Differential legal protections for biologics vs. small-molecule drugs in the US

Wouters, Olivier J. ORCID: 0000-0002-2514-476X, Vogel, Matthew, Feldman, William B., Beall, Reed F., Kesselheim, Aaron S. and Tu, S. Sean (2024) Differential legal protections for biologics vs. small-molecule drugs in the US. JAMA. ISSN 0098-7484

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Abstract

Importance: Biologics approved by the US Food and Drug Administration (FDA) receive 12 years of guaranteed protection from biosimilar competition compared to 5 years of protection from generic competition for new small-molecule drugs. Under the 2022 Inflation Reduction Act, biologics are exempt from selection for Medicare price negotiation for 11 years compared to 7 years for small-molecule drugs. Congress has chosen to codify these differing legal protections on the premise that biologics require more time and resources to develop and have weaker patent protection, necessitating additional protections for manufacturers to recoup their development costs and generate adequate returns on investment. Objective: To review empirical evidence from the US experience with biologics to determine whether they require longer market exclusivity or protection from price negotiation compared to small-molecule drugs. Evidence Review: Recent data on development times, clinical trial success rates, research and development costs, patent protection, market exclusivity periods, revenues, and treatment costs of biologics vs. small-molecule drugs were analyzed. Findings: The FDA approved 599 new therapeutic agents from 2009-2023, of which 27% (159) were biologics and 73% (440) were small-molecule drugs. Median development times were 12.6 years (interquartile range [IQR]: 10.6-15.3 years) for biologics versus 12.7 years (IQR: 10.2-15.5 years) for small-molecule drugs (P=0.76). Biologics had higher clinical trial success rates at every phase of development. Median development costs were estimated to be $3.0 billion (IQR: $1.3 billion-$5.5 billion) for biologics and $2.1 billion (IQR: $1.3 billion-$3.7 billion) for small-molecule drugs (P=0.39). Biologics were protected by a median of 14 patents (IQR: 5-24 patents) compared to 3 patents (IQR: 2-5 patents) for small-molecule drugs (P<0.001). The median time to biosimilar competition was 20.3 years (IQR: 16.9-21.7 years) compared to 12.6 years (IQR: 12.5-13.5 years) for small-molecule drugs. Biologics achieved higher median peak revenues ($1.1 billion in year 13; IQR: $0.5 billion-$2.9 billion) than small-molecule drugs ($0.5 billion in year 8; IQR: $0.1 billion-$1.2 billion) (P=0.01) and had higher median revenues in each year following FDA approval. The median annual cost of treatment was $92,000 (IQR: $31,000-$357,000) for biologics and $33,000 (IQR: $4,000-$177,000) for small-molecule drugs (P=0.005). Conclusions and Relevance: There is little currently available evidence to support biologics having extended market exclusivity or protection from negotiation. As a result of differential treatment, US law appears to over-reward the development of biologics relative to small-molecule drugs.

Item Type:	Article
Additional Information:	© 2024 American Medical Association
Divisions:	Health Policy
Subjects:	R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine R Medicine
Date Deposited:	26 Nov 2024 12:51
Last Modified:	12 Dec 2024 04:30
URI:	http://eprints.lse.ac.uk/id/eprint/126180

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