Whatever the outcome of the current data-exclusivity debate in Washington, the exact terms of the compromise will be important to only a small segment of the pharmaceutical and biotechnology industries. Of greater significance are the opportunities that lie in the development of technology that enables one to demonstrate compliance with standards for establishing similarity and equivalency between follow-on and innovator biological compounds.
Exclusive rights to biological inventions may be obtained under national patent systems, which enable patent holders to prevent competitors from making, using, or selling technologies that embody a claimed invention. As with small-molecule technologies, new compounds, new formulations, and new methods for the manufacture, administration, and use of biologics provide fertile grounds for obtaining patent rights for useful, new, and nonobvious inventions. In the United States, however, pharmaceuticals and biologics require FDA approval before being introduced to the market.Because no current mechanism allows follow-on biologics to receive expedited FDA review, companies that desire to produce these compounds have faced significant delays following traditional new-drug-application procedures. These companies, unlike their generic small-molecule counterparts, cannot simply piggyback on the work of the pioneering biologics companies even after a patent has expired. For patent-protected industries not regulated by FDA, this impediment does not exist.
Incentives lie ahead
If new legislation enables FDA to allow follow-on biologics to come to market faster, then competition for pioneering biologic companies will undoubtedly increase. Because time is money, economic incentives are likely to increase the number of companies that manufacture bioequivalent compounds as well as the number of follow-on biologics brought to market. Innovator companies may see a short-term decrease in profits as a result, but the change should force them to concentrate more on developing new biologics and improving their existing drugs. The combination of increased pressure on pioneer companies and increased opportunities for follow-on biologics companies may cause the biotechnology industry to be one of the first industries to emerge from the current economic downturn.