There was encouraging news coming from testimony about legislation proposed for regulating generic biologics before the Senate Health, Education, Labor, and Pensions committee on Thursday.

The committee is beginning to understand the importance of having a full round of rigorous clinical trials for any generic biologic. Manufacturing a biologic isn’t like stamping out a new batch of pills. It is immensely complicated work where inexperienced companies should have to go through stringent clinical trials.

This is good news for patients and their safety and for the biotech companies that have spent millions on developing new biologics.

It is also good news for the pharmaceutical outsourcing industry and contract research organizations such as Parexel, PPD,PRA, ICON,Covance, PharmaNet, Quintiles and others. They will benefit from the projected increase in clinical trials and from their push in the last few years to work with biotech companies. In the short term it could be welcome news for biotech giant Amgen, whose anemia drug Epogen goes off patent in six years...

Sen. Edward Kennedy of Massachusetts is headed on the right track when he suggests that U.S. regulators should follow Europe’s lead and require a full round of rigorous clinical trials for generic biologics. These trials could be just as lengthy and expensive as ones for new drugs in development.

Of course, business owners and the federal government should be concerned about the rising spending on relatively expensive biotech products. As more of these new products go through clinical trials, spending is rising disproportionately.

A middle ground will have to be struck so biopharma companies remain profitable enough to spend the huge amounts of money developing new treatments.

You can read Sen. Kennedy's official statement at the hearing here.