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Potential Impact of New Generics Bill

Written by on Tuesday, February 20th, 2007

On February 14, 2007, Representatives Henry Waxman, Jo Ann Emerson, and Frank Pallone, Jr.,  and Senators Charles E. Schumer and Hillary Rodham Clinton introduced HR 1038, the "Access to Life-Saving Medicine Act".  The purpose of the bill is to establish a process by which the FDA can approve lower cost copies of biotech drugs.  It goes without saying that this bill is going to be the subject of some serious debate. 

The Washington Post reported that a study conducted by Express Scripts, Inc. showed that patients and health insurance providers could save at least $71 billion over 10 years if there was a regulatory mechanism that allowed for the marketing of generic biotech medicines. 

Of course, on the other side of this debate will no doubt be the biotech industry and its supporters.  If this Act were to become law, it would have a huge financial impact on the industry. 

A letter posted on the BIO website written by Stephen E. Lawton, Vice President and General Counsel in July, 2001 gives a glimpse of what the official position by the industry organization may look like:

[W}e believe that such an approach would raise substantial constitutional and administrative law questions, including the unlawful taking of proprietary data and trade secrets held by the biotechnology industry. . . . A change in regulatory status (from biological product to new drug) to allow for the approval of generics would, in effect, retroactively undo the reasonable expectations of the biotechnology industry.

Indeed, there is no doubt that the passage of such a bill into law would deal a huge blow to the industry.  While a generic biologics law would inevitably create a new market for generic biologics, it would also dramatically reduce the profits that the industry would otherwise earn.  Why would insurance providers cover regular-priced biologics when a generic is available for a significantly lower cost? 

Given the economic reality of what it costs to bring a new drug to market, we should all be concerned at what passing a bill like this would do to an industry that today presents so much promise for the future.  Could this stifle the innovation that is creating all these new biologics in the first place?  Sadly, by legislating that these biologics shall be more affordable to health care providers and the public, we stand to lose many new biologics, which will never be brought to market at all. 

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