Looking to the EU from the U.S. biologic drug market

In trying to cut health care spending, lawmakers in the United States Congress are angling toward generic biologic pharmaceuticals. Two groups of lawmakers have proposed competing bills outlining regulations for these drugs. While both bills would streamline generic biologic drug development, they diverge on one key point.

The bills differ in the length of patent protection time afforded to pioneer biologics. One bill (H.R. 1427 and S. 726) bars generic biologics for a maximum of six years after a pioneer drug receives a patent. The other bill (H.R. 1548) prohibits competition from generics for at least 12 years. President Obama has expressed interestin generic biologics, and passage of some legislation facilitating development of generic biologics appears likely. But what bill should pass?

The discussion centers on the tradeoff between price competition and innovation. The bill allowing twelve-year patent protection gives pioneer drug companies time to recoup the significant R&D outlays necessary to innovate in the biologic drug market, but limits price competition. The bill limiting market monopoly to six years facilitates price competition from generic drug manufacturers, but might stall innovation as pioneer companies struggle to find funds to reinvest.

To find a compromise, American lawmakers should look to Europe. In 2005, the European Union implemented regulations that allow pioneer biologic drug manufacturers a ten-year window of market exclusivity. Early evidence suggests that these regulations have succeeded in decreasing prices of some biologic drugs,and innovation continues as new biologics continue to enter the European marketplace. Ten years of patent protection appears to foster both price competition and innovation, and should be politically palatable to the competing lawmakers.