The Biotech Industry Organization ("BIO") spent $6.6 Million on lobbying efforts in 2007, reported the Associated Press.

BIO’s lobbying efforts last year addressed a range of issues from patent reform to generics to FDA-related issues.  The Associated Press reported as follows:

[BIO’s] lobbying efforts went toward cloning issues ahead of the Food and Drug Administration’s ruling that cloned meat and milk is safe for consumers. Several members of Congress tried to compel the agency to do more studies before issuing a ruling, but FDA cleared the products for consumption in January. 

The biotech industry also lobbied on legislation to allow the Food and Drug Administration to approve generic copies of biotech drugs. Generic drug companies already market cheaper versions of regular, chemical drugs, but the FDA does not have the authority to approve copies of biotech drugs, which are more complicated.  Biotech makers opposed a bill that would have made generic biotechs medically interchangeable with the originals. The industry also argued generic biotechs should be classified as similar, but not interchangeable.

They also want biotech medicines to be guaranteed at least 12 years on the market before having to compete with generic copies. Generic drug makers say any protection beyond five years is unreasonable. Senate lawmakers attempted to pass a compromise bill last year, but negotiations broke down over the length of exclusivity.

This report raises some interesting questions about how much various industries spend today on their Washington lobbying efforts.  One of the issues that has repeatedly come up in the patent reform debate is how minimal the biotech industry’s lobbying efforts are in contrast with the high tech industry.  The argument has been that the proposed patent reform legislation favors the high tech industry, which has traditionally had more of a voice and presence in Washington.  However, as this report makes clear, the biotech industry’s expenditures on lobbying–at least BIO’s expenditures on behalf of the industry–are not inconsequential.  So, this report begs the question: if biotech’s lobbying efforts pale in comparison to high tech’s lobbying efforts on Washington, just how much is the high technology industry spending on Washington lobbying?  What kind of lobbying money is considered adequate to have a voice in Washington?

Gilead Sciences has now overtaken Amgen as the world’s second most highly valued biotech company after Genentech, according to Seeking Alpha.

Seeking Alpha reported:

Investors now think that a biotech company with less than one-third the revenue of Amgen (AMGN) is worth more than the former sector king. . . .

Genentech (DNA) is the commanding number one with a market cap of more than $83 billion. It’s a little nip and tuck between GILD and AMGN, but as I write this Amgen’s market cap stands at approximately $43.5 billion and Gilead’s at $45.5 billion. Amgen is still tops when it comes to revenue: $14.8 billion in 2007 versus Genentech’s $11.7 billion and Gilead’s $4.2 billion.

While Gilead Sciences’ ascension to the number two slot has little if any bearing on the biotech legal landscape, it undoubtedly will have some impact on the negotiating power of Gilead Sciences in future commercial negotiations. 

California, the District of Columbia, and seventeen other states have filed suit against Abbott Laboratories for allegedly entering into a scheme to block the generic version of the cholesterol lowering drug TriCor, reported the East Bay Business Times.

The East Bay Business Times reported on the suit as follows:

The prosecutors are suing Abbott as well as two subsidiaries of Brussell-based Solvay — Fournier Industrie et Sante SAS and Laboratoire Fournier SA — in federal district court in Delaware. The prosecutors say the pharmaceutical companies illegally attempted to monopolize the market for drugs containing the ingredient fenofibrate, which regulates cholesterol and triglyceride levels. Abbott licenses from Fournier American rights to the drug and Solvay sells the drug on the European market. . . .

According to the AG’s office, the companies made trivial changes to the formulations of TriCor, and marketed those while withdrawing the original drug from the market. The companies deleted references to the original forms of the drug from national drug databases, according to prosecutors, making it more difficult for a generic version of TriCor to obtain generic status. Meanwhile, the prosecutors say, Fournier obtained patents covering the variations of TriCor, and then filed patent infringement lawsuits against generic companies that tried to compete. The litigation triggered mandatory 30-month periods in which the Food and Drug Administration could not approve generic versions of TriCor.

