The Market For Follow-On Biologics: How Will It Evolve?

Abstract

With spending on biologics rising and patent expiry approaching for several blockbuster biologics, Congress and the Food and Drug Administration are considering creating a clear pathway for so-called follow-on biologics. Differences between drugs and biologics will affect market outcomes in various ways. Conservative budget impacts are appropriate in the short run because fewer competitors will enter, and average prices will drop less than was the case following the Hatch-Waxman Act. Over the long term, intellectual property provisions will be important considerations for policymakers designing a pathway for follow-on biologics that balances price competition and innovation incentives. [Health Affairs 25, no. 5 (2006):

Data exclusivity for biologics

“…Over time, markets for biosimilars may evolve to more closely resemble the intensely competitive markets for generic chemical entities 8 , where high-sales products often lose 90% of the market to generics within a few months 9,10 . Current biologics, however, may be able to earn significant revenues after biosimilar entry.…”

Follow-on biologics: data exclusivity and the balance between innovation and competition

“…However, even if this is the case, given the prospective cost savings, there will be strong incentives to position follow-on biologics on preferred tiers through formularies and other practices of managed care organizations. Technological development and global market experience also should operate to ameliorate physician and patient concerns about their usage over time 2 .…”

“…As was the case when it created a regulatory pathway for generic chemical drugs through the Hatch-Waxman Act, Congress must balance innovation incentives and price competition. In addition, follow-on biologics raise complex scientific, regulatory and legal issues that differentiate these entities from generic chemical entries 2 …”

Biosimilars And The European Experience: Implications For The United States

“…24 Thus, although the price of a generic may fall to 20 percent of the originator, the list prices of biosimilars in the European Union appear unlikely to drop more than 30 percent below those of the reference products. Although these discounts may appear modest when compared with generics, they are reductions from the much higher prices of biomedicines and represent substantial savings for payers and patients.…”