"Experts say the best opportunities for industry leaders Teva, and Barr are overseas and in biotechnology"

Is the FDA's reluctance regarding biogenerics protectionism disguised as a safety issue? Interesting article here:

Barr also has an eye on the future in biogenerics, or generic versions of biotech drugs.

Biotechnology, a method of drug development that uses living organisms, was established in the 1970s with the debut of Genentech, the world's second-largest biotech in terms of sales behind Amgen. Biotech drugs have been in existence long enough for the patents to run out on some of the industry's older products.

But the FDA does not have the regulatory process necessary for the creation of biogenerics, meaning that biotechs in the U.S. do not have to compete against low-cost generics.
Missing the biogeneric boom

However, Rep. Henry Waxman, D-Calif., is trying to change that. Waxman became one of the most important figures in the drug industry in 1984, when he and Sen. Orrin Hatch, R-Utah, drafted the Hatch-Waxman bill that created the regulatory process for generic drugs in the U.S.

A staffer for Waxman said he plans to submit a bill in the next few weeks to lay the foundations for the biogenerics industry in the U.S. This is on top of another biogenerics regulatory bill that Waxman filed last year with Sens. Charles Schumer and Hillary Clinton, both Democrats from New York.

While biogenerics hasn't gotten off the ground in the U.S., it's up and running in China and Eastern Europe, where companies produce generic versions of biotech drugs. In 2006, Barr bought the Croatian company Pliva, the biggest drugmaker in Eastern Europe and a pioneer in the emerging but risky field.

Sawyer of Leerink Swann said in a published note that Teva and Barr are the "best positioned to benefit from the biogeneric opportunity" because of their involvement in the multinational markets, though the potential benefits from the U.S. market are four or five years away.

"My view is that by 2010 you'll see biogenerics in the U.S.," said Forman. "The U.S. will be the last country in the world to have biogenerics."

I'm in no way opposed to biogenerics. I am curious how the trade off between cost and safety will be resolved. I'm also curious why I never hear anyone pushing biogenerics legislation mention the potential of generic competition to significantly raise the price of biotech drugs before the expiration of the patent. In any case, protectionism never really works out very well.

There are other ideas out there, such as a granting a permanent monopoly to a drug inventor while controlling the price after a certain period of time:

• Allow biotech drugs to be approved and marketed as they are now, without price regulation
• After patent expiration or after a certain number of years on the market, regulate price. The price could be based on cost of goods, a percent of the previous selling price, or some other mechanism

This would avoid the costs and risks of biogeneric development and regulatory approval while delivering the benefits of lower costs to payers. The original maker of the product should be happy too. Although their price will be lower than it is today, they won't have to share the market with generic players or spend money blocking the entry of new players. They will still enjoy a substantial period of high margin sales as they do today. It just won't go on forever.

When, at some point in the future, science improves to the point where truly identical biogenerics can be developed, these rules could be revisited.

It probably would lower the overall price of the drug for consumers, however I'd be concerned that over time the permanent monopoly would lead to a substantial decrease in quality and perhaps innovation. However if the policy were only in place until technology advances to allow the FDA to truly determine sameness in biogenerics it's probably a decent idea, albeit DOA.