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European decision presages era of generic biology drugs

A key European health authority has signed off on the first-ever generic biotechnology drug, opening a crack in one of the most secure and lucrative niches in the business world.

In a long-awaited decision, the European Medicines Agency recommended approval of a new drug called Omnitrope, which copies an existing growth hormone prescribed for undersized children. If given final OK by the European Commission, Omnitrope could be on the market later this year.

Though unlikely to be a blockbuster, Omnitrope marks the first real threat to the nearly permanent franchise enjoyed by any company that manages to bring a successful biotechnology drug to market.

In America, where a single biotech drug can earn its maker more than $1 billon a year, companies are still protected by tough approval rules from competition by generic manufacturers. But as biotech drugs take up a bigger chunk of the national healthcare bill -- more than $30 billion in 2004, according to one count -- biotechnology companies find themselves under increasing pressure from possible generic competition.

''They're becoming more and more concerned about it," said George Xixis, a drug-patent lawyer for Nutter, McLennan & Fish of Boston.

''Historically that's been one of the competitive advantages of creating a biological drug, because even if you have a patent expiration, the barrier to entry for another manufacturer is very high," he said.

With several lucrative biotechnology drugs either off-patent or close to losing their patent protection, generic drug makers are lining up to produce their own versions of insulin, growth hormone, and other biological drugs that have never been produced in cheaper generic versions. Sandoz, the European generic drug maker that won a positive recommendation for Omnitrope on Jan. 26, has said it has several more generic biotech drugs in the pipeline. Other giants, including Barr Laboratories Inc. of New York, have been pushing the US Food and Drug Administration to loosen its rules regarding generic biologicals.

The potential savings are large. Typically a generic drug sells for 20 to 70 percent of the price of the original name-brand drug. Because they are hard to produce, biotech drugs would likely offer less of a discount -- but with such drugs costing $20,000 or more per year for a single patient, even small savings could have a large impact on healthcare.

In Europe, the arrival of ''biogenerics" is being smoothed by regulators who have issued several sets of draft guidelines on how companies can prove their copycat drugs are equivalent to existing approved biotech drugs.

In the United States, movement has been slower. The topic has become the subject of a behind-the-scenes lobbying fight. On one side are generic drug makers eyeing a growing market; on the other, biotech companies like Amgen Inc. of California, whose lucrative red-blood-cell booster Epogen is potentially at risk.

Their focus is on the FDA's approval rules. Generic pills are cheaper partly because their makers don't have to perform large, expensive human tests. Instead, they simply show their molecules are ''equivalent" to existing drugs.

Biotech drug makers say it would be dangerous to allow a similarly quick approval for more complicated biotech drugs. Unlike well-known chemically derived drugs like Lipitor and Claritin, biotechnology drugs -- proteins, antibodies, and other substances derived from living cells -- can be extremely difficult, if not impossible, to reproduce exactly.

''Pharma is the world of small-molecule development, it's a matter of mixing salt and pepper," said Jennifer Chao, a biotechnology analyst for Deutsche Bank Securities. ''In biology, you're talking about living organisms, things that are cultivated in genes."

Biotech producers argue that tiny changes in the way proteins are developed can have serious effects on how they work in the human body. Even if two proteins appear chemically equivalent, one could provoke a dangerous allergic reaction simply because one part of the molecule is structured differently. Without full human testing, they say, safety is impossible to guarantee.

Regulators have agreed. The 1984 Hatch-Waxman Act, which opened the door to generic competition by shortening the approval process for standard chemical drugs, didn't include biologicals. The nation's regulators at the FDA have never issued any guidelines for getting ''biogenerics" to market more quickly.

But that has begun to change. Senator Orrin Hatch, a Utah Republican and cosponsor of the 1984 act, said in a September speech that Medicare costs should push the FDA to reconsider its rules on biogenerics, although no legislation has been introduced. The FDA itself promised to issue a position paper in 2005, he said, but the paper has never been released.

''It's stuck in political limbo in terms of what happens in the US, but there are enough political forces bringing to bear that a solution should emerge," said Michael Ringel, a biopharmaceutical specialist with Boston Consulting Group.

Ringel says that the biotech industry's reputation for novel science should help it weather the eventual arrival of generics.

''It's no secret that there's a ton of generic EPO being developed," he said, referring to Amgen's best-known product, ''and Amgen's value isn't suffering as a result of that. People believe they're an engine of future growth."

Even so, the industry is taking steps to protect its turf. Its key lobbying group has pushed both the FDA and the European Medicines Agency to keep the hurdles high by putting generic biologicals through full human trials.

Instead of fighting the arrival of generics, however, at least one biotechnology company is welcoming it. Momenta Pharmaceuticals of Cambridge became one of the hottest small biotech stocks in America last year because of a new technology that analyzes the structure of complicated sugar molecules. The technique could allow the company to create exact copies of an off-patent drug and then prove to the FDA that they are identical to the original.

Last August, Momenta filed an application for a generic version of Lovenox, a blood thinner with sales of $2.4 billion a year.

Although Lovenox is a sugar rather than a protein or antibody, it is more complex than anything the FDA has evaluated as a generic, said Momenta CEO Alan Crane. The company is still waiting to hear from regulators, but Crane said that if the company is successful, it could turn its attention to more complex biogenerics, such as proteins, many of which have never been fully described.

Stephen Heuser can be reached at

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