Saturday, July 18, 2009


Hat tip to Uncle Ed. The op ed below related to recent threads on biologics and generics. What I didn't know, and no one commented here, is that biologics have had eternal exclusivity because they emerged post Hatch-Waxman.

Interesting split between "liberals" like Ted Kennedy and Waxman on this.


Biotech drugs: Limit pharmaceutical monopolies to make drugs affordable
By Henry A. Waxman
2:00 a.m. July 17, 2009
Twenty-five years ago, Ronald Reagan signed the landmark Waxman-Hatch law, delivering generic drug competition to the American marketplace. Since that time, generic drugs have provided millions of American consumers with access to low-cost, yet safe and effective drugs. In the last decade alone, generics have saved consumers, businesses and state and federal governments $734 billion. Making sure that Americans have access to, and can afford, life-saving medicines has been one of my chief goals as a member of Congress, and I am proud of the success of generic competition in helping achieve that goal.
Unfortunately, Americans now face even higher drug prices on a category of drugs that have no generic competition – biotech drugs. These drugs didn't exist 25 years ago and were not covered by Waxman-Hatch. As a result, they have the equivalent of permanent monopolies. And they are now the fastest growing – and most expensive – class of drugs on the market. Many of these drugs cost patients between $10,000 and $100,000 per year. Some cost even more. And the drug industry is raising biotech drug prices at almost three times the rate of inflation. AARP has reported that the average prices for biotech drugs jumped by more than 40 percent from 2003 to 2007, while general inflations was 14 percent over that time.
Even patients with insurance can be crippled by co-pays on biotech drugs. Uninsured patients may be denied them entirely. And private and government purchasers of these drugs, like the California Public Employees' Retirement System, are warning that without generic competition for biotech drugs, they will soon lose the ability to offer affordable coverage for these life-saving/enhancing medications. They will have to substantially increase co-pays or premiums or even stop reimbursing for these drugs. Life-saving drugs do no good if no one can afford them.
In the coming days, we have an opportunity to bring generic competition to the biotech marketplace. With Democratic and Republican colleagues in the House and Senate, I have introduced a bill, the Promoting Innovation and Access to Life-Saving Medicine Act, to do just that. It allows the Food and Drug Administration to approve safe and effective copies of biotech drugs. Our bill has broad support from national organizations representing patients, businesses, seniors, workers, and pharmacists, including AARP, Consumers Union, AFL-CIO, Kaiser Permanente, and the National Community Pharmacists Association. And we are extremely proud to have the support of President Barack Obama.
Congress has moved toward a consensus on how to ensure that generic biotech drugs are safe and effective. But we remain divided on what incentives are needed to ensure continued innovation.
As we did in Waxman-Hatch, we must maintain a balance between increasing competition and providing incentives for innovation. Some monopoly protection is appropriate to encourage investment in research and development, but too much subverts competition and denies Americans the cost-savings they desperately need. We don't need to give drug companies open-ended monopolies and unlimited profits at the expense of patients.
The drug industry, however, is engaged in a massive lobbying campaign to persuade members of Congress that there will be no more life-saving drugs if they don't get 12-or 14-year monopolies – more than double the monopoly protection available to all other drugs. Yet, even their own experts say that biotech drugs cost no more to develop and take no longer to bring to market than the drugs covered by Waxman-Hatch. And their sky-high prices more than cover their higher production costs.
In establishing an appropriate monopoly period, we would do well to remember that Waxman-Hatch has delivered low cost drugs and innovation for 25 years. Traditional drugs receive three or five years of monopoly protection, in addition to their patents. Remarkably, even as generic competition has saved this country billions of dollars a year, investment in research and development of innovative drugs has soared, increasing every year at a rate higher than inflation. This is not a surprise to the independent Federal Trade Commission, whose recent study concluded that early competition in the biotech marketplace will spur innovation, and, indeed, that 12-to 14-year monopoly periods will harm patients by discouraging new breakthroughs.
A bill granting such lengthy monopolies is not just a windfall for the drug industry; it will effectively eliminate competition. According to news reports, generic drug industry executives have told Wall Street that monopolies of that length will extinguish market incentives to compete in the generic biotech market. So the overreaching of the drug industry will deprive consumers of affordable biotech drugs for the foreseeable future. This is not a result any of us can afford. It's also the wrong prescription for America. On the 25th anniversary of Waxman-Hatch, my wish for Americans is that Congress will stand up to the drug industry and create real competition for biotech drugs.

Waxman, a Democrat, is chairman of the House Committee on Energy and Commerce. He represents the 30th Congressional District, which includes Beverly Hills, Malibu, Santa Monica, Westlake Village, Calabasas and parts of Los Angeles.


  1. I hope someone from the pharmaceutical industry side of things can give me some perspective on this because I have to admit I feel a bit jaded after having viewed the pharma industry for about 2 years. After a while you begin to take a very negative attitude as you see day after day, reports that call into question the intentions of the powers that be in the industry.

    So I’ll go about my jaded comments now and then maybe someone can tell me what’s really up.

    The statement from Mr. Waxman –

    “The drug industry, however, is engaged in a massive lobbying campaign to persuade members of Congress that there will be no more life-saving drugs if they don't get 12-or 14-year monopolies – more than double the monopoly protection available to all other drugs.”

    "No more life saving drugs"
    My immediate thought was that I’ve heard this argument before! It’s the exact same scare tactic used to plead for drug and device Preemption.

    How many times have I heard something to this effect - “If we are not freed from product litigation we will not be able to bring new, innovative, life saving drugs to the American people and everyone will suffer.”

    So is it just me or is pharma beginning to sound more and more like some kind of confidence fraud or maybe like a crack cocaine pusher? “Do what I say or else”, "Hand over your money or you'll die." "I'll protect you but it will cost you."

    Gosh, I hope I’m wrong, if I'm not wrong, I hope someone will stand up to this mob.

  2. The "no more life-saving drugs" argument has a very long history. Besides being used to defend exclusivity and preemption, it was used as an argument against creating the FDA, against required labeling, against clinical trials, again against having an FDA in the 90s (by Gingrich and Co. and the "deregulatory" movement), and pretty much against every other regulatory notion that has ever been proposed.

    How can one not become "jaded" in that context?

  3. Justice,
    I think it is becoming obvious that the pharmaceutical industry has lost its bearing and has become morally second rate.

  4. I think we're talking about a business model and incentive structure that impacts the decisions of a relative handful in the industry, even if their decisions can have, at times, devastating consequences. I would not characterize the industry as a whole in that way, as I've said many times.

    Re: the argument about "life-saving drugs," one can take it cynically or not. Milton Friedman, nobel-laureate economist, also believed the FDA (and all such regulation) hurt more than it helped. Of course, he supported lawsuits as part of the private sector regulatory forces, so was no preemptor.

  5. True, but as we can see better in hindsight and begin to realize the tactics that these industry leaders have used, my concern is that the whole industry begins to be colored by their actions.
    As more and more negative news builds up the cynical view begins to take over. When the prevalent view is negative it becomes very hard to overcome.

  6. There is no question that the industry has an "image problem" (as its spokesfolk like to say).....


Note - Due to a time out issue with Blogger, you may receive a message that requires you to resend your comment. This will not affect its contents.