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CEO Blog: Despite Setbacks, Congress Should Approve a U.S. Biogenerics Pathway

Washington’s new political reality has left the fate of comprehensive healthcare reform uncertain, but there’s still plenty Congress and the Obama administration can do to improve the American healthcare system.

One thing is easy: Increase access to life-saving drugs and save patients, hospitals, employers and the federal government billions of dollars. All it takes is Congress creating a pathway to market for biogenerics, a type of generic drug already available to European patients. We don’t need to wait for comprehensive healthcare reform. Congress can and should take up stand-alone bills on biogenerics to get it done this year.

Biogenerics are generic versions of biologic drugs.

Healthcare coverage and the hastle of forms
Healthcare coverage and the hastle of forms

Unlike traditional pharmaceuticals, biologic drugs are derived from living organisms. Biologic drugs are safe and effective – and very expensive. The price of a biologic therapy can exceed $100,000 per patient per year, and biologic medicines cost Medicare Part B alone more than $7 billion annually.

Biogenerics would cut those costs dramatically.

Two years ago, Hospira became the first U.S. company to launch a biogeneric drug in Europe. The product is called Retacrit, and is a biogeneric version of erythropoietin, or EPO. Retacrit has demonstrated comparable efficacy and safety to the innovator product, and in Germany, the most established European market for biogeneric versions of EPO, biogenerics such as Retacrit have led to a 20 to 30 percent drop in EPO prices.

Unfortunately, biogenerics are not available in the United States.

For years, innovator companies fought to keep biogenerics out of the U.S. market, just as they fought the introduction of generic versions of traditional pharmaceutical drugs more than 25 years ago. Since the Hatch-Waxman Act spurred generic competition in 1984, we have seen unprecedented savings for consumers and massive investment in new drug research and development, which in turn has led to a period of unparalleled pharmaceutical innovation. Consumers have embraced generics, which now account for 69 percent of drug utilization and which saved the American healthcare system more than $734 billion in the last decade. The same can happen with biogenerics.

Congress can spur both savings and innovation.

The House and the Senate healthcare bills each include provisions with broad support on both sides of the aisle that would allow the FDA to approve biogeneric medicines in the United States. The Obama administration also supports the effort.

Congress needs to act on biogenerics.

It also needs to correct some problematic language that found its way into the larger healthcare bills, which would prevent timely consumer access to biogenerics and a competitive biogenerics industry. First, it’s critical that we fix the loophole – commonly referred to as “evergreening” – that would allow innovator companies to make minor changes to their biologic products and receive additional years of exclusivity, possibly giving them a permanent monopoly. Second, we need to ensure that we strike the right balance between access and innovation. President Obama and the Federal Trade Commission agree that the exclusivity period in the healthcare bills – 12 years – is too long for consumers to wait for safe and lower-cost biogenerics.

Innovator companies argue for long exclusivity periods for their products, saying that the cost of developing biologics is so expensive that they need more time without competition to gain back their expenses and save jobs for their workers. But a study by AARP's Public Policy Institute reveals that manufacturers of many top-selling biologic drugs have recouped average R&D costs several times over in the past six years, often within a single year. And the availability of biogenerics in Europe has not had a negative impact on Europe’s biotech jobs market.

Reasonable people can disagree on the necessary length of exclusivity for a biologic drug. That shouldn’t get in the way of a simple, common-sense reform: Creating a pathway to market for biogenerics, with an “evergreening” fix, provides patients with access to lower-cost, safe and effective treatments, puts dollars back into Americans’ wallets and the federal treasury and saves lives. Let’s put the health of patients first, limit the monopolies of the brand drug industry and still preserve innovation.

It is the right thing to do.

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Chris Begley is chairman and CEO of Hospira, Inc. , which is a member of the Coalition for a Competitive Pharmaceutical Market.