CQ Politics | Innovations - Report: Increased Competition Will Produce Better, Cheaper Medicines

Report: Increased Competition Will Produce Better, Cheaper Medicines

September 18, 2008 3:00 AM | Permalink | Comments (0)

By Meghan McCarthy, CQ Staff

More competition among manufacturers of brand name and generic will create better and cheaper biotech drugs, according to a study released Wednesday by the generic pharmaceutical company Teva Pharmaceuticals USA.

Conducted by Boston University Economics Professor Larry Kotlikoff, the study invokes traditional economic theory as it argues that monopolies discourage innovation, which flourishes in a competitive environment.

The study emphasizes the success of the Hatch-Waxman Act of 1984 in bringing small molecule generic drugs to market, and noted there is little significant difference between small molecule and biologic drugs.

"[The Generic Pharmaceutical Association] strongly supports Dr. Kotlikoff's conclusion that excessive exclusivity 'reduces the pace of innovation', and that exclusivity provisions, such as those that formed the basis of Hatch-Waxman, strike the appropriate balance that promotes both competition and innovation," Kathleen Jaeger, President and CEO of Generic Pharmaceutical Association, said in a statement. The group favors legislation sponsored by Rep. Henry A. Waxman, D-Calif., that would provide an abbreviated pathway for the approval of certain generic medicines.

Biotechnology industry representatives disagreed with the study.

"From our initial review, it is clear that this study, funded by the generics industry, results in faulty conclusions based on a misunderstanding of biologic patenting, development, and approval processes, the competitive nature of the biopharmaceutical industry, and the various legislative approaches under consideration for approval of follow-on biologics," said BIO President and CEO Jim Greenwood. BIO represents over 1,000 biotechnology companies, including many firms developing new biologic products, or complex drugs developed from living organisms.

Waxman's bill is one of several measures pending in the House that would give FDA the regulatory authority to approve so-called follow-on biologic drugs but none of those bills are expected to pass before Congress adjourns for the year. Rep. Anna G. Eshoo, D-Calif., introduced a measure that would allow for a period of data exclusivity of 14 years between innovator companies -- firms that are developing new biologic drugs -- and firms producing follow-on biologic drugs.

The Senate Health, Education, Labor and Pensions Committee has approved legislation that would authorize the FDA to approve generic versions of biotech drugs after a 12-year exclusivity period for the original drug maker.