The companies intend to fight the charges, according to the East Bay Business Times, and argue that they have not engaged in any wrongdoing.

The California Biotech Law Blog will be following this story as it unfolds.

Fraud charges were filed this week against the former CEO of Brisbane-based InterMune, reported AP writer Paul Elias for SF Gate. 

Elias reported as follows:

Dr. W. Scott Harkonen served as the Brisbane-based company’s top executive from 1998 until 2003. During that time, he is accused of making false and misleading statements about how effective the drug was in combatting the fatal lung disease idiopathic pulmonary fibrosis, known as IPF.

A press release Harkonen wrote touting the benefits of Actimmune to treat the lung disease in August 2002 is at the heart of the government’s case. The press release stated that a large-scale scientific test of Actimmune showed it helped IPF patients live longer, prompting many doctors to start prescribing the drug for IPF even though it wasn’t approved for that disease. . . . Doctors are allowed to write so-called "off-label" prescriptions for drugs, but companies are prohibited from directly marketing those uses. Prosecutors allege that the test Harkonen cited in the press release was a failure and that there’s no proof the drug played any role in extending life. .. ."

According to Elias, Dr. Harkonen, who is now the CEO of CoMentis, Inc. in South San Francisco, intends to plead not guilty. 

According to the Wall Street Journal Health Blog, the government does on occasion come down on a company for off-label marketing, sometimes even naming individuals; however, it is unusual for the investigation to focus on a single executive and file criminal charges against him rather than the company.  In this case, Harkonen is being indicted on charges of wire fraud and for violations of the Food, Drug and Cosmetic Act.

With all the talk by the candidates of reforming healthcare this political season, it is interesting to consider the impact that a win by each candidate will have on the biotech industry.  As this race unfolds, the California Biotech Law Blog intends to follow the positions of the candidates that may have an impact on the industry. 

Robert Goldberg wrote an interesting column this week for Drugwonks and The Weekly Standard  looking at the John McCain healthcare plan, which has received little if any attention by the media.  Goldberg first addresses the plans proposed by the Democratic presidential candidates.   In contrast to McCain, who views the current Veteran’s Health Administration ("VA") as being severely broken, Goldberg explains that Barack Obama and Hillary Clinton view the VA is the "starting point for the Democratic plans for universal health care."

Goldberg writes:

Both Hillary Clinton and Barack Obama want to expand the VA’s electronic health care system to the rest of the country. Obama has promised to spend $50 billion on electronic health records based on the VA model. And Clinton likes to claim credit for that model, which she calls an astounding success. . . .

In fact, as a government audit discovered, the VA’s paperless system has created a huge bottleneck, losing track of 53,000 veterans.. . . according to internal VA audits, 25 percent of all vets wait more than 30 days for their first exam. Of the veterans kept waiting, 27 percent had serious service-connected disabilities, including amputations and chronic problems such as frequent panic attacks. Iraq war vets often have to wait six months for their first appointment. In some VA hospitals, vets wait 18 months for surgeries–a record worse than Canada’s or England’s national health care systems. The VA’s budget for its health care system has doubled since 2001. . . .

In contrast, Goldberg says that the McCain plan "boil[s] down to freedom of choice," explaining as follows:

McCain’s plan is based around patient-centered initiatives that already have broad support among Republicans in Congress. They include letting people buy health insurance nationally instead of only from state-regulated firms; giving people the choice of purchasing coverage through cooperatives or other organizations (churches or civic groups, for example); expanding health savings accounts; and making health insurance portable by giving people tax credits of up to $5,000 per family to buy their own coverage instead of getting it through an employer.

