Navigation Links
Avoiding No Man's Land: New Deloitte Study on Follow-on Biologics Investigates Proposed Legislation and Possible Unintended Consequences

SAN FRANCISCO, April 14 /PRNewswire/ -- Deloitte today released a study, Avoiding no man's land: Potential unintended consequences of follow-on biologics, that explores the debate on creating a regulatory pathway for the approval of follow-on biologics (FOBs), drugs that are envisioned as the biotech equivalent of generic pharmaceuticals. The study examines two bills that have recently been introduced in Congress, both based on the model of the Hatch-Waxman Act of 1984. The Deloitte study also outlines unintended effects of the Hatch-Waxman legislation and explores how this experience may help guide current legislation.

"At the crux of the argument is how opening a regulatory pathway for FOBs can be accomplished while maintaining patient safety, and without destroying the incentives necessary to attract investment into the next generation of breakthroughs," said Jim Hollingshead, Principal, Deloitte Consulting LLP, in their Health Sciences practice, who lead the study.

Pharma industry of 1984 vs. biotech industry of 2009

The study notes that basic differences between the pharma industry in 1984 and the biotech industry in 2009 make it difficult to apply Hatch-Waxman as a model for FOBs legislation. According to the study, after 1984, pharma innovators earned sufficient returns to continue drug innovation, while generic producers enjoyed increasing volume growth and market penetration. This was accomplished because patents protected innovators' intellectual property, and the data exclusivity period rarely came into effect.

"In 1984, when the Hatch-Waxman generic drug legislation was enacted, the pharma industry was stable and mature and the legislation provided a catalyst for investment and competition," said Hollingshead. "Today the biotech industry is relatively young and complex not only in its science, but in its financial underpinnings, and is highly reliant on risk capital. With follow-on biologics, Congress may need to consider a different set of rules to balance cost savings, patient safety, and economic incentives for future innovation. Strong patent protections will likely need to be in place to enable companies to attract the risk capital they need to continue to innovate new technologies. Smaller, venture capital-backed firms could not attract funding without strong intellectual property protection."

Unintended Consequences

The Hatch-Waxman Act succeeded in creating price competition--the Congressional Budget Office estimates that by 1994, 10 years after passage of Hatch-Waxman, U.S. consumers were saving $8 billion to $10 billion per year from the use of generics. However, the act also produced unintended consequences. The Deloitte study outlines three of these unintended effects, and explores how this experience should be considered in current legislation. The so-called "make hay effect," the "blockbuster effect," and the threat of "no man's land," not only influence research and development spending by innovator companies, but also how drugs come to market, and ultimately, the availability of new medicines for patients.

  • "Make Hay" effect: Once a drug is introduced to the market, an innovator has a short time to recoup its development costs -- upwards of $1 billion over 12 years -- before a competitor enters the market. Faced with patent protection of limited duration, innovator companies must maximize their revenues in the short period before generics are introduced. To do this, they generally raise prices and invest more in marketing the drug, tactics that run counter to Hatch-Waxman, the intent of which was to lower prices.

  • "Blockbuster" effect: Facing increased drug development costs and a limited period of time before generics can compete, innovators typically focus only on those drugs that promise huge returns on investment. To recoup the amount of time and money an innovator spends on a new drug, experts have shown that to break even, a drug would have to achieve annual revenue of roughly $150 million, which is impossible unless a drug targets a large population, or charges a high price per treatment. This blockbuster effect has led pharma companies generally to focus development efforts on only the largest potential indications.

  • "No Man's Land" effect: As soon as a company receives a patent for a compound, the clock for commercialization begins ticking. Each year a patented drug spends in development is another year of lost revenue. If enough time elapses, there comes a point where the compound will never be able to earn sufficient return on investment. This could lead to promising compounds being dropped from development, including those for critical diseases like cancer, Parkinson's, Alzheimer's and others, because there is no way to fund the research once the compound has crossed into this "no man's land." Deloitte estimates this can occur within as little as one year of achieving a patent.

According to Hollingshead, "The most serious of these unintended consequences may be the 'no man's land effect,' which could substantially reduce the biotech industry's ability to continue to develop innovative treatments for our most pressing diseases and medical conditions."

Because of the structural differences between the pharmaceutical industry of 1984 and today's biotech industry, Congress will need to act with care as it looks to create a regulatory path for FOBs.

To view the entire paper, visit

About Deloitte

As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

SOURCE Deloitte
Copyright©2009 PR Newswire.
All rights reserved

Related medicine news :

1. Avoiding Surgery for Low Back Pain
2. Secrets Revealed By A Medical Collector, The Patients Guide to Avoiding Bankruptcy
3. Avoiding secondhand smoke during pregnancy
4. Complimentary Pamphlet on Avoiding Snow Blower Injuries Offered by Chicago Hospital
5. Avoiding a Holiday Season of Discontent
6. Immune molecule that plays a powerful role in avoiding organ rejection identified
7. U.S. Preventive Medicine Experts Available to Discuss Role of Prevention in Avoiding Heart Attacks
8. RF Technologies Assists Healthcare Providers in Avoiding Preventable Injury Conditions to be Denied Reimbursement by Medicare
9. Dietary oil may need help in avoiding any side effects of weight loss
10. Proper Hand Hygiene Is Key to Avoiding Illness During Cold and Flu Season
11. Research Finds Popular Household Pets Transmit Dangerous Parasites to Humans
Post Your Comments:
(Date:11/29/2015)... ... 2015 , ... Effective immediately, every single IguanaMed scrub style will be available ... is offering a “Buy One Scrub Set, Get the 2nd Scrub Set 50% Off” ... at a discounted price. , IguanaMed’s mission is to outfit every healer ...
(Date:11/28/2015)... ... November 28, 2015 , ... Beginning November 30th at 6:00 a.m. EST until 11:59 p.m. ... , With possible savings of up to 20% off orders $80 or more to free ... website every few hours. , As a competitive e-commerce website for skin care and cosmetic ...
(Date:11/27/2015)... ... 2015 , ... According to an article published November 15th by ... handling security in light of the recent terrorist attacks in Paris, other cities are ... an attack from reaching U.S. soil. Especially around special events that may be high-profile ...
(Date:11/27/2015)... ... November 27, 2015 , ... Lizzie’s Lice Pickers just announced a ... customers 10% off of their purchase of lice treatment product. In addition, customers will ... to a company spokesperson. “Finding lice is a sure way to ruin the holidays, ...
(Date:11/27/2015)... ... November 27, 2015 , ... Intellitec Solutions announced today ... Group (MSDSLUG). Recognized as Microsoft’s official group for end users of Dynamics SL ... users, partners, industry experts and representatives. Intellitec Solutions’ membership status demonstrates their ongoing ...
Breaking Medicine News(10 mins):
(Date:11/26/2015)... , November 26, 2015 ... addition of the "2016 Future Horizons ... of Abuse Testing Market: Supplier Shares, Country ... report to their offering. --> ... the "2016 Future Horizons and Growth ...
(Date:11/26/2015)... 2015 ) ... "2016 Future Horizons and Growth Strategies in ... Supplier Shares, Country Segment Forecasts, Competitive Intelligence, ... --> ) has announced ... Horizons and Growth Strategies in the German ...
(Date:11/26/2015)... DUBLIN , Nov. 26, 2015 Research ... of the "Advanced Wound Care Market by Type ... Ulcers), End User (In-Patient Facility, Out-Patient Facility), and Geography ... offering. --> --> ... the description, definition and forecast of the global advanced ...
Breaking Medicine Technology: