Generic drugmakers will be able to sell biosimilars under Senate legislation that would create a so-called pathway for the FDA to approve such treatments. The bill is being introduced by Democrats Hillary Clinton and Ted Kennedy, and Republicans Orrin Hatch and Mike Enzi.

Analysts say competition from lower-cost generics may cut prices by a third. Meanwhile, Barr and Teva, for instance, have invested billions of dollars in acquisitions and facilities outside the U.S. for the technology to make generic versions of drugs whose patents have expired or been ruled invalid, according to Bloomberg News.

“Just as generic drugs have helped bring down the costs of medicines for millions of Americans, new ‘follow-on’ versions of breakthrough biologics will make these innovative treatments more affordable for the patients who need them,” said Kennedy, who chairs the Senate health committee, in a statement this evening.

Biotech companies say their meds can’t be duplicated, and full-scale human trials would be more prudent in order to assure safety and effectiveness. Generic drugmakers argue the FDA should decide on a case-by-case basis whether to waive trials, which are expensive.

The legislation would require generic drugmakers to provide analytical data, conduct animal studies and at least one clinical trial in humans unless the FDA determines that the steps aren’t necessary. The FDA also would have leeway to decide if a generic product could be substituted by a pharmacist for a prescribed brand-name drug.

“If we thought that over a prolonged period of time and over a large number of cases that the FDA was making the wrong decision and being overly conservative, then we’d have to go back to Congress,” Bruce Downey, Barr’s ceo, told Bloomberg recently. “The bigger risk now is not having a pathway.”

European regulators allow approval of generic versions they call “biosimilars,” which aren’t recognized as identical to the original drugs. Novartis won backing from a European panel today to sell copies of Johnson & Johnson’s Eprex, an anemia medicine sold in the UUS as Procrit and as Amgen’s Epogen.

“It’s crucial that Congress get this right because biologics are the future of medicine,” said Hatch in this evening’s statement. “It’s taken a lot of effort, but we’ve achieved a good balance in this bill.”

The Senate health committee is expected to mark up the legislation June 27. Any bill would have to be passed by the full Senate and the House before being sent to President George W. Bush. Competing measures have been introduced in the House.

Generic drugmakers betting on the US market are targeting drugs whose patents have already run out or are set to expire in coming years. Most development projects are kept secret, although analysts say Epogen and Genentech’s breast cancer drug Herceptin are among the products that may be vulnerable to competition once they lose patent production.

Spokeswomen for Amgen and the BIO trade group declined to comment until they had time to review the bill. “Generally, we support a pathway for follow-on biologics,” says Megan Pace, a Genentech spokeswoman. The biotech urges “that any legislation that is passed ensures patient safety and appropriate data protection for innovators.”

Andrea Hofelich, a spokeswoman for the Generic Pharmaceutical Association, said her group was still reviewing the proposal.