Obama backing generic biologics
WASHINGTON - President Obama's budget would pave the way for government to approve generic versions of biologic drugs, an administration official said yesterday, a move that could save taxpayers, insurers, and patients billions on the world's most expensive drugs but could hurt profits of some Massachusetts biotechs.
The budget, which will be released today, will remove barriers to creating generic biologics, said an administration official. The money the federal government would save from biogenerics would help pay for a major overhaul of the nation's healthcare system the president has promised to enact this year.
The Food and Drug Administration currently has no process for approving biogenerics, also called "follow-on biologics" and "biosimilars." Such drugs are made from living organisms, not chemicals, and are extremely difficult to duplicate precisely. Congress in the last few years has haggled over how to create regulations to approve generic versions of biologics.
The generic industry has proposed letting companies copy biologics after three to five years, similar to rules set for conventional drugs under the 1984 Hatch-Waxman Act. The administration's proposal suggests the time frame would be consistent with Hatch-Waxman, though administration officials could not confirm that last night.
But biotechnology companies have fought to keep a monopoly on their drugs for at least 14 years. They say they need that amount of time in order to ensure a return on the significant investment required to develop biologics. Companies also fear patents will not fully protect biologics since competitors could make a similar molecule that may not be covered by the patent.
Massachusetts boasts one of the world's biggest biotech centers, with dozens of companies developing biologics. Several, including Genzyme Corp. and Biogen Idec Inc., already have significant drugs on the market that generate billions of dollars in annual sales. But biotech executives warn that if Congress makes it too easy for generic drug companies to introduce competitors, it could cripple their revenue and discourage them from investing billions of dollars to develop new life-saving therapies.
Still, at least one Massachusetts company, Momenta Pharmaceuticals Inc. in Cambridge, could potentially benefit from the legislation, because it is helping some partners develop copies of biologics for other countries.
Representatives from the biotechnology industry could not be reached last night, and the Pharmaceutical Research and Manufacturers of America, which represents the broader drug industry, said it would withhold comment on specific aspects of the budget until they were officially released.
But proponents of biogenerics praised the news. "We believe generic biologics legislation will happen this year and will generate significant savings and be pivotal to financing broader health reform," said Mark Merritt, president of the Pharmaceutical Care Management Association, which represents drug benefit management companies. "And it will most importantly bring competition to the most expensive medicines available."
Kathleen Jaeger, president of the Generic Pharmaceutical Association, said the period of market exclusivity allowed under Hatch-Waxman should protect research and development investments. The law grants five years to makers of a new chemical entity and three years for more incremental innovation.
Administration officials did not say last night how much the budget provisions would save the Medicare and Medicaid programs. But the Congressional Budget Office estimated last year that the federal government would have saved $6.6 billion over 10 years under proposed legislation that would have provided biotech companies 12 years of market exclusivity for new biologic drugs.