[Ip-health] Glassman and Love in Roll Call regarding Biogenerics: Don’t Kill Competition for High-Tech Drugs

[James Love]

The following guest editorial in Roll Call about was co-authored with
James K. Glassman, an under secretary of State for public diplomacy and
public affairs in the George W. Bush administration.  Jamie

http://www.rollcall.com/news/38298-1.html

Don’t Kill Competition for High-Tech Drugs
By James Love and James K. Glassman
Special to Roll Call
Sept. 9, 2009, 10:12 a.m.

The two of us have often been on opposite sides of important policy
debates on technology and health care, but we are united today in
viewing with alarm recent Congressional action involving biologic drugs
and vaccines, derived from living organisms.

At a time of deep concern about rising health care costs, Senate and
House committees last month voted to make it difficult, if not
impossible, for generic drugs to compete with biologics, even after
patents have expired. If the measure becomes law, it has the potential
to harm millions of sick people, in the United States and beyond.

The dangerous measure is part of the much larger package on health care
that Congress has been considering. Some background is necessary.

In 1984, Congress approved the Hatch-Waxman Act, which created a
mechanism to allow generic manufacturers of pharmaceutical drugs to gain
swift regulatory approval by showing that a medicine was “bioequivelent”
to a product that had already been OK’d by the Food and Drug
Administration. The streamlined procedures lowered the cost of entry by
generic suppliers and created a highly competitive environment that has
saved consumers billions of dollars.

The Hatch-Waxman Act, however, did not anticipate the new age of
biologics, which in 2007 accounted for $40 billion in sales in the U.S.,
or one of every seven dollars spent on prescription medicines — a
proportion that’s rising swiftly. Because no regulatory pathway was
created in the law for generic biologics, it is much harder for
manufacturers of these treatments (called biogenerics, or biosimilars)
to enter the market, even after all of the relevant patents have run
their course. The result is less competition, and high prices, for many
older products. For example, an annual course of Herceptin, a breast
cancer drug, can cost $48,000.

Congress is considering a pathway for biogenerics, but — as laid out in
the measure passed in a Senate committee on July 13 and a House
committee on July 31 — the process is deeply flawed and will reduce, or
even eliminate, potentially significant savings to consumers.

The 1984 act balanced the new regulatory pathway with other measures,
including a five-year period of “exclusion” between the time a product
is first registered and when the generic route can be used.

The original proposal for biogenerics would have retained most of the
features of the 1984 Hatch-Waxman Act, including the five-year
exclusion. But, after an intense lobbying campaign by the manufacturers
of biologics, new amendments to the Senate and House versions of the
bill made it much more difficult for makers of generics to enter the
market.

The most glaring change in the legislation extended the exclusion period
from five to 12 years. Other changes will make it easier for incumbents
to challenge generic approvals on scientific grounds and make it harder
for insurance companies to insist on the cheaper generics.

As a result, Bill Marth, the North American CEO of Teva Pharmaceuticals,
the world’s largest maker of generics, recently told Reuters that, if
the changes stand, his company does not see a way to enter the
biogenerics market. And if Teva won’t make such drugs, Marth said, “I
don’t know who will.”

While the amendments clearly harm consumers, Members of Congress from
both parties have claimed that long monopolies are needed to stimulate
investments in research and development. We strongly disagree. R&D for
new medicines is undoubtedly expensive, but this is just as true for
products that the FDA classifies as “small-molecule,” or conventional,
drugs as it is for biologics. And innovation has prospered under the
Hatch-Waxman regime. In the case of both small-molecule drugs and
biologics, new inventions are granted not just 20-year patents but other
types of incentives, such as seven years of market exclusivity for
products that serve fewer than 200,000 Americans.

A Federal Trade Commission report in June closely examined the issue and
found that a “12- to 14-year regulatory exclusivity period is too long”
and “unnecessary to promote innovation.”

Test-data exclusivity and patent protection stimulate innovation, but
both require a time limit to give consumers broad access to low-cost
generic copies. The length of those limits has to strike a proper
balance between boosting R&D and generating competition.

The framers of the Constitution understood the need for balance in
creating monopolies that were temporary. As Article I, Section 8, Clause
8 states: “The Congress shall have Power ... To promote the Progress of
Science and useful Arts, by securing for limited Times to Authors and
Inventors the exclusive Right to their respective Writings and
Discoveries.”

A critical question is defining “limited Times.” Endless monopolies,
particularly those created by regulatory measures, must be avoided —
especially now, as President Barack Obama and Congress seek ways to make
health insurance more affordable. From different ends of the political
spectrum, the two of us agree that a 12-year exclusion simply does not
meet the test of logic.

If Congress adopts such an exclusion — and provides other opportunities
to litigate generic entry or “evergreen” their monopoly protection (that
is, make minor modifications to a product in order to start the clock
again), then the pathway for biogenerics will be a long and torturous
road that may be seldom, if ever, traveled.

James Love is director of Knowledge Ecology International, a public
interest advocacy group that searches for better solutions to managing
knowledge resources. James K. Glassman was under secretary of State for
public diplomacy and public affairs in the George W. Bush administration
and was editor of Roll Call from 1988 to 1993.


--
James Love, Director, Knowledge Ecology International
http://www.keionline.org | mailto:james.love at keionline.org
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