Regulation of Follow-on Biologics: Still missing the point

In today’s NEJM, Richard G. Frank, PhD lays out some of the issues regarding generic biologics. He suggests using the Hatch-Waxman Act –which enabled the generic drug industry to flourish– as a starting point. The article, Regulation of Follow-on Biologics, is available free. His conclusion:

The prospect of the loss of patent protection for tens of billions of dollars’ worth of biopharmaceuticals increases the urgency of the need for a regulatory policy that promotes price competition and preserves the safety and efficacy standards that Americans expect from prescription drugs. In my opinion, the Hatch–Waxman framework is not sufficient to cover both relatively simple biopharmaceuticals and very large and complex molecules — a new regulatory framework is needed. Because of the need for complex, situation-specific judgments, the FDA should be granted a great deal of discretion. The conflicting goals of bolstering price competition in biopharmaceutical markets and preserving the incentives for innovation call for a nuanced policy that must be based on the best current science and key features of the economics of biopharmaceutical markets — not on the impassioned claims of the interested parties.

The problem with Hatch-Waxman is that its success has put blinders on policymakers and analysts. There’s a simpler and better solution as I’ve advocated several times over the past year (see Paradox or Idiocy? for example):

Regulate the prices of biotech drugs once they go off patent. That eliminates safety concerns, lowers the regulatory burden, and guarantees lower prices, all without reducing the incentive for innovation. The only losers are the companies that would develop and manufacture generic biologics.

August 29, 2007

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