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Guest editorial: Battle over biologics

By MERRILL MATTHEWS
Institute for policy innovation

Congress is debating a bill that would establish new rules for an incredibly promising field of medical technology. The Pathway for Biosimilars Act includes new rules for intellectual property protection for "biologics," or pharmaceuticals derived from living organisms.

Most of what you know about traditional prescription drugs doesn't apply to biologics. They usually come in a vial, not a pill. They are as effective as they are complex; indeed they are effective because they are complex. Biologic drugs have proven effective against diseases like cancer, multiple sclerosis, and diabetes.

The act is a step in the right direction. A robust legal framework for the industry will keep investment dollars flowing and preserve incentives for firms to develop treatments.

The bill's major problem is its "data exclusivity" provision, which grants a fixed time period before other firms can use a biologic inventor's research data.

The period granted by the bill isn't long enough to allow new products to recoup the cost of their development. If the bill passes, biologic innovation could slow down, and patients would lose out on life-saving treatments.

Traditional pharmaceuticals are usually protected by one or more patents. The patent, which is granted for 20 years, gives a drug company the exclusive right to produce and sell that drug once it has been approved by the Food and Drug Administration -- though the development and testing periods take up part of that time.

But patent protections alone aren't enough for biologics. These drugs are so complex that a generic manufacturer can take a biologic's clinical data and produce a copycat version without technically violating patent rules.

Without data exclusivity, producers of generic biologics -- commonly called "biosimilars" -- could quickly siphon away innovator profits. Creating new drugs would be a less profitable enterprise, and there would be fewer new biologics developed.

According to Duke University economist Henry Grabowski, it takes between 12.9 to 16.2 years of exclusivity for a biologic to break even -- not to make a profit, but to cover research and development costs. The Biosimilars Act only provides 12 years of data exclusivity. That all but guarantees that most biologics will be losing investments.

Biologic manufacturers are already on shaky ground. Less than a fifth of publicly traded American biologic companies were profitable in 2006.

If these firms don't get the legal protections they need, they'll close down. And patients will be on the losing end.

The goal of any new biologics legislation should be to get life-saving medicines to patients at a reasonable price. The Biosimilars Act is aimed in the right direction, but it doesn't go far enough. A vote for stronger data exclusivity is a vote for medical progress.

Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas.




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