Healthcare Reform Gave Biotech Everything It Wanted, and More
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known as the FDA approval process.
Regular generic drugs, which are copies of synthetic chemical compounds, are often much cheaper than the original brand names. Development costs are substantially lower and there are few marketing costs for these generics. That will seldom be the case for follow-on biologic drugs, whose complexities present novel difficulties. Generic companies will have to navigate several of the normal aspects of FDA approval, such as pre-clinical data and large clinical trials. Since they are often produced in living cells, manufacturing and production processes for follow-on biologics will also present challenges, increasing development costs. It seems likely that follow-ons will also require marketing expenses not seen with normal generics.
These barriers will limit the entry of large numbers of follow-on biologics into the marketplace. However, there is one more worrisome hurdle that this legislation places in front of anybody who wants to make a follow-on biologic that could compete with an innovator’s product.
Upon application for FDA approval, the company developing the follow-on biologic has to turn over all the relevant documents to the company that owns the original reference therapeutic. Not upon approval, but upon application. To its direct competitor.
That means lawyers at multiple organizations now get to examine all the confidential data and determine whether there are any patent infringements. This seems to be much greater disclosure of confidential information than what is seen today with generic drugs.
As a former VP at a biotechnology company, I would be concerned handing all the information and data required for approval of a product over to my direct competitor before I even have it on the market. All the information is supposed to remain confidential. However, even with legal remedies, lots of damage could potentially be done. Is it worth the risk?
Perhaps I might be misreading the relevant paragraphs. If so, maybe someone could assuage my concerns.
Biotechnology companies developing reference therapeutics should be ecstatic with the legislation. They get 12 years of exclusivity for their products and a first look at any competitor who might produce a follow-on biologic.
On the flip side, companies interested in developing a follow-on biologic may be much less sanguine. They must spend a lot of money generating data for a product that cannot be sold while any market exclusivity still remains – data their direct competitor gets to examine before the follow-on biologic is even approved.
They might ask themselves, “Why not just develop an innovative biologic instead?” The costs will not be much greater, there are 12 years of exclusivity and no one but the FDA gets the data.
I guess time will tell if this legislation really produces a lot of follow-on biologics that help lower the price of drugs. But it certainly helps biotechnology companies.