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Barriers to biologicals competition Posted 15/01/2016

As finding breakthrough small-molecule drugs becomes more difficult, drug companies are increasingly turning to ‘large molecule’ biologicals. Although biologicals represent many of the most promising new therapies for previously intractable diseases, they are extremely expensive. Moreover, the pathway for generic-type competition set up by the US Congress in 2010 is unlikely to yield significant cost savings.

In an article by Price and Rai a fresh diagnosis of and prescription for this major public policy problem is provided [1]. It argues that the key cause is pervasive trade secrecy in the complex area of biologicals manufacturing. Under the current regime, this trade secrecy, combined with certain features of the US Food and Drug Administration (FDA) regulation, not only creates high barriers to entry of indefinite duration but also undermines efforts to advance fundamental knowledge about how biologicals function and are best produced.

In sharp contrast, offering incentives for information disclosure to originator manufacturers would leverage the existing interaction of trade secrecy and the regulatory state in a positive direction. Trade secrecy, particularly in complex areas like biologicals manufacturing, often involves tacit knowledge that is difficult to codify and thus transfer. In this case, however, regulatory requirements mandate that originator manufacturers submit manufacturing details. As a consequence, manufacturers have already codified the relevant tacit knowledge. Carefully structured mechanisms for incentivizing disclosure of these regulatory submissions would not only spur competition, but would also provide a rich source of information upon which additional research, including fundamental research into the science of manufacturing, could build.

In addition to providing a fresh diagnosis and prescription in the specific area of biologicals, this article contributes to more general scholarship on trade secrecy and tacit knowledge. Prior scholarship has neglected the extent to which regulation can turn tacit knowledge not only into codified knowledge but also into precisely the type of codified knowledge that is most likely to be useful and accurate. This article also draws a link to the literature on adaptive regulation, arguing that greater regulatory flexibility is necessary and that more fundamental knowledge should spur flexibility.

Conflict of interest
The authors of the research paper [1] declared that the National Institute of Mental Health (R01MH090284) provided funding for this study.

For full details of the authors’ conflicts of interest/author disclosures, see the research paper [1].

Abstracted by W Nicholson Price II, JD, PhD, Assistant Professor of Law, University of New Hampshire School of Law, USA.

Editor’s comment
Readers interested to learn more about biosimilars competition are invited to visit www.gabi-journal.net to view the following manuscript published in GaBI Journal

Biosimilars: patient and physician acceptability is the fifth hurdle to market competition

If you are interested in contributing a research article in a similar area to theGaBI Journal, please send us your submission here.

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Reference
1.  Price WN, Rai AK. Manufacturing barriers to biologics competition and innovation. 14 April 2015. Iowa Law Review, Forthcoming; Duke Law School Public Law & Legal Theory Series No. 2015-20; Duke I&E Research Paper No. 15-2. 2015. 

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