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Generic drug makers face tougher odds of getting law passed this year on biotech products

WASHINGTON -- Generic drug makers may fail again this year to get a bill passed that would let them market cheaper versions of biotech drugs, some of the most expensive medicines on the market.

The Senate is expected to vote next week on the one major pharmaceutical bill expected to pass this year, and the odds are growing that the biotech generics issue won't be included.

Generic companies, such as Mylan Laboratories Inc. and Teva Pharmaceuticals Ltd., have long sought federal approval to market generic versions of biotech drugs made by Amgen Inc. (Nasdaq: AMGN) and Genentech Inc. (NYSE: DNA) among others.

The competitive stakes are high -- for the companies and for consumers. Biotech drugs can cost tens of thousands of dollars for a year's supply. Already, $12 billion of the drugs sold each year no longer have patent protection, but under current law, generic companies cannot sell similar versions.

Generic drug makers are likely to push the issue in the House, though it's unclear whether lawmakers there are ready to move quickly. The House Energy and Commerce subcommittee on Health has scheduled a hearing on the topic next week. But the chair of the subcommittee suggests the issue needs more study.

"We're serious about seeing if we can create a pathway for generic biologics, but we want to take to take a look at the safety issues and hear all the different points of view," said Rep. Frank Pallone, subcommittee chair.

The Senate is expected to vote next week on a package of bills related to the Food and Drug Administration. The bill is nearly guaranteed to pass because it reauthorizes the user fee program that helps fund the agency's drug review budget.

Lehman Brothers analyst Tony Clapsis wrote in a note earlier this week that the absence of generic biotech from the bill will "slow momentum and make enactment of follow-on-biologics more difficult, a positive for brand biotech."

After Democrats took control of Congress last year, generic firms renewed lobbying for approval to produce biotechs, emphasizing the potential for reining in escalating health care costs. But the biotech industry argues, as it has for more than a decade, that the complexity of their products would make it difficult for generic drug companies to safely copy them.

Despite safety concerns many experts, including a former FDA commissioner, think generic biotech is inevitable for the United States, and point out that the European Union already allows the practice. And consumer groups, such as AARP and Families USA, have joined the Generic Pharmaceutical Association to lobby for the law change. As momentum behind the issue has increased, the Biotechnology Industry Organization trade group has suggested it is willing to compromise.

Senator Ted Kennedy, D-Mass., is working on legislation that was expected to forge a compromise but a draft of the bill includes provisions likely to upset both sides, observers say.

While BIO declined to comment on Kennedy's draft, the group has previously said it will oppose attempts to classify generic biotech drugs as interchangeable with the original products -- something the draft would allow. At the same time, the Kennedy draft requires generic companies to conduct safety studies before their biotech products are approved, which the generic industry says would unnecessarily delay bringing cheaper drugs to market.

Because no industry compromise has been reached, analysts say Kennedy is not likely to attach it to next week's must-pass legislation. While it could be introduced as a separate bill later in the year, analysts say such measures typically never make it to a full vote in the Senate the year they are introduced.

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