His chief concern is for people to take ownership of their health care. McCain likes to note that "Ronald Reagan said nobody ever washed a rental car. And that’s true in health insurance. If they’re responsible for it, then they will take more care of it." At the heart of McCain’s proposals is his effort to allow veterans, particularly soldiers returning from Iraq with traumatic brain injury and mental illness, to get care anywhere rather than just through the Veterans Health Administration (VA). . . .

It is likely that the McCain’s plan will receive additional scrutiny down the road, as healthcare is likely to continue to play a key role in the election.  However, Goldberg gives us a first glimpse of the McCain position on healthcare reform.  There is little doubt that the candidates have a very different perspective on what that reform might look like. 

But how might the McCain view affect the biotech industry?  Well, all in all, I would argue that the biotech industry would most benefit from the McCain position, since ownership of health care would likely lead patients to pursue the best available treatments, to the extent that they can afford them.  In contrast, the Obama and Clinton positions would increase health care availability for the population as a whole, but would likely limit options and treatment availability and potentially even limit the profitability of the biotech industry as a whole.

The California Biotech Law Blog will continue to look at these issues as further information about the candidates’ positions is revealed.   We welcome comments on these issues from our readers.  What do you think: how would the candidates’ positions on healthcare reform likely affect the biotech industry as a whole?

Stem cell biotech companies are looking forward to the next presidential administration, reports CNN Money.  All three of the leading presidential candidates–Senator John McCain, Senator Barack Obama, and Senator Hillary Clinton–have expressed a more tolerant view toward stem cell research than has the current President Bush. 

CNN Money reported:

Bush has twice vetoed legislative attempts to expand the funding, including those backed by McCain, Clinton and Obama. In reference to Bush’s policies, Obama has said, "Stymieing embryonic stem cell research is a step in the wrong direction." Clinton has called for funding for "additional cell lines in order to pursue the promising avenues for research." McCain has said "stem cell research has the potential to give us a better understanding of deadly diseases and spinal cord injuries affecting millions of Americans."

Following his second veto in 2007, Bush said the legislation "would compel American taxpayers – for the first time in our history – to support the deliberate destruction of human embryos." Instead, the president touted the therapeutic potential of stem cells taken from adult tissue.

Given the support by President Bush of the concept of taking taking stem cells from adult tissue and umbilical cords, the companies that have utilized this methodology such as Aastrom, Cytori Therapeutics , Stemcell, and Osiris Therapeutics have been somewhat shielded by the ongoing controversy, reported CNN Money. In contrast, the companies using the methodology of deriving stem cells from human embryos such as Geron, Advanced Cell Technology, Novocell and Neuralstem have found themselves right in the middle.

CNN Money predicts, however, that the new administration will benefit all of these companies, regardless of the methodology used, since investors will have a more positive view about the political climate for these companies and the funding is likely to be made available to them. 

The Washington Post ran a column today by Jon Leibowitz of the Federal Trade Commission, which addresses a suit recently filed by the agency against Cephalon, Inc., which will test the legality of the practice of entering into “pay for delay” settlements.

Liebowitz describes the  “pay for delay” settlement controversy at the root of this case as follows:

When these troubling deals first came to light in the late 1990s, the FTC fought them — and stopped them cold. Between 2000 and 2004, no brand and generic companies entered pay-for-delay deals; in other words, companies resolved patent disputes without anticompetitive payoffs.

Unfortunately, that success is under siege. Two federal appeals courts — in rulings that conflict with the analysis of a third appellate court — have found that a brand-name drug company facing a patent challenge is free to pay any amount to keep a generic producer from entering the market until the patent expires. These rulings depart from the spirit of Hatch-Waxman and our nation’s antitrust laws, and they harm consumers by subverting the competition at the heart of our free-market system.

Courts that have sided with pharmaceutical companies believe, in essence, that even an infirm patent gives its owner the right to pay competitors not to compete. . . .Not surprisingly, after two courts blessed such payoffs, the frequency of these settlements has increased sharply. In fiscal 2006, fully half of all pharmaceutical patent settlements (14 of 28) contained such payments. Brand-name manufacturers, seeing the potential to continue reaping monopoly profits, have taken advantage of this apparent judicial leniency. . . .

