Big pharmaceutical companies are facing a barrage of legislative proposals that could have a dramatic impact on the industry’s future earnings power and open doors to one of its biggest threats: generic drug manufacturers.
A proposal set to be unveiled on Wednesday by Hillary Clinton, the Democratic presidential hopeful, and a bipartisan group of lawmakers would allow generic drugmakers to manufacture cheaper versions of biotechnology drugs produced by companies such as Amgen and Genentech.
The proposal, which aims to cut the cost of high-priced biotech drugs, would empower the Food and Drug Administration, the US chief drug regulator, to approve the generic versions of biotech drugs, also known as follow-on biologics. Opponents, led by the Biotechnology Industry Organisation (Bio), say the proposal raises safety questions and threatens to hamper the willingness of branded biotechnology companies to innovate.
“I think it is natural that those who pay for healthcare – whether it is the government or insurance plans or individuals or employers – are looking for savings. What we have to be careful about is that we don’t put the savings cart before the safety horse,” says Jim Greenwood, chief executive of Bio.
Although the proposal was introduced and failed to pass under the Republican-controlled Congress, some analysts say increasing pressure from voters about the high cost of drugs could give new impetus to proposals that might strengthen the generic industry and lead to cheaper drugs.
A separate effort by a bipartisan group of lawmakers in the Senate that would prohibit big branded drugmakers from paying generic rivals to stay out of their markets is also gaining traction. If passed, the law would close the door on a practice that some regulators have complained allows branded drugmakers to thwart competition and keep drug prices artificially high.
The fight between branded drugmakers, including biotechnology groups, and generic drugmakers centres around two issues: the requirements determining how quickly a so-called biogeneric is approved, and what exactly constitutes a generic version of a biotech drug.
Both issues stem from branded drugmakers’ argument that biologic drugs are reproductions of human proteins, whose structures are complex, never clearly defined and dangerously variable in their production from company to company. Biologics are made by using living cells that are genetically triggered to produce a specific protein identified to help an illness.
The generic drug industry counters that it is not as complex as biotech drugmakers contend and that they can safely produce their own “generic” versions of the branded biologics to treat disease. However, they add that in order to be able to offer them at lower-cost generic prices the US regulators must give them a fast-track approval process.
Generic versions of traditional pharmaceuticals are approved without the need for long, expensive clinical trials, but biotech drugmakers argue that the variability in producing proteins from live cells warrants that generic drugmakers should prove in expensive clinical trials that their protein is equivalent.
Last year, European regulators laid guidelines for approval of follow-on biologics. But without new legislation in the US, many analysts estimated that biogenerics might not reach the world’s biggest drug market until at least 2010 as the FDA carefully worked to codify rules on how to approve follow-ons to biotech treatments.