UPDATE 3-FTC: 12-14 yrs too long to protect biotech drugs

* FTC: Generic biologics could save patients money

* Savings would be up to 30 percent for popular drugs

* FTC: 12 to 14 years exclusivity is too long (Adds details, reaction, background)

By Diane Bartz

WASHINGTON, June 10 (Reuters) - Cheaper versions of expensive biotechnology drugs would save patients money but are unlikely to drive down prices as much as generic competition has cut the cost of antibiotics and other, simpler medicines, a Federal Trade Commission report said on Wednesday.

Makers of brand-name biotechnology medicines, which are derived from living matter and can cost tens of thousands of dollars a year, are pushing for 12 to 14 years of protection from competition as lawmakers craft plans to give the Food and Drug Administration authority to clear cheaper copies.

But an FTC report found "the 12- to 14-year regulatory exclusivity period is too long to promote innovation."

Even with competition from generics, the first companies to develop biologic drugs are not as vulnerable to generic competition as the makers of chemically synthesized drugs, the report found.

In fact, the FTC report concluded that competitors would likely enter the market only for drugs that had more than $250 million of annual sales, and only two to three generic entrants would be expected for each drug.

"These FOB (follow-on biologic) entrants are unlikely to introduce their FOB products at price discounts any larger than between 10 and 30 percent of the pioneer products' price," the FTC said in its report.

"Pioneer manufacturers are likely to retain 70 to 90 percent of their market share and, therefore, will likely continue to reap substantial profits years after entry by (generic biologics)," the report said.

In contrast, generic competition for chemically synthesized drugs can push prices down by up to 90 percent.

Still, the FTC said, giving the FDA clear authority to approve generic biologics "would be an efficient way to bring these lower-priced drugs to market."

Biologic drugs -- which are usually injectable -- tend to be more expensive and complicated than traditional chemical medicines because they are made from living cells. They are used to treat everything from cancer to autoimmune diseases such as rheumatoid arthritis.

The generic drug industry is eager to begin producing cheaper copies of the medicines.

Brand-name biotech companies such as Roche Holding's (ROG.VX) Genentech Inc and Amgen Inc (AMGN.O) say they need an adequate period without competition to encourage development of new medicines.