BIOspeak
by Adam Istas
June 2008
Jim Greenwood, president and CEO of the Biotechnology Industry Organization (BIO) and a former member of the U.S. Congress, discusses the most critical policy challenges facing the industry today.
Photography by
Q: This is a presidential election year here in the States. What is the biotechnology industry paying attention to with regard to the candidates? And can you speculate what effects a new administration—and perhaps a changing Congressional balance—would have on the biotech industry?
JG: Clearly the health care system is one of the top two or three issues of the campaign season, and that reflects concerns from the uninsured as well as the underinsured. The candidates are acutely aware that there are also concerns among the private payors that their costs are going up, and they’re also acutely aware of the fact that 80 million baby boomers are going to start entering the Medicare system pretty soon and that’s a potential budget breaker.
The concern we have is that a new president or a new Congress will be tempted to take a very shortsighted approach to this problem. And that is to say that there are dragons coming over the horizon—particularly for the Medicare program—and we think that those dragons have written on their chests ‘hospital costs,’
‘doctor costs’ and ‘drug costs.’ So Congress and the federal government need to slay those dragons before they eat us up. And as those dragons get closer, policy makers will hopefully realize that what they really have written on their chests are ‘cardiovascular disease,’ ‘cancer’ and ‘diabetes’ and will recognize that the real solution to the issues of access and health care is to reduce the incidence of chronic disease. Seventy-five percent of the cost of health care is attributable to chronic diseases.
If policy makers think that new drugs are too expensive and look at slashing costs through means such as re-importation, price control or by passing the wrong type of follow-on biologics legislation, what we’ll end up with is marginally less expensive drugs and perhaps the evisceration of the drug discovery industry’s ability to take the incredible amount of information that we’re gleaning from the human genome and turn it into real solutions. If policy makers take a longer view and say ‘what we really need to do is to make sure that this industry has the opportunity—through gene silencing, through gene therapy or through regenerative medicine—to really reduce the incidence of chronic disease,’ then we might be able to have a system that not only has great quality, is accessible and affordable, but also creates and sustains ongoing innovation.
Q: With regard to follow-on biologics, what are the industry’s primary concerns as various bills to establish an approval pathway are brought forth?
JG: There are a couple of elements that are key. The first is that we don’t do anything to undermine patient safety. So we think the U.S. Food and Drug Administration (FDA) must have the ability to require certain, reasonable amounts of clinical work before these drugs are injected into people. We also think that the names of the drugs should be separate so people can clearly tell whether they’re getting the innovator product or the follow-on product, so that they can make an informed decision with their physician as to which product they want to take. And that leads to another component, in that we think that decision should be in the hands of the patient and their physician, and not by insurers, whether private or public.
Another critical element is that, whatever this legislation does, it needs to incentivize innovation. Hatch-Waxman has done that in the world of small molecules. You get your patent life to recoup your R&D costs and develop profit. But in the world of biologics, the patents don’t necessarily protect you, because the generic manufacturers can make biosimilars that don’t necessarily violate patent. So we need a surrogate for patent protection, and that surrogate is data exclusivity. We simply think that once a product is approved, there needs to be a certain number of years that elapse before the FDA can approve a follow-on product relying upon the data of the innovator. And we looked carefully as to what that number should be, and we concluded that that number should be 14 years. It takes somewhere between 12.9 and 16.2 years to recover costs of a biologic, so we think that’s the right number.
Q: Comparative effectiveness is certainly a hot issue at the moment. Is too much attention being paid to the price of medicines, rather than patient outcomes? What sort of comparative effectiveness model would you like to see in the U.S.?
JG: Well, it’s not surprising that people pay attention to the price of the drug as that’s all the consumer sees. The consumer never sees the clinical trials or the R&D costs, and payors don’t see them either. So it’s to be expected that they’d be focused on their bottom line. Comparative effectiveness can and should be an effective tool in health care. We want patients and doctors to know how things work, how product A works compared to product B, how procedure A works compared to procedure B, and how prevention works versus treatment and so on. What we’re very concerned about is that this information isn’t used to drive decisions about reimbursement. And for a very clear reason: We are in the age of personalized medicine. This means that if you do a study comparing product A to product B—and on average, product A works better than product B—and product B costs more but we’re only going to pay for A, then that’s good for the average person. But none of us is the average person. The product that’s less expensive may have no effect on some patients due to their genetic make-up, or it may have side effects or ill effects. So, doctors need to be able to say, for example, ‘this product is more expensive, but you’ll be less nauseous, so I’m going to prescribe the more expensive one.’ Again, doctors and patients should be able to make those decisions themselves.
Q: What effect has the Medicare prescription drug program had on the industry and on patients?
JG: I think it’s been remarkably successful, and I feel that it’s one of the most important things that Congress did in the 12 years I was there. The results have been that 85 percent of the beneficiaries are happy with the end result, and I don’t know how you argue with that.
Secondly, the system has cost 38 percent less than we anticipated when we passed it, and that’s because we are employing competitive pressures to drive down prices. Plan A is going to compete against plan B to attract patients, and in order for them to attract patients, they have to have lower-priced products. So if they’re going to win in the competition to get individuals to sign up for their programs—and if they’re going to be able to make a profit—they have to be very skilled at negotiating prices with drug companies. And that’s what they do all day long in the Medicare Part D program and everywhere else where private insurers pay for drugs. And they’re very good at it.
