The folly of biogenerics

Two related items caught my attention today:

• The introduction in Congress of a bill to create a regulatory pathway for biogenerics
• Continued manufacturing problems at Genzyme's manufacturing facilities

As I've posted many times, the drive to enable the introduction of generic biotech drugs is based on the faulty assumption that biogenerics can do for the biotech market what generic drugs have done for chemical-based pharmaceuticals, namely dramatically reduce prices. The beauty of the generics market is that even if a doctor writes the brand name on a prescription, the pharmacist can automatically (and is generally mandated to) substitute a low-priced generic equivalent. In order to gain approval, generic companies must simply show that the product is the same. There is no need to conduct clinical trials. The result is pretty close to the "perfect competition" described by economists, where prices fall toward marginal cost.Bio-generics will be very different. These drugs are much more complicated to manufacture, and it's essentially impossible to produce exact copies that can be automatically substituted for the original product. The drugs will need to go through at least some human trials, which are costly and potentially dangerous. Then they will need substantial sales and marketing efforts to realize their potential --since they can't be directly substituted. All this will add up to delays in new product introductions and high costs. (It's also why big pharma has its eyes on this market.) Who knows, the "generic" products may even be priced higher than the original products if they can demonstrate some slight advantage. Five or ten years from now we'll be back to square one with new reforms.The bill's proponents are either unaware of these issues or choose to ignore them. Some claim, for example, that biogenerics will be directly substitutable.This is where the connection to the Genzyme story comes in. Biotech plants and processes are complex, and a lot can go wrong. Genzyme is having a difficult time running its plants well --and it's not for lack of trying or lack of resources. According to the Wall Street Journal:

The problems at the Boston plant have further delayed Genzyme's plan to increase production of its drug Myozyme, which is used to treat the rare enzyme disorder Pompe disease. Genzyme currently produces the drug in Boston for sale in Europe. But it doesn't have approval to sell the drug made at that site in the U.S.The domestic version of the drug, which can cost as much as $500,000 a year per patient, is produced at a smaller facility in suburban Boston that can't make enough of the treatment to supply the U.S. market.Genzyme has suffered a series of regulatory setbacks in its effort to boost Myozyme production. The FDA considers the version of Myozyme produced at the Boston plant to be different from the product made at the smaller plant outside the city. As a result, the FDA has treated the application to produce Myozyme in Boston as a request to make a new drug, triggering a more intensive regulatory review. If approved, the version of Myozyme made in Boston will be called Lumizyme.

In other words, Genzyme can't even make a substitutable product at two of its own plants in the same city! Myozyme and Lumizyme are biosimilars. And that's exactly what will happen if the biogeneric regulatory pathway is opened up.Furthermore the FDA is overstretched as it tries to supervise biotech plants. I'd rather have FDA and the manufacturers focus on supervising and improving existing facilities rather than trying to work with a bunch of new bio-similar plants as they come online.The solution is pretty straightforward: regulate the pricing of biotech drugs once their patents expire, but don't encourage the development of a biogenerics industry.