Activity

Activity ID

13759

Expires

November 25, 2027

Format Type

Journal-based

CME Credit

1

Fee

$30

CME Provider: JAMA

Description of CME Course

Importance  Biologics approved by the US Food and Drug Administration (FDA) receive 12 years of guaranteed protection from biosimilar competition compared with 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 with 7 years for small-molecule drugs. Congress codified 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 analyze the assumptions underlying longer periods of market exclusivity and protection from price negotiation compared with 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 159 (27%) were biologics and 440 (73%) were small-molecule drugs. Median development times were 12.6 years (IQR, 10.6-15.3 years) for biologics vs 12.7 years (IQR, 10.2-15.5 years) for small-molecule drugs (P = .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 = .39). Biologics were protected by a median of 14 patents (IQR, 5-24 patents) compared with 3 patents (IQR, 2-5 patents) for small-molecule drugs (P < .001). The median time to biosimilar competition was 20.3 years (IQR, 16.9-21.7 years) compared with 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 = .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, $4000-$177 000) for small-molecule drugs (P = .005).

Conclusions and Relevance  There is little evidence to support biologics having longer periods of market exclusivity or protection from negotiation. As a result of differential treatment, US law appears to overly reward the development of biologics relative to small-molecule drugs.

Disclaimers

1. This activity is accredited by the American Medical Association.
2. This activity is free to AMA members.

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Educational Objectives

To identify the key insights or developments described in this article

Keywords

Law and Medicine, Health Care Economics, Insurance, Payment, Drug Development

Competencies

Medical Knowledge

CME Credit Type

AMA PRA Category 1 Credit

DOI

10.1001/jama.2024.16911

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