President Obama's recent US budget proposals have reignited debate surrounding the intellectual property protection offered to pharmaceutical companies investing in biological drugs. Biological drugs or Biologics are principally used to refer to medications produced by biological processes involving DNA technology.

Budget Proposals

The budget proposals call for improved access to medical care to be achieved principally through a reduction in the cost of medical insurance. President Obama has identified the strengthening of the generic drug market, particularly in the case of biological drugs. The expansion of the generic drug market produces significantly cheaper drugs as a result of the lack of research and development costs for the generic drug manufacturer and thus has the potential to vastly reduce the cost of medical care.

Exclusivity

In the US there is no additional intellectual property protection afforded to biological drugs than to other types of drug, however, the rules regulating market access for biologics create a substantial barrier for generic drug producers. In order for a generic biological drug to be placed on the market a generic drug manufacturer must undertake the same extensive drug trials and testing as are required for new drugs. This requirement increases the cost and time involved in gaining market access for generic drug manufacturers which, in effect, increases the period of exclusivity for the original drug developer.

Waxman Bill

In order to facilitate market access for generic biologic drugs the US Congress is revisiting previous proposals which sought to liberalise the drug market. Chief among these is the Promoting Innovation and Access to Lifesaving Medicines Bill, known as the Waxman Bill after its original proponent Henry Waxman. Henry Waxman re-introduced the Waxman Bill to the House of Representatives on 12 March 2009. The key proposals contained in the Bill are:

  1. to allow the Food and Drug Administration (FDA) to approve generic biologic drugs if the drug shows equivalence to an existing biologic drug; the same approach as has been adopted in Europe; and
  2. to provide exclusive access to the market for the original drug developer for a period of 5 years, with a maximum extension of 3 years for variations of the drug.

The Waxman Bill would have the effect of removing a significant barrier to market access for generic drug manufacturers and would at the same time shorten the period of exclusivity offered to the original drug developer.

Reaction

Unsurprisingly the re-introduction of the Waxman Bill has polarised opinion within the drug industry. Drug companies with significant investment in research and development have criticised the move for de-incentivising critical research and potentially jeopardising continued developments into some of the most significant medical issues facing society, for example HIV/AIDS and Alzheimer's. Generic drug companies have in turn welcomed the introduction of the Waxman Bill arguing that it has the potential to significantly reduce the cost of healthcare in the US.

However, the research based drug industry's reaction to the Bill has been less severe than when it was previously introduced. Some of the major investors in pharmaceutical research and development are beginning to see the attraction of entering the generic drug market. Their reaction to the negative impact of the Bill on their research business is thus tempered by the potential positive impact on their interests in the generic market.

Adoption

Congress has already rejected the Waxman Bill twice and, as before, its adoption will depend on the perennial debate between encouraging innovation and preventing harmful monopolies. However, President Obama's first budget has shifted the focus of this debate towards ensuring that affordable healthcare is available across the US and has thus increased the likelihood of the Waxman Bill being adopted at the third attempt.