Misplaced Fears in the Legislative Battle over Affordable Biotech Drugs

Much like tort reform, the debate over recently enacted legislation on biotech drugs — and particularly regulatory supplements to patent protection — has taken on a significance that dwarfs its impact on prescription drug expenditures. Under the Health Care Reform legislation, Congress enacted two major reforms: First, creation of an abbreviated Food and Drug Administration (FDA) approval process for follow-on biologics (FOBs), which are the analogues of generics for biotech drugs. Second, establishment of a twelve-year “data exclusivity” period in which clinical testing data collected by brand-name innovators cannot be used by producers of FOBs to satisfy FDA testing requirements. While the abbreviated FDA approval process enjoys broad support, the data-exclusivity provision has been hotly contested, including strong opposition from the Federal Trade Commission. We argue that the debate over the duration of regulatory data exclusivity is a sideshow. Current estimates suggest that the differences in duration of the data exclusivity period that were debated, essentially between seven and twelve years, would not materially affect aggregate expenditures on prescription drugs. For this and other reasons, any potential benefit to patients that might result from a shorter period of data exclusivity are likely to be outweighed by the financial risks to the biotech industry, and particularly the negative effects on investments in research and development