Q: What’s the current status of the U.S. Senate’s S.5 bill, introduced more than a year ago (Stem Cell Research Enhancement Act of 2007)? And how does BIO view the area of stem cell research?
JG: We’re strong advocates for it, and we think that embryonic stem cell research is vital to our ability to utilize the knowledge that we have of biology and the human genome. The opposition to stem cell research comes straight from the abortion debate, but happily, a good number of House and Senate members who might be 100 percent in their anti-abortion voting record recognize that they can’t deny their sick constituents the opportunity to pursue this. So the House and the Senate passed the bills, which President Bush promptly vetoed, so we still have the continued restriction of National Institutes of Health funding. But clearly since all the presidential candidates voted for the bill, I’m sure that the next administration will reverse that decision and we’ll be back on the pathway.
Q: Not many would argue with the potential of pharmacogenomics in drug development and health care. Aside from the scientific and logistical challenges, are there additional issues—regulatory, legal or ethical—that need to be addressed before that potential can be fully realized?
JG: It’s going to require the appropriate regulatory regime. In order to really pursue the opportunities available under personalized medicine, you need a two-part system. One is to have the diagnostic tool that identifies what it is about an individual that makes him or her appropriate for a certain kind of therapy, and then you have to have the matching therapy. Again, as you do this, either the elegance or the lack of elegance with which the FDA or the Centers for Medicare & Medicaid Services (CMS) decide to approve these products and to reimburse these products, will determine how successful we are in this endeavor. If Congress or the administration is reluctant to pay for these new tools, then we just can’t get the benefit. And that’s true in the private sector as well.
Q: What other regulatory issues—either in the U.S. or in Europe—are of concern to the biotech industry?
JG: I would say that generally speaking, the whole drug safety issue was addressed quite well in the Food and Drug Administration Amendments Act passed last year. But now the agency must execute all of its new powers. What’s really important in the safety realm is that rather than what Congress initially did in its knee-jerk reaction to Vioxx—clamping one-size-fits-all safety regimes on every single medicine—they instead need to use all of the tools that the information age gives them so they can collect prescribing data for large population sets and correlate that with treatment data to look for adverse effects. The data can then be used to specify who exactly is having those adverse effects so that we can contraindicate certain therapies for certain populations without taking the product off the market entirely. And if we do that well, we’ll have a very smart, real-time system to identify safety signals, and we won’t have that recurrent pendulum swing between getting products to patients quickly and slowing down and being ridiculously risk-averse.
Q: Can you provide an overview of the most salient points of BIO’s efforts with regard to patent reform?
JG: What’s happening is that the National Academy of Sciences, the Federal Trade Commission and others did an analysis of the American patent system and concluded that it could be improved so that we could be more innovative than we already are. Along the way, a relatively narrow group of interests, most of them large information technology companies, decided to hijack the patent reform process and create a system that is more conducive to its business model, which is more patent-infringement friendly. So if you’re rolling out an iPod or a laptop or a MP3 player or any other high-tech information device, you want to get that product onto market as fast as possible because it will become obsolete fairly quickly. What you don’t have time for is cumbersome, annoying and expensive patent-infringement suits.
The bill that recently came out of the Senate Judiciary Committee allows patents to be challenged at the Patent Office ad infinitum on a very broad basis for challenges. It also sets a one-size-fits-all system for determining the damages to be paid to the plaintiff when it’s been determined that infringement has occurred. Those two things alone would be extraordinarily damaging to our ability, as a biotechnology industry, to raise capital. Because what we do—which is almost a mirror opposite of what the info-tech people do—is that we patent a molecule or two and then we’re on a 15-year march during which we have to raise a billion US dollars just to get the opportunity to market the product. Whether it’s venture capitalists or institutional investors or whomever, anything that undermines the value of our intellectual property and makes it less costly to infringe upon our patents will just drive investment away and into other sectors.
Q: With regard to technology transfer, does the stagnant funding level of the NIH threaten to upset the balance of the Bayh-Dole Act, the landmark 1980 legislation that allowed universities and companies to license government-funded inventions for commercial development?
JG: It does upset the balance, and it’s a little counterintuitive. I was in the Congress when we doubled the NIH budget, and we were very proud of ourselves for doing so. But we were surprised when people came back soon thereafter and were complaining that now the funding was level or flat and asked for the continued growth of the budget. And it’s taken a while for representatives from academic institutions to convey to members of Congress that if you double the budget and incentivize the creation of new infrastructure, then you diminish or flatten the annual appropriations, you create a logjam. What happens is that all of the investigators who have grants can continue to do their research, but there’s nothing left for the new graduates. And if you don’t have continued expansion, then you can’t take advantage of all these brilliant young minds that we’re training. So, BIO strongly advocates for increased NIH funding, and we’ve been mildly successful so far.
Q: Looking forward, what do you expect from an industry that seems to be changing every year?
JG: I think to some extent, the Holy Grail is to be able to continuously identify the genetic cause of diseases and then prevent those diseases from being expressed to begin with. I can envision a world in which there is no diabetes, in which there is no Alzheimer’s, in which there is no Parkinson’s disease, and one in which the incidence rates of cancer and cardiovascular disease are dramatically reduced.
I think this is the coolest place in the world to be right now and I hope that America continues to produce young people who want to participate in this journey because it’s going to be a great one.
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