The next “Big Thing” for pharmaceutical companies competing generic products for its blockbuster brand products is the ability to circumvent the issue through novelty or improved products. Evidently, the presence of the generic alternative substantially reduces a brand-name product’s revenue but presents affordable choices for consumers. In the US, the “drug price competition and patent term restoration Act”, popularly known as the “Hatch-Waxman Act” of 1984 allows the introduction of a generic version of a brand-name product under an abbreviated new drug application (ANDA) criterion (Whitmore, 2004). The USFDA’s ANDA only requires pharmacokinetics, pharmacodynamics and bioequivalence information in other to consider a generic version for approval. The regulatory processes for the generic introduction of small molecules in the market have always been an attractive business to generic companies. One primary reason for its attractiveness is the enormous saving for introducing a generic product in the market over the introduction of an original brand-name product into the marketplace, which requires a three-phase clinical trial.

In the US, the Hatch-Waxman incentives allow generic companies to avoid clinical trials and the prescription drug users’ fee (PDUFDA), all which accounts for hundreds of millions of dollars in savings. Perhaps, the next “big thing” for brand-name companies to keep their edge in the drug business is to maintain a constant presence in the market with a patented blockbuster brand-name products either at the cost of 800 million-$1.2 billion for each brand-name product introduced in the market (based on pharmaceutical sources not independent sources); or invest in biopharmaceuticals (protein-based medicinal products) or both (Whitmore, 2004). From the laboratory research and development processes through clinical trials, it takes 15-18 years to introduce a new medicinal product into the marketplace. Even then, the likelihood of introducing a 20-year patented lifespan blockbuster pharmaceutical or biopharmaceutical product in the market within 15-18 years is very slim (Miller, Kaitin & Bang, 2013; Whitmore, 2004).

Acquiring a patented biopharmaceutical (biologics) instead of a chemical-based pharmaceutical product has substantial advantages to big pharmaceutical companies in several ways. One of the benefits of acquiring a brand-name biopharmaceutical product is that its patent may not be challenged by generic companies for a generic version alternative. Recently, in 2010, the Obama Administration signed into law the “Patient Protection and Affordable Care Act” (ACA) in the US (FDA, 2015). The ACA amended the Public Health Service Act (PHSA) and created an abbreviated licensure pathway for biological similar products “biosimilar” as an “interchangeable” product with an FDA-licensed biological product (FDA, 2015). The pathway is covered by the “Biologics Price Competition and Innovation Act” (BPCI Act). Thus, the BPCI Act allows a biological product demonstrated as “biosimilar” or “highly similar” biologic as a biogeneric version of an already-approved biological product (FDA, 2015).

Although the US 2010 ACA permits the changes. Currently, the USFDA and many medicinal regulatory agencies does not have a clear guideline on how to approve and determine sustainable characteristic profiles and criteria for a “highly similar” or “biogeneric” or “biosimilar” products. The major issue for the regulatory agencies and generic companies with biogeneric is that it is practically impossible to characterize biopharmaceuticals (biologics) precisely. For this reason, “biogeneric” companies will have difficulties in generating convincing data to show bioequivalence of its biogeneric products to the brand product in question. Hence, a brand-name biologic may stay in the market longer without any competition (Rouhi, 2002).

Interestingly, the expertise and capability needed to develop biopharmaceutical products are cost-effective in small biotechnology than big companies. It is possible in small biotechnology companies because small biotech companies have the flexibility to focus its research and development (R&D) processes on biologics without many bureaucratic processes that often exists in large pharmaceutical companies. The absences of or minimal bureaucratic delays within small biotech company’s decision-making processes make a small biotech company an efficient R&D pipeline (Arnst, 2009). For instance, in 2000, Pfizer spent more than $60 billion in its laboratory for R&D but could not introduce a product in the market within that time (Arnst, 2009).

In the US, pharmaceutical companies spent $65.2 and $36 billion in 2008 and 2002 respectively on R&D (Arnst, 2009). Only eight new drugs were introduced in the market compared to half as many as introduced in 2001 (Arnst, 2009). The factors associated with delay in new innovative inventions and the introduction of new medicinal products in the market are multifactorial. Nonetheless, investing in biopharmaceutical innovation is empowering to brand-name companies because of the possibility of phasing out or minimizing generic competitions and the potentials to generate staggering revenues with less or no competition.

The empowerment ideation was evident on March 21st, 2013 when the state of Virginia legislators signed a law allowing for substitution of biosimilar. The law allows doctors to specify “do not substitute” clause. The provision also allows patients to make the choice of getting a brand name product instead of a generic version of any biomedical products (Gabi, 2013). At this point, there is less doubt that the move to small biotechnology companies would increase competition among small biotechnology firms, hence, making the industry more innovative and productive. On the other hand, limitation of a generic version of biologics or biopharmaceuticals would create price burden on consumers due to the limitation of choices and lack of competition for consumer’s acquisition.

References

Arnst, C. (2009, March 23). The drug mergers’ harsh side effects. BusinessWeek, (4124), 26. Retrieved from http://www.bloomberg.com/bw/stories/2009-03-11/the-drug-mergers-harsh-side-effects

Food and Drug Administration (FDA). (2015). Biosimilars. Retrieved from http://www.fda.gov /drugs/developmentapprovalprocess/howdrugsaredevelopedandapproved/approvalapplications/therapeuticbiologicapplications/biosimilars/default.htm

Genetic and biosimilar initiative online. (2013). US state biosimilar substitution bill becomes law. Retrieved from https://pharmnest.com/news.

Miller, C., Kaitin, K., & Bang, S. (2013). Corporate perspectives on current issues in medical Product Development Retrieved from https://class.waldenu.edu/webapps/portal/frames etjsp?tabtabgroupid=21&url=%2Fwebapps%2Fblackboard%2Fexecute%2Flauncher%3Ftype%3DCourse%26id%3D_2651615_1%26url%3D.

Rouhi, (2002). Generics next wave: biopharmaceuticals. CENEAR (80), 38, pp. 61-65. Retrieved from http://pubs.acs.org/cen/coverstory/8038/8038biogenerics3.html.

Whitmore, E. (2004). Development of FDA-regulated medical products: Prescription drugs,         biologics, and medical devices. Milwaukee, WI: ASQ Quality Press.