This dispute clearly puts Hatch-Waxman to the test: should a patent owner have the right to pay to keep a competitor out of the market until the patent expires?

Clearly, insurers and the public would say yes.  According to Liebowitz, Cephalon made an additional $4 billion dollars as a direct result form entering into this “pay for delay” settlement–this is money that came directly out of the pockets of insurers and patients.  As a member of the public who lost my health insurance following the collapse of my former law firm just over four years ago, when my former employer terminated COBRA at the six month mark, leaving me in the position of having to pay full price for prescription medications, I know all too well how expensive it can get to pay for prescription medications, when no generic is available.   There is definitely an impact on the public at large, insurers, and individuals when they have to foot the bill for a more expensive medication.

On the other hand, as an IP lawyer, I can’t help but scratch my head a bit over this case: the FTC is effectively taking issue over a patent owner trying to protect its exclusivity until the patent expires.  Isn’t that the patent owner’s right?

Not according to the FTC.  The FTC’s position is that patent owners do not have the right to enter into these types of settlements–that such deals violate the spirit of Hatch-Waxman and antitrust law.

It makes perfect sense to me why certain courts have sided against the FTC on this particular issue, and also why the FTC anticipates this case going to the Supreme Court.   According to Liebowitz, however, a bill is also making its way through Congress that would prohibit such agreements.  The FTC, of course, supports this legislation.

The California Biotech Law Blog will keep you posted as this battle unfolds.

The Boston Business Journal ran a story this past week on the increasing number of contract research organizations in the Boston area and around the nation.

The article profiled Blue Stream Laboratories, a Woburn contract research organization with eight employees that launched the summer of 2006, reporting that Blue Stream Laboratories President Michael Kouchakdjian had indicated that “his client base is growing as biotechnology companies and contract pharmaceutical manufacturers try to save money by farming out development work to companies like his.”

The Boston Business Journal article provides further evidence that  outsourcing is on the rise in the biotech and pharmaceutical industries–a trend we have been following at the California Biotech Law Blog since last year (see our blog postings from May 23, 2007 and April 2, 2007).  As we have indicated previously, it is almost inevitable that outsourcing will continue to play an increasing role in the biotech and pharmaceutical industries, given the success that the high tech industry has had with offshore outsourcing in recent years. If companies can dramatically cut their costs by outsourcing work, why wouldn’t they pursue that option in order to become more profitable?  I think it is difficult to deny the clear business case for utilizing outsourcing to the extent possible.  I expect that we will continue to see more stories on outsourcing in the life sciences industry over the next few years.

The Supreme Court declined yesterday to review a ruling by the U.S. Court of Appeals for the Federal Circuit that there is no constitutional right to access experimental drugs, reported the Associated Press. 

The California Biotech Law Blog reported on this case back in August 2007:

My best guess without reading the decision is that the Court felt that this is a policy issue that should be decided by Congress, which seems to be what was reported. . . .

It will be interesting to see what the Supreme Court says on this case, if it is indeed heard by the Court.  As those of us who have studied Constitution Law know, the concept of "rights" has been liberally interpreted on occasion, according to Constitutional scholars, to reach a particular result that seems "just" from a policy perspective.  Could the current Court do the same? 

I somehow doubt it.  We have a "conservative" Court in place right now, so I doubt this Court will be reading new rights into the Constitution.  Granted, I am not a Constitutional Scholar, but that is my take on the current Court.

The California Biotech Law Blog accurately predicted that the Court would decline to read a new right into the Constitution.  While the Court did not provide any explanation of its decision not to hear the case, it can be assumed that the Court agreed with the Federal Circuit’s decision: that no right to experimental drugs exists, even when the patient is terminally ill.

So where does the Court’s decision leave this issue?

