Why Big Pharma Wants To Be Like Big Biotech

8/19/09

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one key advantage over biologics: the ability to act inside the cell. Biologics, because of their large molecular mass, generally function outside of the cell as agonists that stimulate some kind of desired activity (for example, binding to a receptor on cells to initiate a signal) or as antagonists (by blocking the binding of some molecule to a target, thereby blocking the signaling cascade). If the biological process you seek to block or enhance is within the cell, traditional small molecules made through chemical synthesis is still the way to go.

Yet to be seen is whether emerging technologies, be they older (such as gene therapy and antisense) or newer ones like RNA interference and cancer vaccines, can be developed to the point where they can enter the marketplace as serious contenders. If the technologies can be made to work in a clinical setting, the ability to control gene expression will rapidly supplant a host of other technologies in the marketplace.

Biologics Have No Generic Competition – Yet

Small molecules eventually go off patent, as do biologics. This loss of patent protection often leads to the introduction of generic drugs, which are usually priced at a small fraction of the cost of the branded drug. When small molecules lose their patent protection (or their patents are successfully challenged in court), their sellers can lose significant market share within days or weeks when they face a flood of competition from cheaper generic copies. Big Pharma’s solution to the generics issue has been to establish “pay for delay” agreements with generics manufacturers. They pay these companies NOT to challenge their patents and sell competing drugs, thereby preserving market share. The legality of this practice has come into question, since it is obviously anti-competitive and is designed to keep prices high for consumers. The Federal Trade Commission is currently working to promote anti-trust legislation to block this practice. Cost savings for consumers are significant: the introduction of generic competitors for just four brand-name drugs (Prozac, Zantac, Taxol, and Platinol) has been estimated to have saved consumers more than $9 billion. Eliminating “pay for delay” agreements will save US consumers $3.5 billion a year, according to FTC Chairman Jon Lebowitz.

Biogenerics Have No Straightforward Path to Approval

What about biologics? Big Pharma has good business reasons to enter the biologics arena, because there is no clear regulatory path forward for biogenerics (also referred to as follow-on biologics or biosimilars) to enter the market. This subject is currently being debated in great detail by the politicos in Washington, because there are significant savings to be reaped in the US healthcare system if a way can be found … Next Page »

Stewart Lyman is Owner and Manager of Lyman BioPharma Consulting LLC in Seattle. He provides strategic advice to clients on their research programs, collaboration management issues, as well as preclinical data reviews. Follow @

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