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."
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.
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 www.deloitte.com/us/FOB.
As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.
Copyright©2009 PR Newswire.
All rights reserved