Competitive Enterprise Institute | 1899 L ST NW Floor 12, Washington, DC 20036 | Phone: 202-331-1010 | Fax: 202-331-0640
Since the very first biotechnology-derived medicine was introduced in 1982, the technology has revolutionized the pharmaceutical industry. Today, more than 187 of these biopharmaceuticals have been approved in the United States, and have been prescribed to approximately 325 million patients. Biotechnology has delivered extraordinary medical advancements and has helped to treat diseases once thought intractable.
The biotechnology revolution has not come cheap, however. Many biopharmaceuticals cost thousands of dollars for a course of treatment that can last months or years. But, because the patents on many first-generation biotech medicines are slated to expire in the coming decade, there is a growing interest among patients, insurers, governments, and the generic drug industry in the production of generic biopharmaceuticals.
Some experts have speculated that the approval of generic biopharmaceuticals could save patients billions of dollars each year. However, biopharmaceuticals and conventional drugs are regulated in different ways, and the shorter approval mechanism for generic drugs does not apply to most biopharmaceuticals. Some biopharmaceuticals are regulated under the same process as conventional drugs, but most are regulated under an entirely different statute. Consequently, many groups have sought the creation of a new abbreviated regulatory pathway for generic—or what the FDA calls “follow-on”—biopharmaceuticals.
It may be possible for FDA to establish such an abbreviated approval process on its own, and the agency’s initial attempt to create such a process for generic conventional drugs may serve as a useful model. That effort was frustrated, however, by a variety of inefficiencies, so new statutory authority is probably necessary to make the approval process for follow-on biopharmaceuticals efficient and effective. Members of Congress have introduced legislation that would do just that, but there remain several practical problems that must be addressed.
Skeptics argue, for example, that the existing difference in regulatory treatment reflects the fact that biopharmaceuticals are substantially more complex and prone to contamination, which complicates the production of accurate copies. While there is some merit to these claims, the current state of biotech science has made it possible to generate safe and effective duplicates of many biopharmaceuticals. The agency has even approved one follow-on biotech drug already under the process set out for approving follow-on versions of conventional drugs. And the proposed legislation would grant FDA broad discretion to determine how much laboratory and/or human testing would be necessary for approval.
Other observers note that, because the research and development costs for biopharmaceuticals are significantly greater than for conventional drugs, and because the biotechnology industry is considerably less mature, Congress should enact special provisions—such as additional patent life or data exclusivity protections—that will help the industry remain viable. Indeed, Congress should consider certain limited incentives for innovation. However, once the patent and data exclusivity protections expire, there should be a simple and proficient method for getting approval of follow-on biopharmaceuticals.
Consumers would see tremendous benefits from an abbreviated approval process for follow-on biotech products. Many observers estimate that the introduction of follow-on biopharmaceuticals could reduce prices by 15 to 25 percent, with annual savings in the billions of dollars within a decade. In addition, the competition that follow-on approvals will generate could spur the pace of incremental improvements in biopharmaceutical quality. Thus, creating a regulatory pathway for follow-on biotech medicines would be a constructive way to advance competition in the biotechnology industry and to begin taming the rapidly increasing price of biotech medicines.