The Legislative Pillars Supporting Innovation & Access in the Life Sciences Ecosystem

Nov 28, 2023 | Blog Post

For nearly four decades, policymakers have prioritized bipartisan policies that incentivize investment in groundbreaking medical research – aiming to make new innovations accessible for millions of Americans. As a result, the legislative foundation fueling life sciences innovation – from Hatch-Waxman to Bayh-Dole and the Orphan Drug Act – has helped smooth the path to market for new medicines in the U.S., alongside competitive reforms to spur the development of generic and biosimilar treatments and improve patient access. Together, these policies – hallmarks of a diverse and dynamic life sciences industry in the U.S. – have fostered a robust pipeline of medical breakthroughs – from vaccines to cell and gene therapies, and other first-in-class treatments.

Hatch-Waxman Act

The Hatch-Waxman Act, signed into law nearly 40 years ago, sets windows of exclusivity for new therapies, after which generics will be allowed to enter the market. This period of exclusivity is critical for companies to recoup their considerable costs of developing and delivering new treatments, which exceed $2.6 billion over 10-15 years on average – and sets clear timelines for generic competition.

The promise of eventual generic and biosimilar competition helps ensure access to a wide range of treatment options for patients while incentivizing life sciences companies to constantly invest in the next innovative therapy. It is in part because of this policy framework that there are now more than 8,000 potential new therapies in the development pipeline, with the potential to radically transform our approach to treating disease.

Orphan Drug Act

The Orphan Drug Act builds on Hatch-Waxman, designating an extended window of exclusivity for therapies to treat rare diseases – complex health conditions with often few or no existing treatment options and affecting fewer than 200,000 people. Life sciences companies developing treatments and cures for these diseases face steeper challenges in recruiting and conducting clinical trials (often increasing the already steep costs of conducting these trials), securing regulatory approval and distributing their medicines to a comparatively sparse set of patients.

To offset the high costs associated with bringing a rare disease treatment to market, the Orphan Drug Act also provides tax credits and grants to help drive R&D, in addition to the extended window of exclusivity. These robust incentives have helped spark innovation for the more than 1,110 orphan drugs approved by the FDA since the Act’s passage to treat rare cancers, neurological diseases, blood disorders, infectious diseases and other rare illnesses.

Bayh-Dole Act

The Bayh-Dole Act grants universities and other research institutions ownership of the intellectual property they create through federally funded research, allowing them to license their inventions to manufacturers who can develop and deliver medicines. In the life sciences ecosystem, these unique intellectual property protections create a dynamic culture of collaboration and a constant cascade of knowledge between public and private researchers, academics and companies of all sizes.

Through licensing agreements, partnerships and other collaborations, Bayh-Dole has empowered members of the life sciences ecosystem to innovate more efficiently and connect promising research to companies that have the necessary resources and expertise to bring it to patients. Since the Bayh-Dole Act’s passage, public-private partnerships have helped bring more than 200 new medicines to market, while sourcing more than 98% of the necessary investment from the private sector.

Mergers and Acquisitions: A Vital Bridge for Innovation

Mergers and acquisitions (M&A) have proven to be a critical tool for allowing U.S. life sciences companies to unlock the full potential of these policy-driven incentives for innovation. M&A allows life sciences companies of all sizes to combine the necessary resources and expertise to advance new treatments and cures more effectively and efficiently. Case in point: on the back of 10 years of increased M&A activity, the rolling 5-year average of new treatments approved by the FDA nearly doubled – rising from 24 in 2010 to 49 in 2022.

Unfortunately, the Federal Trade Commission and Department of Justice have proposed a new approach to regulating M&A, putting forth legislative changes that risk broadly deterring such activities. This proposal threatens to undermine decades of balanced and bipartisan policies which have helped position the U.S. as a global leader in biopharmaceutical breakthroughs. Policymakers must preserve these balanced policy frameworks, which have shaped the U.S. life sciences ecosystem and its robust pipeline, for the next generation.