Waxman, Hatch debate fate of follow-on biologics

WASHINGTON —Rep. Henry Waxman, D-Calif., and Sen. Orrin Hatch, R-Utah, disagree on just about every major issue, but party lines didn’t prevent them from coming together on Sept. 18 at the Generic Pharmaceutical Association’s Annual Policy Conference.

Twenty-five years ago, the two sponsored the Drug Price Competition and Patent Term Restoration Act, better known as the Hatch-Waxman Act, which created a regulatory approval pathway for generic pharmaceutical drugs. That law spawned an industry that now provides 72% of all the prescription drugs that American patients take, but accounts for 17% of drug spending, according to GPhA statistics.

But Hatch and Waxman lately have parted on the issue of creating an abbreviated regulatory approval pathway for follow-on biologics, specifically data exclusivity periods, with Waxman supporting a five-year model similar to the Hatch-Waxman Act and Hatch supporting the 12-year model in the amendment to the healthcare-reform bill added by Rep. Anna Eshoo, D-Calif.

“If follow-on biologics enter the market too early, investors will be hesitant to invest heavily in future products for fear of a limited rate of return on their investment,” Hatch said, noting the biotech industry’s strong reliance upon venture capital. “And it is like rolling a dice sometimes. As a result, investment incentives will be skewed away from biotechnology.”

Waxman, whose speech followed Hatch’s, disagreed. “If that amendment becomes law, I believe it will pose almost insurmountable barriers to real competition in the biologics marketplace,” Waxman said. “With the guarantee of 12 years of exclusivity and unlimited opportunity for evergreening—that is, allowing companies to make minor changes in products and obtain 12-year extensions of the exclusivity—the Eshoo amendment is everything a monopolist could hope for.”

Both agreed, however, that the Food and Drug Administration’s Office of Generic Drugs needed more funding. “As patents on brand-name drugs expire, there is a tremendous increase in submissions of generic-drug applications, and the Office of Generic Drugs does not have the funding to keep up with its current workload,” Hatch said.

The workload has multiplied in recent years. In 2003, the office had a backlog of 515 pending approval applications for generic drugs, according to published reports. By last year, that number had increased to about 1,500.

In addition to the more than $70 million in funding that the office received for this year, Hatch and Waxman expressed support for a user-fee program, whereby generic drug companies would pay a fee to expedite reviews. Similar programs already exist for branded drug companies and device makers.

“We would rather have an important government function supported by government appropriations—that’s clearly got to be our preference—but in an era of staggering budget deficits, we’ve all come to realize that user fees may be necessary in exchange for subsidizing the generic-drug review process,” Waxman said. “The industry is entitled to accountability from FDA on such things as the length of the review process and the transparency of decisions.”

Another topic on which the two Congressmen disagreed was reverse payments, also known as “pay-for-delay” settlements. The settlements, whereby branded drug companies pay generics companies to delay launching generic versions of their drugs for a certain period of time, have come under criticism from the Federal Trade Commission, which considers them anticompetitive. According to an FTC report released in June, banning such settlements would save consumers $3.5 billion a year. Earlier in June, the House Subcommittee on Commerce, Trade and Consumer Protection passed a bill, H.R. 1706, the Protecting Consumer Access to Generic Drugs Act of 2009, to prohibit reverse payments. Waxman signed on as a co-sponsor of the bill, though Hatch continues to support the settlements.

Despite their differences, however, both received a warm welcome from the organization. “We were honored to have our industry’s founding fathers with us as we celebrate the 25th anniversary of the Hatch-Waxman Act,” GPhA president and CEO Kathleen Jaeger said. “We thank both Sen. Hatch and chairman Waxman for their long-standing commitment to increasing access to generic medicines.”