A “Generic” Call for Change | Citizens Against Government Waste

A “Generic” Call for Change

The WasteWatcher

As Congress braces for the largest reform of healthcare in the nation’s history, lost in the debate has been an issue critical to federal and state healthcare budgets, as well as the ability of consumers to afford lifesaving drugs.  The issue is whether Congress should grant generic makers of the next generation of medications called “biologics” the same regulatory approval treatment it did for chemical drugs under the 1984 Hatch-Waxman Act.

Biologics are the next generation of medications and treatments that now represent one in four pharmaceuticals sold in the United States.  They are substances made from living organisms or their products which are used to treat, prevent, or diagnose certain diseases.  Unlike traditional chemical drugs, the composition of biologics is much more complex.  The commonly-known diseases biologics are used to treat include diabetes, multiple sclerosis, Alzheimer’s, Parkinson’s, psoriasis, and a litany of cancers.

Hatch-Waxman provided a pathway for generic chemical drug makers to seek and receive Food and Drug Administration (FDA) approval of equivalent generic drugs.  In creating this pathway, Congress struck a careful balance among competing interests by retaining the incentives for cutting-edge innovation, protecting intellectual property and drug safety, while promoting the development of more affordable generic medicines that could be brought to market for the benefit of consumers.  The law has been successful.  Despite initial estimates of cost savings to the U.S. healthcare system of $1 billion in the first decade, a recent Generic Pharmaceutical Association study revealed $734 billion in savings since 1998.

In 2007, worldwide sales of biologics (56 percent of which are sold in the U.S.) topped $75 billion.  Over the past decade, the total market for biologics has nearly doubled, and their prices have grown exponentially, with the average daily patient cost of a biologic reaching 22 times the cost of a traditional chemical drug.  The costs keep rising, in part because biologics are more complex and expensive to make, but mostly due to the lack of competitive generic alternatives that otherwise would put downward pressure on costs.  At a time when Medicare and Medicaid budgets are deteriorating at a much quicker than expected pace, Congress moving quickly to open the pathway of Hatch-Waxman to generic biologics would be a victory for taxpayers and consumers. 

Congress is currently considering two competing pieces of legislation to give FDA authority to approve biogenerics.  H.R. 1427, the “Promoting Innovation and Access to Life-Saving Medicine Act,” introduced by House Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) and Health Subcommittee Ranking Member Nathan Deal (R-Ga.), is supported by members of both parties, many in the healthcare industry, as well as patient and consumer groups.  It gives the FDA proper authorities to approve safe, effective and affordable biogenerics while providing innovating companies with an exclusivity period of five years and an extra three years for new indications and dosage forms – much like the Hatch-Waxman formula worked for chemical generics.

The other bill, H.R. 1548, the “Pathway for Biosimilars Act,” introduced by Rep. Anna Eshoo (D-Calif.) and House Energy and Commerce Ranking Member Joe Barton (R-Texas) gives the FDA authority to approve biogenerics as well, but it would provide 12 years of exclusivity and an additional two years for new indications and dosage forms for innovating companies.

There is general agreement that a pathway to biogenerics must be provided as quickly as possible, and the issue is getting some traction as a way to save money to help pay for Congress’s healthcare reform.  The Waxman-Deal bill would get generic biologics to market more quickly, saving taxpayers and consumers money while still allowing for a reasonable period of time for innovating biologic companies to recover their investment.

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