Rep. Henry A. Waxman, D-Calif., heard testimony Monday that his bill to boost biotech drug competition might save much less money than advertised and should be rewritten to ensure 10 years of exclusive marketing for product innovators.

But other witnesses at the House Oversight and Government Reform Committee hearing said even savings as low as 10 percent from “follow-on biologics” would be worth pursuing and are critical to ensuring access to biologics.

Many analysts assume that legislation to allow competing versions of biotech drugs, also loosely known as “biotech generics,” won’t get through Congress unless it includes incentives to develop original biotech drugs. Duke University Economics Professor Henry Grabowski offered testimony that could point to what those incentives might be.

Grabowski expressed concern that Waxman’s bill (HR 1038) to spur the follow-on products would allow patent challenges from the first day the innovator product is marketed. He warned that companies will be skittish about investing in research and development without assurances of a period of competition-free marketing and called for a 10-year period in which makers of competing similar products could not use data developed by makers of original products in marketing applications for rival drugs.

Grabowski also cautioned that biotech generics are much more costly and risky to make than traditional generics. Fewer companies will try to develop them, and as a result, price reductions will be lower — he estimated in the range of 10 percent to 25 percent.

The pharmacy benefits management industry has projected billions, if not tens of billions, of dollars in savings from follow-on products over a 10-year period, but Grabowski cited a study by the consulting firm Avalare Health that forecast some $3.6 billion in savings as a more realistic estimate. (See related story, CQ HealthBeat, March 7, 2007)

Grabowski’s call for caution about “scoreable savings” from such legislation appears to bolster the arguments of those who say Congress should move cautiously on competing products, not only because of safety concerns associated making the biologically complex products, but also because production won’t fulfill hopes of saving enough money to fund other health-related legislation.

But backers of the Waxman bill pointed to testimony by Janet Woodcock, chief medical officer of the Food and Drug Administration, as evidence that Congress should act promptly to pass the measure, which also has been introduced in the Senate (S 623) by Sen. Charles E. Schumer, D-N.Y., with the high-profile backing of his fellow Democrat and state’s junior senator, Hillary Rodham Clinton. Waxman’s backers say Woodcock’s comments demonstrate that the agency has the expertise and experience needed to determine appropriate safety and efficacy testing requirements for follow-on products. The Waxman bill would rely on the agency to determine appropriate standards and clarify that it has authority to establish them.

Woodcock noted that because of the complexity and variability of proteins used to make biotech drugs, it’s unlikely that makers of follow-on products could make versions identical to the originals. The process of demonstrating similarity will be more complex and “require more new data” than in the case of traditional generics, she said.

She also said the agency “has applied its expertise and experience to approve certain follow-on protein products” in the past, such as Omnitrope, a version of a biotech human growth hormone product. That drug relied on an abbreviated approval process to get to market, though not as abbreviated as would be the case with follow-on biologics contemplated by the new legislation. Woodcock also noted that the FDA has been developing guidelines for approval of follow-on biologics.

Backers of the Waxman bill, including the pharmacy benefits management (PBM) industry, want to see it added to reauthorization of FDA’s prescription drug user fee program, which expires this year. Woodcock’s testimony on the agency’s expertise “demolished” arguments that the Waxman bill would lead to approval of unsafe products, said Mark Merritt, president of the Pharmaceutical Care Management Association, which represents PBMs. The testimony allays “anyone’s concerns that it could be attached” to the reauthorization measure, he asserted.

But some senators have urged that the legislation should require clinical testing of follow-on drugs without leaving it up to the FDA to say yes or no on those more extensive tests.

And industry officials say Waxman’s bill assures neither safety nor essential research incentives. Jim Greenwood, CEO of the Biotechnology Industry Organization, issued a statement on the hearing stating that because of the complex policy issues raised by the bill, it should not be tied to the reauthorization measure.

Witnesses representing state employees and retirees in California and Illinois said even if savings estimates of 10 percent to 25 percent are correct, annual savings from those programs will run into the tens of millions of dollars.