In the small-molecule drug area, which covers chemical drugs, the Food & Drug Administration (FDA) has provided generic drug makers with an expedited approval process—and incentives for companies to take advantage of them—since the 1984 Hatch-Waxman Act. The pathway changed the market, creating a generic drug industry that in 2011 accounted for more than 70 percent of all prescriptions in the U.S., according to IMS Health, a pharmaceutical intelligence company.
Hatch-Waxman didn’t cover the $30 billion biological products market, however. Biologics are drugs and treatments that are far more complex than small-molecule drugs. They require much more complicated manufacturing processes and often are derived from living cells or tissues. The most widely used biologics treat diabetes, cancer, rheumatoid arthritis and multiple sclerosis. When a drug has no clinically meaningful difference from a reference product, it is biosimilar.
