the growth of private-sector R&D investment and secure our sector's future here in America.”

The Prescription Drug User Fee Act, which allows the FDA to collect fees from the industry to offset the cost of drug reviews in exchange for providing a level of predictability on the speed at which they will be completed, expires in 2012. The fight over renewal of the legislation is at the top of the industry’s agenda this year. It may be that the President, who is known for being a crafty poker player, has just set two more chips on the table.


February 17, 2011
http://www.burrillreport.com/article-a_generic_argument.html