Clearly, a ruling on the issue in one federal appellate court does not preclude other appellate courts from hearing cases on similar facts and ruling differently on the same issue.   Thus, the possibility exists that another appellate court will revisit the issue down the road.

Having said this, in my opinion, a more likely scenario is that Congress decides to take up the issue at some point in the future.  This issue raises some valid public policy issues, and Congress is arguably the most appropriate forum to address them. 

I continue to take the position that there should be some mechanism by which the terminally ill can access experimental medications that offer a real promise to treating the terminal illness.  While I agree that perhaps the moral arguments in favor of making experimental medications available to the terminally ill do not rise to the level of a Constitutional right, I still think those arguments are compelling.  Doesn’t this issue merit some additional debate?

The U.S. Appeals Court in D.C. has ruled in an 8-2 decision that the terminally ill have no right to take unapproved drugs, even when their doctor says it is their best hope for survival.

The Mercury News reported on the decision as follows:

[T]he court said federal drug regulators are entrusted by law with deciding when new drugs are safe for wide use.

The families of terminally ill patients, several of whom died after they were denied promising drugs that were still in tests, filed the lawsuit. They said that dying patients were far more willing to take risks and argued that they should not be forced to wait for new treatments to win final approval from the Food and Drug Administration.

The judges said the families should take their pleas to Congress, not the courts.

However, the two dissenters said the ruling ignored the Constitution’s protection for individuals and their “right to life” and instead bowed to “a dangerous brand of paternalism” that put the government’s interests first.

According the The Mercury News, the next step is going to be to take this case to the Supreme Court.  It goes without saying that this is not likely to be the last we are hearing on this issue.

I have not seen a copy of the decision yet, so I’m interested to see how the majority reached the decision that they did.  My best guess without reading the decision is that the Court felt that this is a policy issue that should be decided by Congress, which seems to be what was reported above.

Clearly, from a pure policy perspective, the denial of access to potentially life-saving drugs to the terminally ill does not seem to be sound policy.   While the guinea pig argument (i.e. we want to protect the dying from being guinea pigs to be experimented on in their last days) may sound compelling to some, the reality is that most doctors are not going to do that to their patients.  They are only going to recommend possible treatments that hold some hope of working.  And why shouldn’t a patient who chooses to take a chance on an unapproved drug have that opportunity?  What is likelihood that any patient will really face a fate worse than what they are already going to face?

DrugWonks voiced a similar opinion today on the outcome of this case:

I believe the Abigail Alliance and others can make the case that they are not asking for wide use but targeted, tailored and scientifically responsible use that is consistent with their constitutional rights under the Fifth Amendment. This notion that somehow such rights are trumped by Padzur’s effort [to] take a wrecking ball to accelerated approval is a joke. The FDA is inconsistent on who gets what and when with respect to access to medicines and I don’t think the Supreme Court is going to let this “wide use” nonsense pass particularly since the Alliance is not asking for patients to determine when a product is safe but only to have the FDA create a regulatory pathway for allowing dying patients access.

It will be interesting to see what the Supreme Court says on this case, if it is indeed heard by the Court.  As those of us who have studied Constitution Law know, the concept of “rights” has been liberally interpreted on occasion, according to Constitutional scholars, to reach a particular result that seems “just” from a policy perspective.  Could the current Court do the same?

I somehow doubt it.  We have a “conservative” Court in place right now, so I doubt this Court will be reading new rights into the Constitution.  Granted, I am not a Constitutional Scholar, but that is my take on the current Court.

So, it’s quite possible that this will ultimately be placed in the lap of Congress, which will hopefully do the right thing and change the current policy.  There should be some way to legally access unapproved drugs in this country that might save your life when you are dying.  If someone wants to continue to fight to live until the bitter end and not throw in the towel, even if that person is grasping at straws, why should the FDA have the right to deny him or her that chance?  Who is the FDA really protecting in such a case?