Opening the door for biogenerics

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By Chris Begley

Congress has the opportunity this year to increase access to lifesaving drugs and save patients, hospitals, companies and the federal government billions of dollars. Doing so will require standing up for the needs of average Americans -- and recognizing that health care reform is not one massive to-do, but rather a series of incremental steps that are both doable and meaningful.

One important step involves a class of drugs known as biologics. These drugs, unlike traditional pharmaceuticals, are derived from living organisms. Biologic drugs are safe and effective. Unfortunately, they are also expensive. The price of a biologic therapy can exceed $100,000 per patient per year, and biologic medicines cost Medicare Part B alone more than $7 billion annually.

An incremental step to help Americans save money on these lifesaving treatments is biogenerics, or generic versions of biologics. However, biogenerics are not currently available in the United States.

For years, innovator companies fought hard to stop the entry of biogenerics into the U.S. market, just as they fought the introduction of generic versions of traditional pharmaceutical drugs 25 years ago. Now they argue that they'll accept a regulatory pathway for biogenerics but are putting up roadblocks, saying innovation could be stifled if certain conditions aren't met and that satisfying these conditions is more important than providing patients with access to safe, effective and lower-cost medicines.

Since the birth of generic competition with the enactment of Hatch-Waxman in 1984, there has been unprecedented savings for consumers and investment in new drug research and development, which in turn has led to a period of unparalleled pharmaceutical innovation. Consumers have embraced generics, with generics now accounting for 69 percent of drug utilization and saving the American health care system more than $734 billion in the last decade. There is no reason to believe this won't be the case again with biogenerics.

Congress now has the opportunity to spur such savings and competition. The House Energy and Commerce Committee and the Senate Health, Education, Labor and Pensions Committee have passed health care reform packages, both of which include provisions that would allow the Food and Drug Administration to approve biogeneric medicines in the United States.

Although a biogenerics regulatory pathway was included in both bills, there are some problems with the language as currently written that will prevent timely consumer access to biogenerics and a competitive biogeneric industry. First, it is critical that we fix the loophole -- commonly referred to as "evergreening" -- that would allow innovator companies to make minor changes to their biologic products and receive additional years of exclusivity, possibly giving them a permanent monopoly. Second, we need to ensure that the final bill strikes the right balance between access and innovation. President Obama and the Federal Trade Commission agree that the exclusivity period in the current bills -- 12 years -- is an unnecessarily lengthy period of time for consumers to wait for safe and low-cost biogenerics.

Innovator companies argue for long exclusivity periods for their products, saying that the cost of developing biologics is so expensive that they need more time without competition to gain back their expenses and save jobs for their workers. But a recent study by AARP's Public Policy Institute reveals that manufacturers of many top-selling biologic drugs have recouped average research and development costs several times over in the past six years, often within a single year.

While Congress deliberates over the conditions necessary for biogenerics to enter the U.S. market, European consumers have been benefiting from the low cost and efficacy of biogenerics for several years, with no negative effects on the European biotech jobs market. Hospira Inc. -- the world leader in generic injectables -- was the first U.S. company to launch a biogeneric drug in Europe: Retacrit, a biogeneric version of erythropoietin, or EPO. Retacrit is therapeutically equivalent and can be safely and effectively interchanged with the innovator drug.

In addition to providing European consumers access to safe and effective treatments, biogenerics are saving people money. In Germany, the most established European market for biogeneric versions of EPO, biogenerics have led to a 20 percent to 30 percent drop in EPO prices. A 20 percent price cut in a drug treatment that now costs $100,000 is significant to consumers, insurers and government purchasers alike.

As Congress continues to debate health care reform, we hope that common sense ultimately prevails; a shorter period of exclusivity with an "evergreening" fix would provide consumers with access to lower cost, safe and effective treatments, putting dollars back into American consumers' wallets and saving lives. Let's put the health of consumers first, limit the monopolies of the brand drug industry and still preserve innovation. It is the right thing to do.

Chris Begley is chairman and CEO of Hospira Inc., which is a member of the Coalition for a Competitive Pharmaceutical Market.