With Congress and the president trying desperately to find ways to fund health-care reform, a Senate committee last week rejected an approach that would have cut costs the old-fashioned way: through private-sector competition.

Instead, in a 16-7 vote on July 13, the Health, Education, Labor, and Pensions Committee decided to grant lucrative biologic drugs 12 years of insulation against competitors. Such a lengthy period was opposed by the Obama Administration and a wide variety of organizations, ranging from generally liberal groups like the AARP, AFL-CIO, and Consumers Union, to conservative ones like the Council of Citizens Against Government Waste, the Competitive Enterprise Institute, and Dick Armey’s Freedom Works.

The bill will face opposition in the House and the full Senate, but if it passes, few if any drug companies are likely to develop generics to compete with patented biotech drugs, or “biologics,” as they are called.
Biologics, which are made from living tissues and microorganisms, are playing a growing role in fighting disease.

In 2007, Americans spent $40 billion — or about one in every seven dollars spent on prescription drugs — on biologic medicines, including blockbusters such as Avastin for colon cancer and Lantus for diabetes. Like conventional, or “small-molecule,” drugs, biologics are protected by patents for 20 years after their invention. But when the patent on a biologic expires, the Food & Drug Administration provides no efficient pathway for generic-style competitors — in this case called “biogenerics.”

With patents on the majority of the leading biologics set to expire by 2015, Congress wants to establish a process that can bring biosimilars to market, but many of the big pharmaceutical companies are resisting. On July 13, the Senate’s health panel supported the companies’ position, scoring, as Reuters put it, “a major victory for biotech drugmakers such as Amgen Inc. and Roche Holding AG.” The vote flew in the face of a FTC report last month, which found that a “12-to-14-year regulatory exclusivity period is too long” and “unnecessary to promote innovation.”

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