Henry Waxman is moving a health-care bill through Congress. It is supported by Rahm Emanuel, Hillary Clinton, Chuck Schumer, John Conyers, AARP, and the AFL-CIO. And it’s a good idea.
The bill would increase competition in the market for a type of medicine called “biologics” (other terms for them include biotech drugs, biopharmaceuticals, and biological products). These products are typically derived from living cell cultures rather than synthesized chemically. They are often more complex than traditional “small molecule” medicines. They are also, often, more expensive.
The basic law governing drug patents, the Hatch-Waxman Act, was passed in 1984, when the industry barely existed. It is now one of the fastest growing sectors in medicine. (In 2005, biologic sales jumped 17 percent, to $52 billion.) When drug companies bring other types of medicine to market, eventually their patents expire and other companies can sell “generic” versions. That competition has saved consumers billions. But it is not clear that the FDA has the authority to approve generic versions of biologics, and for technical reasons approving them isn’t as simple as approving generic versions of traditional medicines.
Waxman’s bill would create procedures for competition in this new market. It’s not just liberals who are supporting him: The bill also has the support of Republican senators David Vitter and Norm Coleman, Rep. Pete Hoekstra, and the free-market lobbying group FreedomWorks. The Competitive Enterprise Institute has released a supportive paper. Most of the co-sponsors are, however, Democrats.
Needless to say, the bill is the subject of a lobbying tussle. Some companies see expanded competition as a threat, and others as an opportunity. The Biotechnology Industry Organization (BIO) and the Pharmaceutical Research and Manufacturers of America (PhRMA) are against the bill, but not all of their members are. Novartis is a member of PhRMA, but it has a generic subsidiary that would gain from the legislation. Other companies produce both branded and generic products, or want to be able to do so, and have no stake in this fight.
The principal argument against the bill is that replicating biologics is much harder than producing generic versions of other medicines, and that generic biologics could therefore be unsafe. But there is no reason to think that the FDA would approve unsafe generic biologics. Even people who think that the agency is too cozy with the pharmaceutical industry do not allege that it sides with generic manufacturers over the other parts of the industry. It may be that the promise of cheap generic biologics has been oversold. But if that’s the case, the opponents of the bill have nothing to fear.
Jake Hansen, the vice president of government affairs for Barr Laboratories, and a former executive director of the American Conservative Union, supports the bill. “It really disappoints me that we don’t have more Republican support,” he says. “We’re either going to have competition or price controls.”