In the pharmaceutical industry, intense competition has been going on for years between “branded” drug manufacturers and “generic” competitors for the same drugs. This competition has taken place under the carefully balanced rules laid out in the Hatch-Waxman Act, with the biotechnology industry thus far immune to it. Thanks to the Biologics Price Competition and Innovation Act of 2009 and the long-awaited proposed “biosimilar” guidelines, issued by the U.S. Food and Drug Administration on Feb. 9, that is about to change.
Medicinal drugs largely fall into two categories — small, chemically-synthesized molecules and large, biological products produced by living organisms. In both instances, the company that develops the new drug (or a new therapeutic use for an existing drug), patents it, and establishes to the satisfaction of the FDA that the drug is safe and effective can reap huge profits during the term of its patent. For example, the cost of using Avastin — a popular biological cancer medication developed and sold by Genentech Inc. — can reach $100,000 per patient per year. There is little doubt that if a generic version of Avastin were available, it would cost significantly less and still generate substantial profits for its generic manufacturer.
