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FTC calls for biogenerics path and end of “pay for delay” deals

By Gareth Macdonald , 11-Jun-2009

 

The US Federal Trade Commission (FTC) believes that an effective FOB approval pathway and laws preventing “pay-for-delay” deals are the only ways of reducing the cost of biologic drugs.

 

A FTC report, released yesterday, concludes that competition will have less of an impact on biologics than on small molecule drugs because the costs involved in making follow-on-biologics (FOB) do not allow for substantial discounts.

The authors suggest that only biologics generating sales of $250m (€178m) a year and above are likely to encounter generic competition and only from a small number of non-branded producers.

The commission also predicted that, even when a generic version is launched, most biologics “are likely to retain 70 to 90 per cent of their market share and, therefore, will likely continue to reap substantial profits years after entry [by generic biologics].”

Based on these factors, the FTC believes that the 12 to 14 year patent exclusivity period being sought by innovator firms will stifle rather than promote innovation by Big Pharma.

FTC Chairman Jon Leibowitz said: “If Congress creates an efficient pathway to follow-on biologic drugs…it will be taking a major step forward for both health care reform and affordable drugs.”

The Commission also believes new legislation preventing “authorized generics” deals, such as was passed by a House Energy and Commerce subcommittee last week, would accelerate market entry for generic biologics and bring down prices.

The FTC’s conclusions are in line with the Obama administration’s support for a FOB pathway and efforts to increase the use of generic versions of both biologics and small molecule drugs.

The full FTC report can be read here .

BIO vs GPhA

Predictably, response to the findings has been polarized with parties on both sides of the biologics sector lauding and decrying its conclusions in equally strong terms.

The Biotechnology Industry Organisation (BIO) told Reuters that the report is based on “fundamentally flawed or highly selective assumptions, an exceedingly narrow policy perspective, and a lack of true understanding of the necessary conditions to drive future biomedical breakthroughs.”

In contrast the Generic Pharmaceutical Association (GPhA) welcomed the conclusions, commenting that they are “another endorsement of the need to move forward on passage of legislation that brings affordable biogenerics to patients sooner rather than later.

"President Obama, many members of Congress of both parties, and now the FTC all believe that FDA can create a biogenerics pathway that ensures a balance between pharmaceutical innovation and consumer access.”

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