Rx for a Drug Company
The Medicines Co. Tries to Hire Its Way to a Solution
What difference does a day make? The Medicines Co., a small, New Jersey-based drug maker, learned the hard way in 2001 when it filed a patent extension for its top-earning pill, Angiomax, one day past deadline. The goof could cost the company four and a half years of patent protection — and potentially hundreds of millions of dollars in sales.
Now, after failing to convince the U.S. Patent and Trademark Office to cut it some slack, the company is turning to Congress — and hiring a raft of downtown talent to make its point.
The Medicines Co. has no office in Washington, D.C., and gives next to nothing in political money. Until 2002, it had no lobbyists on retainer. But in the past two years, the company has assembled the kind of top-flight team of hired-gun consultants usually reserved for Fortune 100 companies.
Indeed, the roster is a who’s who of K Street all-stars: Democratic super-fixer Steve Elmendorf, former House Judiciary Committee chief counsel Phil Kiko, former Sen. Dan Coats (R-Ind.) and Clinton White House and House Judiciary Committee alum Jonathan Yarowsky. The company’s team also includes former House Majority Leader Dick Armey (R-Texas), John Merrigan, former President Lyndon Johnson adviser Harry McPherson of DLA Piper and high-powered public relations executive Gloria Dittus, among others.
The team is helping the company push a legislative fix tailor-made for its predicament: a two-page House bill to give Medicines — along with others filing late unintentionally — 30 extra days to petition the patent office for an extension.
Labeled the “Sorry I’m Late, the Dog Ate My Homework Act” by generic drug companies and watchdog critics, the measure fell just short of passage in the closing days of last year after the House passed it but the Senate adjourned before taking it up.
Despite predictions the company would suffer from a wider chill against name-brand drug makers as Democrats returned to power, instead it has found new champions in the new majority. Rep. Bill Delahunt (D-Mass.) reintroduced the Medicines bill that then-Rep. Bill Jenkins (R-Tenn.) drafted last year.
With the help of its small K Street army, it also has rallied support among members of the Congressional Black Caucus. They are citing arguments from Medicines that an extension would give the company the capital to invest in new applications for Angiomax, a popular anti-coagulant used in hospitals that could help in procedures treating heart disease, which is endemically high in the black community.
Eight CBC members made that case in a letter to Judiciary Chairman John Conyers (D-Mich.) and ranking member Lamar Smith (R-Texas) this year.
The company also has made strides in the Senate. This summer, Sen. Edward Kennedy (D-Mass.) won voice-vote approval from the Judiciary Committee to add language similar to the House bill to a broader patent reform measure. The House passed its patent law overhaul without including the provision. But observers expect it to survive a House-Senate conference likely to move forward next year.
“We strongly support this bill because it would amend an overly rigid provision in the law under which innovators who develop new medicines automatically lose years of hard-earned patent rights if they make a filing error,” Dittus spokeswoman Trudi Boyd said in a statement. “This rigid, bureaucratic rule is unwise both because it hurts innovators and because it can be devastating to the many patients who could benefit from further innovation.”
For Medicines, the success hasn’t come cheap — at least by K Street standards. Last year, the company shelled out $2.12 million for its lobbying team. In the first half of the year alone, the tab for the talent was $1.26 million.
The $840,000 bill from Armey’s firm, DLA Piper, itself was enough to make Medicines the sixth-highest-paying single client of the year so far, behind the Blackstone Group, Mars, Nissan, Nucor, the government of Taiwan and the trial lawyers’ lobby, the American Association for Justice.
“They’re not a big pharma company downtown that has a big PR department and lobbying group,” said one lobbyist working for the company. “But they have to have the best and the brightest, because if they don’t get this through, it’s going to have a devastating impact on the company.”
Indeed, the case of Medicines points up a fact that has become increasingly clear to corporate brass in recent years: decisions made inside the Beltway can have billion-dollar consequences for single companies, and investing a sliver of that sum in effective lobbyists can mean the difference between success and failure, boom and bankruptcy.
For Medicines, spreading out a couple million dollars downtown could help them protect hundreds of millions from their top money-making drug.
Sales of Angiomax are projected to be $295 million this year in the United States, making up 98 percent of the company’s revenue, according to Jason Kantor, an analyst at RBC Capital Markets.
He said Wall Street has been closely monitoring the status of the legislation, adjusting valuations for Medicines stock based on its prospects.
“This is everything for them right now,” he said. “If we knew they had five more years of patent protection, people would assign a much higher value to the franchise, because, with the drugs they have in the pipeline, they’d be adding growth on top of growth.”
The patent expires in 2010. At that point, failing an extension, a generic drug maker could offer a cheap alternative, undercutting the value of the pill for Medicines — and substantially depressing its stock.
At a House hearing on the bill last year, Generic Pharmaceutical Association president Kathleen Jaeger testified the bill would “benefit a single brand pharmaceutical company at significant expense to all Americans, as well as the generic pharmaceutical industry.” Of Medicines’ filing blunder, which occurred when the company thought it had two months instead of 60 days to file an extension, she said, “Mistakes have consequences.”
But so far this year, the measure has faced scant opposition. The generics lobby declined to comment for this article, referring questions to Jaeger’s testimony last year. Another Medicines’ lobbyist said “I have not seen any work going on their behalf, probably because they have other things going on.”
The generic drug industry is focusing its lobbying might on trying to protect the tools it uses in patent litigation against name-brand companies.