Generic-drug makers have scored a point in their push to take market share from biotech companies like Genentech
Patient advocates and generic-drug companies had argued for a five-year period, and biotech companies were lobbying for 14 years, so the compromise clearly fell in favor of the biotech companies. But, in reality, I'm not sure the longer exclusivity really affects the generic-drug manufacturers that much. They'll have to wait a while to start making the nonbranded versions of these high-price drugs, but it's not like there aren't plenty of biotech drugs coming off patents to choose from.
The biggest winners may actually be small developmental-stage biotech companies like Medarex
The other sticking point was whether pharmacists would be allowed to substitute the follow-on biologics for brand-name drugs without consulting the prescribing doctor -- something they're currently allowed to do with small-molecule generic drugs made with a synthetic process. (Biologics are different as they are therapies produced in living organisms.) That provision made it into the bill, scoring another point for the generic-drug makers.
On the clinical-trials front, the Senate bill allows the FDA to decide on a case-by-case basis whether the generic-drug makers are required to run clinical trials on their follow-on drugs. Given what the FDA knows about the safety and efficacy of the branded biologics, I think it's likely that many of the follow-ons won't be required to conduct clinical trials to prove that they are equivalent. That would speed their path to market. On the other hand, the separate FDA reform bill currently in the House would likely require the follow-on drugmakers to run the same post-marketing clinical trials that the biotech companies will be required to run, so I'll give a point to each for equality.
When the U.S. markets open up, Dr. Reddy's Laboratories
If you haven't been keeping track, that's two points for the biotech companies and three for the generic-drug makers. Not a bad showing by both parties, and since the bill is a long way from becoming a law, I'll refrain from declaring a winner until we see how many amendments get added and what the House version looks like. Stay tuned to the Fool for more updates or jump on the community discussion boards and make your opinion known.
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Fool contributor Brian Orelli, Ph.D., got an A in his high school government class, but he's far from a political junkie. He doesn't own share of any companies mentioned in this article. The Fool's disclosure policy is the most important law in Foolville.