Biotech Firms Turn to State Legislatures to Beat Back Generics

In response to intense lobbying from major biotech firms, state legislatures around the country are considering legislation that would limit generic competition.

Reduced prescription costs through the use of generics is one of the biggest avenues of proposed savings in the Affordable Care Act, especially when used as a substitute for more complex drugs that consist of living cells rather than chemicals. 

A variety of well-known drugs for rheumatoid arthritis, psoriasis, and cancer are currently made using this process.

Virginia led the way to protect biotech firms and their original formulas when it passed a bill last week restricting the ability of pharmacists to substitute generics for brand-name versions. The New York Times reports similar bills have been introduced in eight states around the country. 

Biotech firms maintain that these product protections benefit the consumer because they ensure the drugs are identical to originals. Generic versions have slightly altered formulas, prompting the name biosimilars for the drug class.

Generic drug companies and insurers are working to amend state bills, which they maintain are an effort to undermine confidence in generics. 

In addition to state legislation, a battle is waging at the federal level as to whether biosimilars can have the same generic name as the brand name product. If the name differs, pharmacists would not be allowed to substitute a biosimilar for an original, regardless of state law. 

Bills being introduced on the state level would impose restrictions on biosimilars that do not currently exist for pills made through a chemical process. Some also require doctors or patients to be notified in the event of a drug switch.

For its part, the Generic Pharmaceutical Association and insurance companies do not oppose limiting substitutions to drugs that are on an FDA approved list. However, they say once that determination has been made, no further restrictions should be necessary. 

In the wake of the Virginia legislation, Amgen has given more than $22,000 total to several Virginia legislators associated with the legislation. A similar bill was introduced this week in Indiana, although it would not require patients consent to a substitution. 

The debate coincides with a recent study conducted by the Generic Pharmaceutical Association that found generic drugs saved U.S. consumers $193 billion in 2011 and more than $1 trillion over the last 10 years. 

The study, which was conducted by IMS Health for the association, also found that savings from generics increased 22 percent in 2011 from the prior year and that savings from newer generic medicines that have entered the market since 2002 totaled $481 billion. About 80 percent of the prescriptions written in 2011 were filled as generics, which accounted for 27 percent of the total spent on prescriptions. 

In response to pharmaceutical industry claims that the lost revenue from generic medicines poses a threat to the development of new drugs, the report cites the introduction of a variety of blockbuster drugs since that period, including Lipitor, Zocor, the antidepressants Paxil and Prozac, and the blood thinner Plavix. 

"By creating a fair balance between innovation of new medicines and accessibility to lower-cost generic medicines, federal law has established a win-win for providers and American consumers," the association said in a statement. 

The Biotechnology Industry Organization is also lobbying the federal government to enforce intellectual property rights granted to them throughout the world. The organization, which represents more than 1,100 biotech companies, said that the majority of its total membership is small and mid-sized companies working to bring products to market. Given that, the group says they rely heavily on the enforcement of patent protections to secure the investment needed to actually bring products to market. 

The report highlights several countries that the group says do not adequately enforce intellectual property protections, including Argentina, Brazil, Canada, Chile, Colombia, Egypt, India, Indonesia, Israel, Peru, the Philippines, Russia, and Venezuela.

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