Cuing Up the Latest Fight Over Generic Drugs

Posted March 17, 2009 at 5:55pm

The debate over how long biotechnology drugmakers should retain exclusive rights to their patents — five, seven or as long as 12 years — has returned to center stage, prompted by soaring health care costs and cries for reform.

Getting it right, stakeholders say, will save patients’ lives and cut costs; if done incorrectly, however, it could cripple investment in products that cost billions to develop.

“This will get done this year,— said a veteran Republican health care lobbyist. “It’s a complex issue, but Congress and the administration know the importance in terms of savings and patient access.—

On Tuesday, Reps. Anna Eshoo (D-Calif), Jay Inslee (D-Wash.) and Joe Barton (R-Texas) introduced legislation that would set the period of exclusivity at 12 years. That comes just one week after Reps. Henry Waxman (D-Calif.) and Nathan Deal (R-Ga.) introduced a bill that would set exclusivity at five years.

As expected, powerful competing lobbies have emerged to safeguard their stake in what is the fastest-growing segment of the $600 billion pharmaceutical industry — a market segment that produced $94 billion in worldwide sales in 2007.

On one side: universities, biotech companies and venture capitalists fighting to protect inventors’ rights and ensure more thorough clinical trials. On the other side: consumer groups, labor unions, insurers and generic drug manufacturers all pushing for more marketplace competition and more affordable, quality drugs for patients.

The two sides agree on the need to establish a way for the federal government to approve generic versions of biotech drugs that can cost patients upward of $1,000 per month. But they disagree over what level of authority the Food and Drug Administration should have in overseeing the patent and regulatory approval processes, and how long a drug company can keep its product on the market before a generic version is allowed.

“Exclusivity— has emerged as the major sticking point in a more than two-year debate that arose as biotech drugs such as Genentech’s cancer drug Avastin and Amgen’s rheumatoid arthritis treatment Enbrel became available to patients.

Because these drugs, known as “biogenerics— or “biosimilars,— are made in living cells and cannot be copied into generic versions in the way conventional drugs can be, their makers and groups like the Biotechnology Industry Organization argue that 14 years should be the minimum period for exclusivity to account for a development process that takes, on average, 10 years and $1.2 billion for a product to reach market.

Twelve organizations, representing the biotech industry, patient groups and venture capitalists, have already endorsed the Eshoo-Inslee-Barton bill with its 12-year patent protection.

“The venture capital industry is driving the true, innovative biotech drug companies in an already risky environment,— said Kelly Slone, director of the medical industry group at the National Venture Capital Association. “With less than 12 years of exclusivity, the venture capital industry will dry up in biotech investing.—

That’s not necessarily what Waxman and Deal believe.

Their legislation, which raised the ire of BIO, sets exclusivity at five years for new biologics and an additional three years for drug improvements and new indications, a standard similar to the one established by Waxman’s and Sen. Orrin Hatch’s (R-Utah) landmark Drug Price Competition and Patent Term Restoration Act of 1984, which regulates approval for generic versions of conventional drugs.

“Our analysis found that 12-14 years of exclusivity puts us on parity with the incentives that conventional pharmaceuticals get today under Hatch-Waxman,— said Tom DiLenge, BIO’s general counsel. “We want to make sure that Congress does not provide less incentive to invest in biologics research.—

The Waxman-Deal bill was quickly supported by groups such as AARP, Consumers Union, AFL-CIO, Service Employees International Union and the National Business Group on Health, which see shorter exclusivity as the way to deliver safe, affordable and quality drugs to patients and open the marketplace to increased competition.

“This bill builds on what we have learned from 20 years in the marketplace since Hatch-Waxman,— said Kathleen Jaeger, president and chief executive officer of the Generic Pharmaceutical Association, a trade group. “It’s a consensus deal that achieves the right balance between patient access and product innovation.—

President Barack Obama called for patient access to generic biotech drugs as part of a plan to reduce overall health care costs in his budget address last month. The administration’s budget outline contained around $9 billion in savings over 10 years with passage of a biogenerics bill that assumed seven years of exclusivity.

The closest Congress came to bringing the two sides together on this issue came with legislation introduced in the Senate Health, Education, Labor and Pensions Committee in 2007 by Chairman Edward Kennedy (D-Mass.) and ranking member Mike Enzi (R-Wyo.).

The committee approved the bill by a unanimous voice vote, but fell short of bringing it to the floor for a full Senate vote amid disputes again over exclusivity.

The Kennedy-Enzi bill called for a “hard— 12 years of exclusivity, meaning no additional time would be provided for drug improvements or new indications.

But groups advocating a shorter period of exclusivity said the bill’s language was still not tight enough to prevent drugmakers from “evergreening,— or stacking the 12 years one after another in order to increase the period of exclusivity for their products.

A committee spokesman for Enzi confirmed that the Senator plans to work with Kennedy to resolve the evergreening issue and will reintroduce a bill with 12 years of exclusivity once that issue is resolved.

Kennedy’s office declined to offer specifics on the timing or content of any legislation, replying in an e-mail that, “We hope to include biologics language in health reform — as President Obama has called for.—