Why Five Years of Data Exclusivity Makes Sense for US Follow-on Biologics Legislation
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In case you did not know, the 12 years of market exclusivity proposed for follow-on biologics by supporters and lobbyists for the pharmaceutical and biotechnology industries is part of the impending US healthcare reform legislation currently pending in Congress. While President Obama has publicly announced that he supports a five year period of data exclusivity for biologics (the same as the exclusivity period for generic small molecule drugs, it is unlikely that the President will be able to convince or coerce legislators to reconsider the 12 year data exclusivity provision. However, there was a brilliant Op-Ed piece in today’s New York Times written by Anthony So and Samuel Katz at Duke University which offers a plethora of financial and business reasons why the five year period makes a lot of sense!
- Generic small molecule drugs have been estimated to save the American healthcare system as much as $734 billion over the past 25 year or so since the inception of the Hatch Waxman Act.
- Biologics cost on average 22 times more than equivalent brand name prescription small molecule drugs
- In 2008, 28% of sales of the life science industry’s top 100 products came from biologics and biotechnology products: by 2014 that share is expect to rise to about 50%
- The Medicare Payment Advisory Commission found that the top six selling biologics which include Epogen (Amgen) Avastin (Genentech) and Remicade (Centocor) accounted for $7.0 billion (43%) of Part B drug spending in 2007 (Part B covers the cost of doctor spending and outpatient visits)
- Between 2006 and 2007, Medicare Part D (prescription drug coverage) spending on biologics increased by 36% as compared with a 22% increase in spending for small molecule drugs
- Prices for biologics and biotechnology products have increased more rapidly than those for small molecule drugs
- While industry leaders and their lobbyist contend that it costs more and takes longer to develop biologics and biotechnology products than small molecule drugs, based on reports by various industry trade groups it costs about $1.2 billion to develop biologics and roughly $1.318 billion for small molecule drugs
- The US Federal Trade Commission, the independent federal agency whose main goals are to protect consumers and to ensure a strong competitive market by enforcing a variety of consumer protection and antitrust laws, recommended that the data exclusivity period for follow-on biologics should not exceed six years.
Despite the likelihood that follow-on biologics will substantially reduce prescription drug costs and healthcare spending, Congress has chosen to support questionable legislation that will delay access of Americans to less costly, efficacious follow-on biologics until at least 2020.
Until next time...
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