Markets Wired

Testifying today on behalf of the Federal Trade Commission before the Subcommittee on Health of the U.S. House of Representatives Energy and Commerce Committee, Commissioner Pamela Jones Harbour presented the findings and recommendations of the FTC’s new Report, “Follow-on Biologic Drug Competition.” The Report examines whether and how the price of biologic drugs – products manufactured using living tissues and microorganisms – could be reduced by competition from so-called follow-on biologics (FOBs). Biologics are increasingly used to treat arthritis, cancer, diabetes, and other diseases. Lower-priced FOBs are like generic drugs, but with significant differences.

“As an expert competition agency charged with protecting American consumers, the Commission is uniquely well-suited to examine how competition is likely to evolve in biologics markets. This consumer-focused competition perspective is a critically important element of the FOB debate,” said Commissioner Harbour. “The Commission’s Report highlights fundamental aspects of FOB competition, as well as implications for the design of an abbreviated regulatory pathway that will bring life-saving therapies to the American public at competitive prices. I hope and expect that it will serve as a valuable reference, especially for legislators.”

The Commission’s Report draws a number of conclusions about the likely impact of possible incentives to promote FOB competition:

• legislation creating an abbreviated FDA approval process of FOBs is likely to be an efficient way to bring them to market, because of the time and cost savings it would provide;
• patent protection and market-based pricing will promote competition by FOBs, as well as spur biologic innovation;
• a 12- to 14-year regulatory exclusivity period for pioneer biologics is too long to promote innovation by these firms, particularly since they likely will retain substantial market share after FOB entry;
• special procedures to resolve patent issues between pioneer and FOB manufacturers before FDA approval are not needed and could undermine patent incentives and harm consumers; and
• FOB manufacturers are unlikely to need additional incentives – such as a 180-day marketing exclusivity period – to develop interchangeable FOB products.

Copies of the Report can be found on the Commission’s Web site at: http://www.ftc.gov/os/2009/06/P083901biologicsreport.pdf and as a link to the press release announcing it at: http://www.ftc.gov/opa/2009/06/biologics.shtm.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust@ftc.gov, or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/bc/edu/pubs/consumer/general/zgen1.shtm.

(Biologics Statement.final.wpd)