The Pathway for Biosimilars Act – Path or Detour?

September 11, 2008

With the introduction of the bipartisan Pathway for Biosimilars Act, H.R. 5629 introduced by Congresswoman Anna Eshoo (D-CA) and committee ranking member Joe Barton (R-TX), many questions have arisen as to whether this proposed legislation creates an easier path for generics to enter the biologics market, or does it simply send them on an unnecessary detour? The question must be asked, is the Act a pathway in name only?

What does the Legislation do?

According to Eshoo, this “legislation will establish a regulatory pathway for biosimilars that will promote competition and lower prices, and protect patient safety, drug efficacy and sound science . . .” However, some representatives of the generics industry view it as a substantial roadblock in providing patients with safe and affordable biogenerics. According to the Generic Pharmaceutical Association, in order to “. . . increase competition and ensure timely patient access, Congress needs to enact a workable pathway without barriers. This workable pathway must spark innovation by brand and generic companies without requiring unwarranted and unprecedented market exclusivity or patent extension provisions.

So what are the barriers that the Generic Pharmaceutical Association are referring to? Eshoo-Barton provides for 12 years of market exclusivity for the innovator product. However, the Eshoo-Barton bill goes beyond S. 1695, a comparable bipartisan bill introduced by Senators Kennedy, Enzi, Clinton and Hatch, by including a provision that allows for 14 years of innovator market exclusivity if, within 8 years after approval of the reference product, a new indication for use is approved which would be a “significant improvement, compared to marketed products, in the treatment, diagnosis, or prevention of disease.” Additionally, Eshoo-Barton provides for 6 months of exclusivity for approval of a pediatric indication for the reference product.

What does the Legislation mean for the Biologics Industry?

With the exclusivity provisions contained in the legislation, innovative companies will enjoy a period of absolute data exclusivity. During that time, generics will be denied access to the data that they would need in the research and development of follow-on drugs. Some view this as an opportunity for innovative companies to experience a windfall of profits while simultaneously preventing any reliance on clinical data of the innovator as evidence of safety and effectiveness.

From a market perspective, this issue will remain the subject of significant debate. It is no secret that venture capital funds have seen an enormous percentage of funds dedicated to the Life Science Industry. The uncertainty surrounding the exclusivity period involved in the Act leaves the biologics industry in a bit of a quandary. Investors may be hesitant to invest funds into a follow-on drug that has had too short a study period by the innovative. On the other hand, however, a period of exclusivity that is too long might negatively affect market competition.

Generic manufacturers, innovative manufacturers and investors alike will continue to watch the development of this with a keen eye.