BOSTON ( TheStreet) -- The U.S. Food and Drug Administration is scheduling a public hearing in November to discuss the development of copycat versions of biotech drugs, according to a draft notice of the meeting being circulated by the regulatory agency.

The proposed public hearing is another signal that FDA is moving deliberately towards creating a regulatory framework to foster new, lower-priced competition to the biologic drugs that are the growth engines of biotech companies like Amgen ( AMGN) , Biogen Idec ( BIIB) , Genzyme ( GENZ) and others.

The FDA's two-day meeting on so-called biosimilar drugs will be held Nov. 2-3, according to a draft Federal Register notice titled "Approval Pathway for Biosimilar and Interchangeable Biological Products."

FDA has yet to formally announce the meeting, but the draft agenda has been circulating around Washington, D.C., according to health policy analyst Alec Vachon, who disclosed the FDA's plans Friday on Twitter.

The healthcare reform bill passed earlier this year by Congress gave FDA permission to approve biosimilars, which are copies of large protein, or biologic, drugs made in cultures of living, genetically altered cells. Biologic drugs are notoriously hard to manufacture, so until now, they've been exempt from federal law that allows for the manufacture of low-cost copies of small molecule, or chemical, drugs once the patents protecting their intellectual property expires.

Generic copies of chemical drugs are considered to be identical to their brand name counterparts and existing law allows doctors and pharmacies to substitute one for the other freely.

Biologic drugs, however, are complex proteins so copycat versions may be "similar" but not completely identical or have the same efficacy and safety profile. While FDA now has the authority to approve biosimilars, the agency has struggled so far to come up with clinical testing standards to ensure that patients treated with biologic copies receive the same benefits while not being put at any greater risk.

"The Food and Drug Administration (FDA) is announcing a 2-day public hearing to obtain input on specific issues and challenges associated with the implementation of the Biologics Price Competition and Innovation Act of 2009 (BPCI Act)," states the agency's draft Federal Register notice, referring to the law which authorizes the approval of biosimilars.

"We believe the primary focus might be to better define what terms in the bio-similar legislation actually mean and to clarify exactly what the approval criteria will be for generics companies to secure true 'interchangeable' status," said ISI Group biotech analyst Mark Schoenebaum, in a note to clients Sunday.

"Interchangeable status" refers to the high regulatory standard by which the biosimilar can be expected to produce the same clinical result as the branded biologic drug being copied.

Without interchangeable status, doctors would have to specifically prescribe the biosimilar drug and switching between the copy and the branded version would not be allowed.

The biotech industry has generally argued against interchangeability because it believes biologic drugs are unique and cannot be copied.

The uniqueness of biologic drugs and the absence of generic competition has been a boon to the biotech industry, which typically charges premium prices for its biologic drugs. The drugs Genzyme makes for the treatment of rare genetic diseases, for example, can cost upwards of $200,000 a year. Treatment with Roche's cancer drug Avastin can cost about $100,000, while Biogen's multiple sclerosis drug Avonex, which patient must take for their entire lives, costs about $20,000 per year.

The eventual approval and launch of biosimilar drugs, therefore is a potential threat to the biotech sector, which could face lower-priced competition for its drugs similar to what has happened to large pharmaceutical companies.

The FDA's public hearing on biosimilars follows the agency's decision in August to approve a biosimilar version of the Sanofi-Aventis ( SNY) anticoagulant Lovenox developed by Momenta Pharmaceuticals ( MNTA) and Novartis ( TEVA).

In Europe, the approval and commercial presence of biosimilars is much further along, although the difficulties and high cost in making biologic drugs has minimized price erosion that usually comes with generic competition.

Among the biologic drugs most susceptible to biosimilar competition include the anemia drugs Epogen and Procrit sold by Amgen and Johnson & Johnson ( JNJ), respectively, Amgen's rheumatoid arthritis drug Enbrel, Roche's cancer and rheumatoid arthritis drug Rituxan and Biogen multiple sclerosis drug Avonex.

Teva Pharmaceuticals ( TEVA) has already announced its intention to move aggressively into the market for biosimilar drugs.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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