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Americans spend an estimated $200 billion a year on prescription drugs. In 2004, nearly half of all U.S. prescriptions were for generic drugs, yet those low-priced products accounted for only 12 percent of the nation’s drug bill. As a subset of the larger pharmaceutical industry, biotechnology drugs represent an $18 billion industry in the United States and nearly $30 billion globally. Biotech medicines account for 10 percent to 15 percent of health care spending, with the market growing annually at about 10 percent. Generic drugs cannot generally be manufactured and marketed until the patent protecting the brand-name drug has expired. As the biotech industry is relatively young, brand-name biotech medicines have almost always been covered by patents. But now several key patents covering brand-name biotech medicines have expired or are close to expiration. Many of these expiring patents cover such widely used biologics as insulin, human growth hormone, and epoetin. Last year, for example, the patents covering epoetin alpha began to expire. Epoetin alpha is a biotech medicine for treatment of anemia and has been manufactured and marketed under the brand names of Epogen and Procrit. Cheaper generic versions would put money back in the pockets of the 3.4 million Americans living with anemia and taking brand-name medicines. The market for all kinds of generic pharmaceutical drugs has been very lucrative for many companies. And now that the manufacture of generic biotech medicines is becoming a legal possibility with the expiration of key patents, generic manufacturers are gearing up to expand from simpler generic pharmaceuticals to so-called biogenerics, also known as follow-on biologics. With U.S. prescription drug prices at an all-time high, the market for new biogenerics is likely to be highly profitable. With so much money at stake, the skirmishing between brand-name manufacturers and generic manufacturers has already begun and is not likely to subside anytime soon. Food and Drug Administration guidelines to cover biogenerics have become an important area of contention. So far, the FDA has not issued any guidelines on biogenerics, and generic manufacturers are waiting. Such guidelines are expected in the near future and will have important consequences for consumers’ pocketbooks and, more important, their health. TRADITIONAL GENERICS Generic drugs are not a new issue for drug-makers. In 1984, Congress passed the Drug, Price Competition, and Patent Restoration Act — commonly called the Hatch-Waxman Act — to permit pharmaceutical manufacturers to produce generic versions of brand-name drugs after applicable patents had expired. Since the passage of the Hatch-Waxman Act, generic manufacturers have analyzed thousands of traditional small-molecule pharmaceuticals no longer under patent protection and have learned to manufacture generic versions safely and cheaply. Generic drugs are cheaper than their brand-name counterparts in large part because generic manufacturers do not have to conduct the expensive and time-consuming clinical trials required of brand-name drugs under FDA guidelines. The Hatch-Waxman Act allows generic manufacturers to forgo these clinical trials if laboratory analysis can prove that the generic version is chemically identical to the brand-name drug. Because of the difficulties in conducting such analyses for biotech medicines, however, the Hatch-Waxman Act specifically excludes biologics. BRAND NAME VS. GENERIC Brand-name biotech medicine is a multibillion-dollar business for drug-makers such as Amgen, Genentech, and Johnson & Johnson. The scientific innovations of such companies have resulted in almost 500 new medicines — with more than 150 FDA-approved drugs and nearly 350 more awaiting human clinical trial completion. In fact, approximately 40 percent of the medicines now in final-stage clinical trials originated in the biotech field. So it is not surprising that brand-name biotech manufacturers are attempting to prevent biogenerics from entering the market. The selling prices required to recoup the high costs of discovery, development, and regulatory clinical trials of brand-name biologics would be undercut by the cheaper prices of a biogeneric. According to some estimates, branded drugs lose 15 percent to 30 percent of their market share when a first generic version reaches the market, with sales declining by as much as 75 percent to 90 percent when other companies introduce subsequent generics. In addition to brand-name biotech manufacturers trying to keep them out of the biologic market, generic manufacturers face some potential scientific hurdles. Unlike traditional pharmaceuticals, which are synthesized using reproducible chemical procedures, biotech medicines are fabricated from bacteria, farm animals, and other organisms that have a life of their own. Biologics typically involve the large molecules of hormones, antibodies, or cytokines. Most are constructed from proteins, which are too complicated to make from scratch. To function properly, a protein must be folded a certain way; sugars and other chemicals must be added to particular spots on the macromolecule. Accordingly, even generic manufacturers agree that FDA guidelines will need to address the inability of biogenerics to be chemically identical to their brand-name counterparts because of all these potentially irreproducible procedures. The brand-name manufacturers take this concern further, warning that small differences in biotech medicines can have enormous consequences in the body. CONCERNS OVER BIOGENERICS According to the Biotechnology Industry Organization, an advocacy group for more than 1,000 biotech companies, the science currently does not exist to provide an alternative to the full complement of data, including clinical evidence, needed to demonstrate the safety and effectiveness of biogenerics. Biotech medicines are simply much more difficult to produce and pose greater safety risks for patients. Because of differences in the components of a biotech product or differences in how it is manufactured, says BIO, various versions of the same biotech product produced by companies other than the innovator inevitably will differ in certain respects from the innovator’s product. And studies show that even small product differences can result in significant safety or efficacy differences. Therefore, given the current state of scientific knowledge and technique, clinical trials remain a fundamental part of evaluating the safety and effectiveness of any follow-on biologic. REGULATORY FUTURE The dilemma faced by the FDA and the regulatory organizations of other countries is, therefore, whether to require biogeneric manufacturers to conduct large, lengthy, and expensive clinical trials similar to those required for brand-name manufacturers. Such trials would inevitably raise the price of biogenerics for consumers, undercutting the main reason for permitting generic drugs. But if such trials were not required, biogenerics would have to be approved on the basis of informed guesses about whether subtle differences in the generic version of the brand-name product were likely to harm patients. The FDA has been deliberating on this balance between actual trials and estimated data for several years. According to regulatory experts on the biotech industry, the public can expect biogenerics to make their U.S. debut within the next five years. These same experts also predict that Europe may beat the United States in providing approval for biogenerics. The European Union already is moving forward with a regulatory process to allow simple biologics to be copied. The European Medicines Agency has issued guidelines for biogenerics and has already begun approving and rejecting products. However, this does not necessarily place Europe in the lead for biogeneric approval, as the European Medicines Agency does not make the final decision on what is approved or rejected. The final approval for biogenerics must come from the European Commission, which does not necessarily follow the lead of the European Medicines Agency. For example, Omnitrop, a generic growth hormone produced by Sandoz/Novartis, received a favorable European Medicines Agency review, but was rejected by the European Commission because of “filing irregularities.” Although the FDA is behind the European Medicines Agency in terms of actually releasing official guidelines, FDA officials have drafted proposals to create a regulatory approval mechanism based on the Hatch-Waxman Act. In July 2004, the FDA transferred responsibility for reviewing biotech pharmaceuticals from its Center for Biologics Evaluation and Research to its main Center for Drug Evaluation and Research. The FDA began a series of workshops in September 2004 to assess the risks inherent in biogenerics and the technologies available to mitigate them. The last major workshop in the series was held in February 2005. Acting FDA Commissioner Lester Crawford summarized his view in testimony before the Senate Judiciary Committee last year: “FDA believes that [biogenerics] may hold the potential for greater access to therapies and meaningful savings for consumers. We acknowledge that approvals of more complex products are likely still years away and would require resolution of serious scientific, legal, and policy issues.” For the good of consumers and biotech manufacturers alike, let’s hope that resolution comes as expeditiously as possible. David Milligan is an associate in the D.C. office of Baker & Daniels, where he specializes in patent law. He may be reached at [email protected].

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