Regulating Follow-On Biologics

Abstract:     
Regulating copies of originator biotechnology drugs, i.e., follow-on biologics, has become a major policy agenda item. With high prices and low access, biotechnology drugs are in the position that chemical drugs occupied 20 years ago. At that time, the Hatch-Waxman Act was passed, which speeded lower cost generic copies to the market using an abbreviated approval process while maintaining incentives for drug development and innovation. Recently, under pressure from governors and others, Rep. Henry Waxman has introduced a similar proposal, seeking an abbreviated approval process for biologics. However, this proposal is highly problematic. Using a policy analysis paradigm that assesses scientific information gaps, relative vulnerability of the polity shouldering the risk of policy failure, the magnitude of harm associated with that failure, as well as a review of the EU experience in this arena, the Waxman proposal wrongly emphasizes product approval in exchange for empirically small price discounts at the expense of safety. The Waxman proposal also creates incentives to be second into the market rather than first, and, like Congressional inaction before it, does nothing to provide access to vulnerable patient groups who will suffer from policy failure. In response, this paper proposes an alternative legislative approach. This approach does in fact take into account the policy and safety concerns inherent in the science of biotechnology, couples company incentives with participation in a low cost/no cost drug access program for underserved, as well as corrects other skewed innovation incentives and weaknesses associated with the Waxman proposal. It also addresses other important policy concerns associated with the pharmaceutical markets.

Number of Pages in PDF File: 144

Keywords: biologics, generics, follow-on, biosimilar, biogeneric, Waxman, safety, legislation

JEL Classification: I12, I18, L51

Accepted Paper Series